CNN RELIABLE SOURCES
What Did the Bush Administration Know About Enron's Collapse?; Should the War Still be Front-Page News?
Aired January 12, 2002 - 18:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HOWARD KURTZ, HOST: Welcome to RELIABLE SOURCES, where we turn a critical lens on the media. I'm Howard Kurtz.
Just ahead, we'll talk with a panel of top newspaper editors about whether papers around the country are losing their appetite for the war.
But first, the big media story over the last 48 hours has clearly, undeniably been the Enron collapse and possible links to the Bush White House. What is now a criminal investigation exploded into the news on Thursday.
(BEGIN VIDEO CLIP)
TOM BROKAW, NBC NEWS ANCHOR: The stunning collapse of Enron, the giant energy trading company that went quickly from being a darling of Wall Street and a major player in American politics to the subject of a federal criminal investigation.
PETER JENNINGS, ABC NEWS ANCHOR: There have been any number of startling revelations since the company collapsed. As you probably know, a few people were left fabulously rich and many more without their life savings.
UNIDENTIFIED NEWS ANCHOR: What did the Bush administration know about Enron's financial troubles? The White House acknowledged for the first time today that Enron contacted members of the president's cabinet, telling the treasury secretary the company was heading for bankruptcy.
(END VIDEO CLIP)
KURTZ: Well, joining us now, Phil Bronstein, executive editor and senior vice president of "The San Francisco Chronicle," Jim Warren, deputy managing editor of "The Chicago Tribune" and an analyst for MSNBC, Leo Wolinsky, deputy managing editor of "The Los Angeles Times," and Susan Page, Washington bureau chief for "USA Today."
Phil Bronstein, the media are now treating Enron as a full blown, full fledged beltway scandal, despite the fact that the Bush administration didn't do anything when Enron executives called a cabinet official shortly before the company just melted down.
Has the coverage been hyped or unfair in your view?
PHIL BRONSTEIN, "THE SAN FRANCISCO CHRONICLE": Well, I think, Howard, it's been appropriate. I think the right questions are being asked, which basically are: what did the Bush administration know and when did it know it. These are the traditional questions.
I heard earlier today on CNN a reference to crony capitalism. I'm not sure that it's risen to that level yet, at least we have no evidence. But having covered Ferdinand Marcos in the Philippines for a number of years, that's a phrase that rings pretty interesting to me.
On the other hand, it's sort of a case of gambling in Casablanca. We're really shocked.
KURTZ: Shocked about the relationship between money and politics.
KURTZ: And let me pick that up with Susan Page.
The White House is blaming the intensity of the coverage on scandal-hungry reporters. But it's undeniable that Enron made big financial contributions, certainly to George Bush, $0.5 million over his career, to a lot of Republicans, and to some Democrats. So is the press being overheated in connecting these financial dots?
SUSAN PAGE, "USA TODAY": You know, I think it's quite the opposite. I think because of the September 11 disaster, that the press didn't cover with the kind of intensity it might have the early signs last fall of trouble at Enron.
And even when bankruptcy was declared, it took weeks for the press to kind of catch up with this story, which has an obvious political angle. We know Kenneth Lay and Enron were big contributors to George W. Bush.
So I think that actually we had a kind of delayed reaction. One White House official told me about a week ago that Enron would not be a big problem for this White House because the press could only cover one thing at a time, and what we're covering now is 9-11.
I think this person would not repeat that statement today.
KURTZ: I don't think so.
And Leo Wolinsky, I wanted to ask about this sort of less-than- aggressive posture on the part of the media before the latest events. I mean, this was basically treated as a pretty good financial story -- I mean, after all, you had top executives making lots of money, thousands of employees losing their retirement funds. But it wasn't really front burner -- it wasn't really engaging the political reports. Is that because it's a complicated story?
LEO WOLINSKY, "THE LOS ANGELES TIMES": It is a very complicated story. It's hard to even describe exactly what Enron did at its best.
But, you know, it was a major story in California going back a while ago, because we had our energy crisis and Enron was a major player in that. So we've been kind of watching this thing develop for some time.
KURTZ: Jim Warren, didn't reporters fall into the trap of calling up those Wall Street analysts, the same people who told us that, you know, PriceLine and eToys would keep going up on the stock market, and being told that everything was all right with this company?
JIM WARREN, "THE CHICAGO TRIBUNE": You got it. I mean, I think the biggest culprits here obviously are boisterous, gullible Wall Street analysts, blind to the absolutely bogus claims of Enron's escalating earnings.
