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Thanks Steve,
We Needed That
Diamond is the author, most recently, of White House to Your House, and a professor at NYU, where he directs the news Study Group. Stacy Bradford, Alice Roche Cody, Andrea Modafferi, and Mario Kaiser provided research help.
The Washington press pack hardly raised a droopy gaze when Malcolm S. "Steve" Forbes, Jr., journeyed to the National Press Club last September to announce his candidacy for president of the United States. The New York Times ran a wire service story well back in the first section; The Washington Post noted that the reaction to Forbes was one of "lighthearted amusement." The journalists' insouciance continued through the rest of the year, despite Forbes's multimillion-dollar television ad campaign and the giddy rise of his polling numbers; in late December, a page-one series in the Los Angeles Times recounted "defining moments" in the lives of "GOP front runners" Dole, Gramm, Alexander, and Buchanan, excluding Forbes.
In the executive offices of Time Warner Inc. magazines, editor-in-chief Norman Pearlstine had a more animated reaction to the news of Steve Forbes's entrance into the race. The day Forbes announced, Pearlstine sent notes to John Huey and Jim Gaines, managing editors of, respectively, Fortune and Time. He suggested a profile of Forbes and -- more pointedly -- of Forbes's publishing company and its flagship magazine, the business fortnightly Forbes. Gaines chose to wait to see if the Forbes candidacy proved "viable." Huey, whose Fortune happens also to be a fortnightly business magazine, quickly decided to do a major investigative piece. After all, Steve Forbes was one of us, an editor-in-chief with his own regular column, a ghost-assisted ramble in the family's magazine called "Fact and Comment."
The article that Pearlstine wanted and Huey delivered created more stir than anything Fortune had done in memory. According to Fortune, Forbes the man wasn't as interested in being president as he was in raising the circulation and revenues of Forbes the magazine. Powell and Gingrich had pushed their books on month-long tours; Steve Forbes was using the whole of campaign '96 to increase Forbes magazine's visibility.
Of course, these supposed goals were not unlike those of Fortune itself in pursuing the story, a point Forbes himself made when the article appeared in mid-January. "Pure class envy," he called it, an interesting choice of words for a man who inherited a family business and a personal net worth in excess of $1.1 billion.
Fortune's assault on Forbes, and Forbes's counterattack, added little to public understanding of "the issues" of 1996. The clash of the fortnightlies, however, did bring to attention some longstanding practices endemic in the magazine business, those "grubby little insiders' secrets," in one insider's phrase, that "everyone knows" but that "everyone" seldom shares with readers.
The world of New York business journalism exposed by the Fortune-Forbes episode is so cozy it makes the supposed insularity of inside-the-beltway Washington look as inclusive as the Super Bowl XXX audience. In Washington, public officials, lobbyists, and journalists merely know each other; inside the midtown media zip codes (10010 to 10022), everybody has worked for everybody else at one time or another. Rivals become co-workers and vice versa as quickly as they change into sweats for morning workouts. Pearlstine left The Wall Street Journal in the late 1970s to put in two years as a top Forbes editor. Then he rejoined the Journal, where he hooked up with John Huey before both men came over to Time Inc., Huey in 1988, Pearlstine in 1994. The Fortune article draws on the work of Willy Stern, a former Forbes writer now at Business Week, the third competitor in the big-time business magazine field. Jeanie Russell Kasindorf, the writer who did the Fortune article, put in ten years at New York (disclosure: for nine of those years, I worked alongside Kasindorf).
Kasindorf left New York last summer, after some well-publicized, ham-handed rewrites by her editors during the closing of a piece she wrote about Jann Wenner (yet another media figure from inside the 10020 zip code). Pearlstine called her as soon as he learned she was available; the day Kasindorf walked into Fortune last September, she got the Forbes assignment.
Kasindorf's article took up twelve pages in the February 5, 1996, issue with the cover line: "What Makes Steve Run?" There's some obligatory psychohistory -- actually quite reasonable -- about the shy, awkward son trying to emerge from the shadow of the successful, celebrity father, Malcolm Sr. Inevitably, references are made to "clamorous rumors" of the senior Malcolm's life as a "flamboyant homosexual" and to Malcolm's excessively chronicled seventieth birthday party held in 1989 in Tangier (and attended by Pearlstine, among other media executives).
