Papers in the Papers

This week I watched as an inside news scandal seemed to unfold in process. I felt particularly atuned to it and intrigued by it because of our recent case study work. The paper in question was The Wall Street Journal. And the scandal? The possibility that one of the Journal's top executives leaked information on the pending Murdoch bid to a Hong Kong businessman accused of insider trading.

The first coverage I saw of this story was in The New York Times on Tuesday.

Why Wall St. Journal Editors Held News of Murdoch Bid
http://www.nytimes.com/2007/05/08/business/media/08journal.html?_r=1&oref=slogin

Andrew Sorkin reported on the challenges the Journal's editors faced when privy to early information on Murdoch's bid to buy Dow Jones. This breaking news was one of the largest business stories of the year, but The Wall Street Journal left it to CNBC to break the news.

As Sorkin wrote:
"The Journal’s decision raises a nettlesome issue for the media: what are a news organization’s obligations to report important market-moving news about itself or its parent company before the news is officially disclosed?"

Turns out, The Wall Street Journal's news obligations and corporate obligations would become even stranger bedfellows as the week progressed. What started as a story about editorial ethics quickly turned into a story about business ethics. Sorkin's Times article hinted at this when he wrote:

"One unusual aspect of this story was that some investors may also have learned about the deal before the news broke, and traded on that information. As a result, the questions of who knew what and when they knew it inside The Journal could become an issue in inquiries by the Securities and Exchange Commission and the New York state attorney general into an unusual spike in trading in options to buy Dow Jones stock ahead of a formal announcement of the offer."

Soon enough this was exactly what happened. The following day, Wednesday, The Wall Street Journal published what felt like a piece provoked by the Time's probbing. The article, Insider Trading Alleged in Shares Of Dow Jones, revealed that a Hong Kong couple--Kan King Wong and Charlotte Ka On Wong Leung--were being investigated officially by the SEC for insider trading after turning an $8.2 million profit on Dow Jones shares. The catch? The wife's father is close friends with David Li, the director of Dow Jones. It was the father who transferred investment seed money into the couple's account days before the news of Murdoch's bid officially broke.

What ensued has been a slew of building articles and investigations by The New York Times and The Wall Street Journal, and other news outlets have joined in the reporting as the story has grown. What was seemingly prompted by a Times article has been covered much more thoroughly by the Journal itself. As Sorkin wrote in the first line of his initial article, "One of the trickiest things for a news organization to do is cover itself." But for all the challenges of self-coverage, there is also an inherent edge.

The Wall Street Journal has provided far and away the most in depth, investigative reporting on the scandal--not least because it has access to figures like David Li himself. Whereas the Times' stories are riddled with "refused to comment," the Journal gets quotes directly from the source. Editors at the journal might have initially let the story of Murdoch's bid go covered by other news outlets, but it seems that now they've decided to create a virtual monopoly on the sensitive information. The ethical decision-making of covering their own story--what to put in, what to leave out, and how firmly to press their company's own executives for real answers--will be the center of attention as the rest of the story unfolds.