In all due respect to Susan, I really don't think it's a function of inattention of journalists caused by September 11. Attention was there for a year, even a couple of years.
And a few places, if you look at the clips of some of the magazines such as "Fortune," "U.S. News and World Report," you will see some pretty good reporting.
But at heart to the extent it is a journalism story, I think it underscores the tremendous ignorance in all of our newsrooms about business and finance.
The company that Leo and I belong to, Tribune Company, is passing out stock options this year in lieu of raises, and most of our people don't even have a clue what a stock option is.
If you look at our financial sections -- even though at the bigger papers they have improved dramatically, I think, over the last 20 to 25 years, qualitatively -- if you look at most of the 1,500 daily newspapers in this country, and certainly most of the TV stations, the reality is that we're basically bulletin boards for corporate America.
KURTZ: Right. Right.
WARREN: And even though there are the likes of "The Wall Street Journal" and "Fortune" and "Forbes" and "Business Week" magazine, which do a pretty good job, I think a real overriding reality at all of our institutions is that though we might have a doctor who covers health and medicine, we might well have a lawyer who covers the Supreme Court or the courts, we don't have CPA's who have a clue about a 10K or a prospectus or an annual report who are in our business sections.
KURTZ: Well, I think the financial coverage is a little better than you describe, Jim Warren.
But at the same time, I think that a story doesn't really take center stage, top of the network news, until it has a political aspect.
Now, let's look at some headlines in yesterdays newspaper.
"New York Times": "Enron Contacted Two Cabinet Officers Before Collapsing."
"Washington Post": "Enron Asked For Help From Cabinet Officials."
"USA Today": "Bush Seeks Review Of 401(k) Law."
Bush seeks review of 401(k) law?
PAGE: Well, it's a different angel on the same story. And of course, the calls to the administration made were part of that story, but not the part of the headline.
KURTZ: But why were the calls and at lest the specter, the possibility of White House influence, why was that not the lead? Most newspapers led with that.
PAGE: Yes, and it is certainly a legitimate lead. I think one reason is because this is a Friday paper that has to hold up until our Monday paper comes out. We don't have a weekend paper. And so we always look for a headline that will seem still good enough, for a paper, good enough to buy on Saturday or Sunday.
KURTZ: Leo Wolinsky, I did...
KURTZ: Go ahead.
WARREN: If I can just interject, speaking of 401(k) laws. You know, you could take a look at the facts that have come out up to this point and sort of just turn around many of our leads. Instead of talking about all these calls going to the Treasury Department from Enron officials, or in fact apparently even from Robert Rubin, the treasury secretary, you might have led with the fact that the Bush White House apparently repeatedly rebuffed arm-twisting from the likes of Rubin and from Enron.
And when it comes to 401(k)s, I think lost in the shuffle here as this becomes a distinctly political story, are some of the real significant public policy issues that we could conceivably be looking at, such as the extent to which many of our workers' retirement plans are hooked up with their own companies stock.
KURTZ: Well, one of the reasons I think there is a whiff of scandal here, at least as far as journalists are concerned, is because a lot of this information was held back by the administration. But it may well turn out that nothing was done for this company.
PAGE: Of course, Democrats argue that that may be the problem, that nothing was done. And in October, when these calls were made, Enron stock was still at about $15 a share. One question Democrats are likely to raise is whether they had an affirmative responsibility to do something to protect the interests of some of those people...
KURTZ: To protect the employees...
PAGE: ... that lost their entire 401(k) savings.
KURTZ: And I'm sure the Bush administration officials who sold their stock when they joined the administration are probably happy they did, because it's now below a buck.
Leo Wolinsky, I did a count of front page stories in newspapers about Enron before the last two or three days, and "The Washington Post" had three, "USA Today" didn't have any, "The Chicago Tribune" had two. But "The Los Angeles Times" had eight, and "The San Francisco Chronicle" had seven. And I think this goes back to the point you were making earlier about this having some resonance in California.
Did your newspaper jump on this story in part because it wasn't some abstract scandal -- actually the actions of Enron effected California energy users.
WOLINSKY: Yes. I think there was whiffs of scandal very early on because nobody knew exactly where this energy crisis was coming from. Some thought it was a made-up thing. Enron was right in the middle of the whole thing. None of that really got sorted out in the end.
And of course, we didn't know that one of the problems was that they were so overstating their earnings.