When Malcolm Sr. died in 1990, Steve, the eldest of the five Forbes children, took charge of the media properties (which include American Heritage, as well as a chain of New Jersey weeklies). As Kasindorf tells it, "stodgy, uncharismatic Steve" could figure only one way "to keep score with his dad." Father had used the Tangier party, the dates with Elizabeth Taylor, the chateau in Normandy, the Highlander yacht cruising the East River, the 727 private jet ("Capitalist Tool") and, yes, the editorial pages of Forbes, to raise the profile of his magazine and to sell advertising pages. They were ways of doing business (and tax deductible in the bargain). Steve Forbes, according to Kasindorf, would seek to surpass dad by bringing in more advertising business.
The latest figures of the Publishers Information Bureau show how well Steve Forbes has done. In 1995, Forbes magazine carried 4,542 pages of ads, up 9.4 per cent from 1994. Its advertising revenues soared to $205,703,659, an increase of 8.7 percent. For Fortune, the comparable 1995 figures were: 3,184 ad pages, up 4.4 percent, and $179,524,270 in advertising revenues, up 9.7 percent. Business Week, with its weekly frequency, sold 3,816 ad pages and collected $267,632,090 in advertising revenues, a healthy 14 percent improvement over 1994. All three magazines are quite profitable, demonstrating once again Calvin Coolidge's axiom (circa 1925) that the business of America is business. But Steve Forbes's Forbes, for all its thin, fourteen-paragraph cover stories, sappy supply-side economic theory, and quirky advocacy of a return to the gold standard, is Number One in advertising pages and profitability.
The fact that Forbes is winning the ad-pages battle is certainly not an indictable offense. In Fortune's accounting, however, Forbes has done so by favoring its advertisers -- bluntly, by doing upbeat stories on companies who buy heavy ad schedules. As Kasindorf tells it, a "protected list" of advertisers exists, untouchables "exempt from tough editorial criticism" because of their ad buys (GM, Ford, Rockwell, GE, and insurer AIG are said to be on the current list). Kasindorf cites "at least seven current and former [Forbes] writers and editors" as sources for her story.
Most of these informants are unnamed. Accounts of the experience of Willy Stern, for example, are attributed to "a Forbes source" rather than to Stern. On one occasion Stern's copy was rewritten to make Commander Aircraft, "a frequent Forbes advertiser," seem like a good though risky contrarian buy; on another, an article about Hartmarx, described as another major Forbes advertiser, was spiked when it couldn't be turned into the "positive" story Stern's editors wanted. (According to Kasindorf, print-outs of Stern's drafts appeared on her desk one day in a Forbes envelope with a note signed "A Friend.")
But Kasindorf has one key figure on the record. Forbes editor Jim Michaels gave the following written reply to Fortune's questions: "At Forbes, copies of every story ready for publication are routed to the publisher [Jeffrey Cunningham] and the editor-in-chief [Steve Forbes]. Occasionally they send queries based on their own knowledge and information back to the editor, Michaels, or the managing editor, Larry Minard." Michaels goes on to say that writers may hear from the editors "if the queries are valid" and that "very occasionally these queries lead to changes in the story."
"That's the smoking gun, in Jim Michaels's own words," exclaims John Huey, a Johnnie Cochran jabbing at a folder on his desk. "That's what's most interesting: the publisher reads copy before publication," adds Pearlstine, more in the manner of Robert Shapiro. "You know what the publisher of a magazine is? The publisher is an ad salesman." And that, according to Pearlstine, makes Forbes "significantly different from The Wall Street Journal, from Business Week, certainly from us." While small business-trade magazines may allow the sales side such access, Huey adds, only Forbes among "mainstream magazines permits such an unacceptable ethical practice."
If it fits, you can't acquit. When Forbes the magazine and Forbes the candidate denounced the Fortune article, they initially did so with boilerplate rather than specific rebuttals. Framing the Fortune piece as part of a business competition -- "a desperate move to get someone, anyone, to read Fortune" -- the Forbes forces failed to address Fortune's smoking gun, the evidence of a system to allow advertiser input in editorial matters. Gretchen Morgenson, Forbes's press secretary, picked up the gauntlet -- and threw it back. Without denying that the head of the ad sales staff reads copy before publication, Morgenson argued that the practice did not compromise Forbes's editorial integrity. Jim Michaels made the same point to me: "Seeing copy isn't the same as compromising copy." Moreover, says Morgenson, citing her own seven years as a writer and senior editor at Forbes, "I cost Steve Forbes $1 million in advertising revenues." In 1993, "I did a "tough piece on price-fixing at NASDAQ [the securities exchange]. NASDAQ pulled its ads and never returned." Morgenson adds: "I told this to Jeanie in September. She didn't use it." For the record, the notes Kasindorf shared with me show no such reference
to ads.