But certainly it was a major story here right from the get-go.
KURTZ: Phil Bronstein, journalists, as you well know, sometimes respond to outside critics, politicians -- if they make an issue out of something, we are happy to come charging in. I'm wondering if you think that, to the extent that the Democrats are going to jump on and try to exploit and make political hay out of Enron in the same way that Republicans did, for example, during the Clinton years over White Water -- whether that is going to help drive the coverage in the coming days and weeks.
BRONSTEIN: Well, Howard, I don't know that we should expect anything different from the Democrats than we expect from Republicans. It's about politics. And ultimately, the story on Enron is about abuse of power, or potential abuse of power. Clearly, there was some abuse of power in the collapse of Enron. We don't know about this latest wrinkle.
The truth is, is that I think hindsight is a wonderful thing. And it's true that there is a certain amount of ignorance in newsrooms about financial matters. I mean, how many of us kicked ourselves because we were so slow in picking up on the savings and loan scandal even though we had hints of that for years? KURTZ: That's a terrific point.
BRONSTEIN: But the reality is, is that, you know, we do essentially the best we can. And I think at this point, we are doing the best we can in pursuing this.
And the idea of scandal, I mean, if you want to talk about scandalous stories and tabloid-type stories, you know, Gary Condit made his first reelection campaign appearance in California yesterday and the press was all over that.
KURTZ: Do you have the impression, Phil Bronstein, just briefly, that journalists who have had to adopt a sort of serious, sober tone because of the war and terrorism are just salivating over the idea of an old-fashioned political scandal here?
BRONSTEIN: Well, I think everything has changed a little bit. This was the big banner headline, essentially, after 9-11, that the world has changed. And I think the world has changed, but not so much, as we saw from coverage of the Condit appearance yesterday and as we're seeing in coverage from this.
But I think, you know, there's one aspect of this story, and that is the sense one got after 9-11 when talking to people, we all ran stories about it, was that people had changed, that the country had changed, that people were looking for a little more goodness in life and in each other.
And suddenly this comes along. And it will be interesting to see if there's any difference in the reaction of the public -- never mind the press -- as to how they respond to this.
KURTZ: Jim Warren, any salivation in Chicago?
WARREN: Well, a little bit of a reality check here, Howie, as you look at the feeding frenzy in Washington: no single story this week garnered more attention, particularly on local television, than the divorce of Michael Jordan. It led all the newscasts one evening this week, a four, five, six minutes, ad nauseam. We gave it pretty big play in our newspapers.
And I suspect right now, sad or not, more people in this town are interested in a sort of daily double that comes up in a week or so with the Bears in the play-offs for the first time in years on the very same day that Michael Jordan returns to town. More folks are interested in that, sadly, perhaps, then in the ramifications of the Enron debacle.
KURTZ: Well, so much for Enron. Maybe we'll do our show next week on that.
We have to take a break. And when we come back, how do newspaper editors deal with a war that's now four months old and clearly winding down?
(COMMERCIAL BREAK) KURTZ: Welcome back to RELIABLE SOURCES.
And turning our attention now to the war coverage, Phil Bronstein of "The San Francisco Chronicle," is the war still top of the front page news in your city? And, at this stage of the game, should it be?
BRONSTEIN: Yes and yes.
I think that we're engaged in a war, and of course it's always hard to keep people's attention. I think George Bush is discovering that now in the wake of what we discussed a little while ago, Enron.
But the reality is, we're in a war. People are dying. People died this week, on all sides. The issue of prisoners. The transfer of the prisoners from Afghanistan to Cuba is very controversial today in the news.
I think these are things that are significant, have a great impact on people's lives -- you know, it's one of these questions, what do you put on the to of your page, your front page. Do you put what people are interested in -- today in San Francisco it's going to be the Raiders game -- or do you put the war? And the reality is, you put both.
KURTZ: Leo Wolinsky of "The Los Angeles Times," are readers in LA still very interested in this war? And don't newspaper shave a sort of a disadvantage in that, you know, television can show a flashy video of the latest bombing raid, when there is bombing, or of the special forces in action. And newspapers are left with accounts that clearly are going to be less dramatic than when we were trying to take the country away from the Taliban.
WOLINSKY: Yes, but the good thing for us now is that with the actual fighting aspects dying down, it's a great enterprise story for us.
This is really an investigative story about the roots of terror, the networks that go out throughout the world, the changes that are happening all over America because of the terrorist attacks.
So this is really a story that now I think plays to the strengths of newspapers much more.
KURTZ: So, in some ways it's easier to do this kind of digging when you don't have the country in the hands of a brutal regime.
KURTZ: Jim Warren of "The Chicago Tribune," you oversee the feature sections at the Trib. Are some of the feature stories less than 9-11 related than might have been the case say in September and October?
WARREN: Yes, exactly. You know, it's interesting whether it was the Sunday magazine, even the book review, the food section, the travel section, the arts and entertainment section on Sunday -- for those first couple of months, I'd say, Howie, virtually every story idea that we considered was seen through the lens of September 11.
And it wasn't just a matter of subject matter. It was a matter of tone. We were actually, you know, often very nervous even about having fun, about being seen as being a tad frivolous. That clearly has gone now and one is reminded of the fact that people, you know, see this story in the ebb and flow of any sort of story.
At the moment, there's not quite the height in interest, even though our circulation remains up 3 or 4 percent contrasted to pre- September 11 figures. But the reality is, for the editors, we're not sort of walking on eggshells in the say way that we did before. We're not feeling guilty about just having some fun, writing about celebrities, and doing things that have nothing to do with September 11 and what clearly are the profound impacts on the nation.
KURTZ: Well, nothing wrong with having a little fun.
Susan Page of "USA Today," most newspapers, except for a few big ones, have either no foreign correspondents or a relative handful. So, is there a certain exhaustion factor when you're rounding up people, drafting them, so to speak, sending them over to Afghanistan, and now we're four months in, maybe people just want to take a break, from a journalistic perspective.
PAGE: Well, one thing that we found is we have a small foreign staff, and we really sent a lot of people from our Washington bureau and from our life and money section, even, to the region to do reporting there.
And we've rotated them back, because it's a difficult place to work. It's exhausting. Some of the people got sick. So, we have done a kind of rotation.
I actually think this story, though, continues to be the best story in this country, although no longer the only story, and that that will continue to be true at least until we know what happened to Osama bin Laden, which is the big question mark that remains out there.
KURTZ: And of course...
KURTZ: Yeah, go ahead.
BRONSTEIN: You know, and I think the news papers are doing what they've always done during the course of this war, and that is provide the context. You can't beat television pictures, you're right. And you can't beat television for drama in a sense. But newspapers and magazines will provide and do provide the context.
And context is so crucial in this, because after the end of the Cold War, as those of us who were doing this kind of job knew, interest dropped dramatically. There was a precipitous drop in interest in the American public in foreign international news. And now, suddenly... KURTZ: You could argue, Phil Bronstein, that a lot of journalists and editors and producers concluded that people didn't care about foreign news, and maybe it turns out that they were wrong.
BRONSTEIN: Well, I think they'd certainly be wrong if they assume that now, but the reality is, suddenly we're talking about very strange cultures, cultures that are strange to us, so a sort of isolationists view is not only inappropriate, but it doesn't give you any clue as to why what's going on is going on.
So, what newspapers can do, I think, is provide the context and the context is culture. Because everything else is just events that happen, and outside of the context of culture, they really are somewhat meaningless and you have no clues as to how they stick together. And that's what we can do.
KURTZ: And Leo Wolinsky, Phil Bronstein mentioned a moment ago about the transfer of prisoners by U.S. forces to Guantanamo in Cuba, Taliban and al Qaeda prisoners. The Pentagon won't let any pictures be transmitted. Now, some of these people understandably are under high security are being moved -- they're manacled, they're shackled, they're hooded in some cases, they're in small cages. What do you make of the Defense Department saying, I'm sorry, American journalists, the world just can't see this?
WOLINSKY: Well, the security concerns are understandable, but it's something that should be seen. I mean, it's very important that the world see how the United States is taking care of these prisoners to find out if they're being treated humanely.
When you don't get information, then the worst is assumed all the time. So, I think it'd be very advisable for them to open up and let us see more what's going on there.
PAGE: I actually think this is a mistake on the part of the Pentagon and the administration, because if there is one thing that makes us different from the people we're fighting, it's our willingness to open our processes to press coverage and the kind of security that brings, when people know what's going on and know they can trust their government.
And I think this is largely a PR decision in terms of the pictures being transmitted from Cuba, and one that the Pentagon ought to rethink.