Yet, a passage in Kasindorf's story seemingly undermines some of Fortune's thesis that Forbes trades favorable editorial mention for advertising dollars. Kasindorf states that Forbes is "well known" for writing negative stories "about companies that advertise in its pages." Kasindorf then quotes "a former Forbes writer" as saying that "nobody . . . can figure out why they decide to burn some advertisers and why they decide to protect others."
When I pointed to this passage and suggested to Pearlstine that, absent a discernible pattern, there wasn't much of a gun at Forbes, smoking or otherwise, his reply was quick: "The pattern doesn't matter. The system itself has a chilling effect on the journalistic process: the head of sales is reading copy." Of course, Pearlstine acknowledged, anticipating the next question, "as editor in chief of Time Warner's magazines, I read copy before publication." The day before our interview, for instance, he approved, "without making one change," a takeout on Steve Forbes closing in People (it proved to be straightforward, perky, the usual People-plate). But Time Warner is different from Forbes: "I don't sell ads, I'm not the c.e.o."
As a one-time top editor at Forbes from 1978 to 1980, Pearlstine would have been in a position to know about "protected lists." Did he recall any favors to advertisers? "That was a long time ago." He paused; without going into any details, he offered, choosing his words, "nothing I know is at variance with what Fortune wrote about."
Once again, "everyone" seemingly knows about these practices. In a matter of a few calls I had no trouble finding editors and writers willing to talk about "pressures" and "lists" at Forbes . . . and also at Time Inc. and at their own magazines. Like Kasindorf, I, too, found it difficult to get these informants to go on record. One ex-Forbes writer, now at a competitor, declared: "Absolutely, there was a protected list -- but it wasn't unlike the 'system' at other magazines I know. No one ever really says 'do a positive story.' But if you come in with negative stuff, they might sit on it or turn it around in the editing process." Still, while at Forbes, this writer put through "some nasty pieces" about advertisers; "Sure, the editors 'de-nastified' them a little, but they were still tough."
One writer willingly went on the record. Christopher Byron was an assistant managing editor at Forbes from 1985 to 1989; "I sat at the same desk that Pearlstine sat at," he says. Byron also was at Time Inc. for the thirteen years before that. He now does a monthly column for Esquire. As Byron tells it, at Forbes he never saw a story "turned around, twisted, killed, or filled to please an advertiser." On the other hand, Byron is critical of the Time Inc. system: "Henry Luce owned the place and he read every word, too." As for Pearlstine, "he's the interface between editorial and the Time Warner owners."
Luce and his editors, however, never flew the elite to Tangier to entertain it with 200 Berber horsemen and 600 belly dancers. But last October, Time took forty business movers and shakers, plus an odd university president or two, on the eleventh Time Newstour, continuing a practice begun in l963. Flying in a specially outfitted L-1011 jet, the Americans -- Time called them "honorary journalists" -- met with world leaders in such news spots as Havana (Castro), Moscow (Chernomyrdin) and Bangalore (P. Chidambaram, India's commerce minister). A Time contingent including the top editors and advertising executives accompanied the c.e.o.-journos.
The fact is, there's a gray area at many publications where "advertiser friendliness" mixes and mingles with the editorial process. Alert writers soon master the "unwritten curriculum" of the news business: the people, ideas, zeitgeists that " we" as an institution like or don't like; the stories to do at cruising speed and the ones "to hit hard"; the times to float like a butterfly or sting like a bee.
The real offense is that this subject seldom gets talked about. John Huey says it would have been better if The Wall Street Journal or The New York Times had done the Forbes-advertiser story, rather than direct competitor Fortune. Pearlstine asks: "Where were the media critics, and the Columbia Journalism Review, all these years?"
Admittedly, it took Steve Forbes's candidacy to prod one news organization to turn over the rock of "protected lists" and "friends of the family" and force a look at the teeming world underneath. In the first two weeks after the Fortune story appeared, both The Wall Street Journal and U.S. News & World Report offered their own excavations from the Forbes files, citing friendly treatment of heavy hitters such as supply-side economist Paul Craig Roberts. Others became curious about Fortune's own corner under that rock; as cjr went to press, at least two other news organizations were working on investigations of conflicts of interest at Time Warner.
Whatever else the Forbes campaign accomplishes in 1996, it has helped journalism more carefully examine itself, in the mirror of its own ambitions and ideals. The secrets of the business may still be grubby, but not just the insiders know them now.