BRONSTEIN: One of the fascinating things about this, Howie, is that on the one hand, government, in this case, is returning to their sort of basic instincts, which are censorship. On the other hand, you know, this is a war where we have suddenly had a discussion, openly, in the press about the use of torture. And I think that's an extremely healthy discussion to have.
KURTZ: Jim Warren, is the press maybe...
WARREN: Howie, if I can...
KURTZ: Please, go ahead.
WARREN: If I can just add, it's also, quickly, it's a reminder of how open the coverage has not been throughout the entire war and how little we actually do know, even up to this point, as to what actually happened regarding our military in Afghanistan. And that's all right from the top. Donald Rumsfeld, despite his glorious tenure on the Tribune Company board of directors, is deeply suspicious of all of us and would rather not have us in attendance.
KURTZ: And do you think, Jim, that one of the reasons the press has been reluctant to complain more loudly about things like no pictures and limited access and Pentagon rules, is that the president is fighting a war. He's at 85 percent popularity, and that's a heck of a lot more popular than the journalistic profession?
WARREN: Well, it's a double-edge sword. At the same time, make no mistake, there are some folks, including the editor of our Orlando paper, Tim Franklin, who were absolutely furious the other day when his guy was booted off Guantanamo, and complained and tried to figure out a way to get to Rumsfeld.
So, in no way did he feel shackled by the high approval ratings of the president.
KURTZ: Leo Wolinsky, we have about 30 seconds. Do you see newspapers and the media in general going back to a greater depth of coverage on foreign news beyond Afghanistan, beyond terrorism, beyond Osama bin Laden? Or are we just going to slide back to the days when executives concluded that most readers just didn't care very much?
WOLINSKY: I certainly hope it goes forward. You know, I think about 70 or 80 percent of media outlets dropped or cutback their foreign, national, coverage during about a 15 year period, saying that people just cared about local news. And I don't think it was just coincidental that it's a lot cheaper to just cover local news.
I think now, I think everybody has learned, those that have cut back were at a distinct disadvantage during this war. And I think now you can really see that when something goes on, you have to be there ahead of time in order to have a context. You can't just dive in at the last moment and make something up and try to catch up with time. So hopefully, they will see the real value in this.
KURTZ: We will wait and see.
Leo Wolinsky in Los Angeles, Phil Bronstein in San Francisco, Jim Warren in Chicago and Susan Page here in Washington, thanks very much for joining us.
And when we come back, are the media finally getting back to normal? We'll cut the ways, literally, in the SPIN CYCLE.
KURTZ: For months now, it's been war, war, war in the media. But our exhaustive investigation reveals that war is, yes, winding down. There's still plenty of air time to fill, of course. And so as a public service, we hereby present the top ten signs that the media are returning to normal. Let's go to the videotape.
KURTZ (voice-over): Number 10: Diane Sawyer is talking about exercise.
DIANE SAWYER, NETWORK ANCHOR: This week we have our series called "Minutes to Fitness."
KURTZ: Number nine: MSNBC is showing Imus again instead of war news.
Number eight: We're back to the debate over the stimulus package.
Number seven: Cable is again covering murder trials involving people you never heard of.
Number six: Geraldo Rivera has left Afghanistan.
Number five: Larry King is chatting up guests with strange tales to tell.
LARRY KING, HOST, CNN'S "LARRY KING LIVE": Tonight, death defying feats, amazing transformations, astounding stories against succeeding against all odds.
KURTZ: Number four: Three words: Yves Saint Laurent.
Number three: Michael Jordan's divorce; the media jumping on his wife's charges that the man sure can score.
Number two: "The Today Show" is covering the "Sex and the City" bus tour.
UNIDENTIFIED MALE (voice-over): It's a three-hour jaunt through the streets of Manhattan and into Carrie, Miranda, Charlotte and Samantha's favorite hot-spots.
UNIDENTIFIED FEMALE: In fact, on one episode, Carrie turns to the camera and she has, "I have a substance abuse problem; expensive footwear."
KURTZ: And the number one sign that the media are getting back to normal: snow coverage.
Every year at this time it seems a strange white substance falls from the skies, filling TV stations everywhere with unmitigated terror.
Snow in January, imagine.
Well, that's it for this edition of RELIABLE SOURCES. I'm Howard Kurtz.
Join us again tomorrow morning at 9:30 Eastern when we'll talk about the cable wars, how the news channels are raiding each other, the growing importance of personality, and even alleged sexiness, on the air.
"CAPITAL GANG" is up next.
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