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January 23rd's departure of Citigroup, Inc. (NYSE: C) executive Todd Thomson may have been helped along by his use of Citigroup's corporate jet to fly General Electric Company's (NYSE: GE) CNBC reporter, Maria Bartiromo from Asia. This is just the tip of the iceberg. Todd & Maria-gate Memo will follow the ongoing saga.
The New York Times Company's (NYSE: NYT) New York Times [subscription required] reports this morning that Maria Bartiromo has repeatedly appeared at events sponsored by CNBC advertisers. Are CNBC advertisers, in effect, paying for good press? Bartiromo's August 2005 interview with Thomson makes me wonder.
Bartiromo's attended alot of corporate events -- some for companies on which she's reported. For example, in 2006, she appeared at 46 events three of which were on behalf of Citigroup. She also appeared at events for Google, Inc (NASDAQ: GOOG), Charles Schwab Company, Inc. (NASDAQ: SCHW) and Dow Jones Company (NYSE: DJ), which publishes the Wall Street Journal.
As noted earlier, Bartiromo -- who is married to Jonathan Steinberg, son of financier Saul Steinberg -- flew back from Asia on Citigroup's corporate jet. She also flew back from Davos last year on Citigroup's jet and appeared at a Citigroup-sponsored awards event in London in 2005, as co-host of the event with another CNBC anchor, Simon Hobbs.
This morning's Wall Street Journal [subscription required] notes that Bartiromo has reported substantial pieces on Citigroup 11 times since 2004, according to its review of CNBC transcripts, including four interviews with Thomson. My review of the transcript of her August 1, 2005 interview -- just months before she was spotted having dinner at Daniel with Thomson -- makes it clear that Bartiromo failed to disclose her business relationship with Citigroup in the interview.
Moreover, in my view, the interview was a commercial for Citigroup and GE. For example, in reference to Citigroup's purchase of Legg Mason, Bartiromo gushed about what a "great deal" it was and Thomson praised CEO Jeff Immelt for GE's success in China and India.
This is not the first time that a GE employee has crossed the boundary between a professional and personal relationship with a journalist. After all, former GE CEO Jack Welch is married to the former editor of Harvard Business Review, a relationship that began as she was reporting on a story about Welch.
If there really is a personal relationship between Bartiromo and Thomson, the line crossing is more complex. First, To evaluate content, readers need to know whether there are business relationships between the advertiser and the reporter. Second, GE shareholders need to know why a CNBC reporter is required to fly on a corporate jet instead of finding a cheaper mode of transportation. And if that reporter needs to fly on a corporate jet, doesn't it create the appearance of a conflct of interest if the reporter is flying on an advertiser's jet? Finally, there's the rumored personal relationship between these two married professionals which puts into a different context Thomson's praise of Bartiromo -- "She truly understands business and brings clarity and authenticity to the table" -- in this Success story on her.
After the dot-com crash, CNBC began requiring analysts who appeared as guests to disclose their business relationships with the companies whose stocks they discussed. At a minimum, such disclosure should be applied to CNBC's own reporters as well.
Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches Management at Babson College and edits The Cohan Letter. He has appeared as a guest on CNBC and owns Citigroup and GE stock. He has no financial interest in Dow Jones, Google, New York Times or Schwab.
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Reader Comments (Page 1 of 1)
1-26-2007 @ 1:15PM
James J McDermott said...
Why does CNBC defend and permit duplicitous conduct by its' employees. Why don't they just come out and chastise the behavior as unacceptable and frought with conflict of interest.
1-26-2007 @ 5:18PM
MarkHainesIsHotter said...
I agree completely with everything written here. I'd like to here a senior executive of CNBC or NBC/Universal -- rather than a PR department hack -- come out and state publicly the GE position on these matters and the very valid questions raised here.
1-26-2007 @ 8:03PM
Edward Barkes said...
This is a real scandal caused, at best, by a major lack of judgement by two large corporations.
1-27-2007 @ 11:02AM
Thomas L Kenny said...
The true nature of CNBC is finally coming to light. They tout themselves as 'serious' business reporters but if you were to check their bios , you would find a serious lack of business education and/or business experience. Anotther example of CNBC's lack of ethicical substance is their duplicitous inreviewing of PIMCO's Bill Gross. Ron Insana has given Gross the tag line of 'Bond King' and is always very soft with the questions. What firm sponsors the Bond Report ? PIMCO !!!! Bill Gross has been so wrong for so long but no one on CNBC questions this track record on the air. Might it be because PIMCO pays CNBC for air time ?!
1-27-2007 @ 11:37AM
Pam Martens said...
Has mainstream media missed the big story here?
Without exception, including today's editorial plug from the WSJ, this story is being played as the valient Citigroup CEO Chuck Prince acting quickly to terminate Thomson for potentially using capital assets to influence a reporter.
As much as the WSJ would like to spin our brains into believing that Chuck Prince has cleaned up the corrupt culture at Citigroup, there is that pesky detail of the code named trade, "Dr. Evil," where his out of control traders attempted to rig the European bond market: a fiasco that Citigroup has never recovered from reputationally.
Given that Bartiromo's conflicts of interest with Citigroup date all the way back to Sandy Weill's era (such as her Citigroup stock ownership and her gushing plug of him on the book jacket of "King of Capital" and her softball interviews with him while the firm was a major CNBC advertiser)it is much more likely that Chuck Prince had a very different agenda in mind when he canned Thomson.
In my opinion, just as Weill terminated anyone who might be a serious successor, this is what Prince had in mind. Any idea that Prince has cleaned up Citigroup's act should be quickly dispelled by the details of the Dr. Evil trade.
Any idea that CNBC isn't in bed with Citigroup should be dispelled by their joint sponsorship of the Hong Kong-based business leadership awards last year and the 11 CNBC interviews over the last two years. Are we to believe Prince didn't know about that either?
Pam Martens
2-09-2007 @ 3:48AM
todd shriber said...
Great post. What's funny is that C's stock is still a dog despite Maria's (alleged) efforts to tout it. How many other major bank stocks would one be better off with before C? BAC, JPM, WFC. The list goes on! - Todd Shriber
2-09-2007 @ 4:05AM
todd shriber said...
this whole situation is very much like a lobbyist buying the votes of a congressman with meals and golf outings. I'll give GE the benefit for a nano-second. What are they supposed to do? Maria B. is their biggest star and it's going to be difficult for her not to report on a company whose event she may have attended or that her husband may invest in. (Though the latter scenario should be avoidable.) Flip side is should've known better and I think the C handling of this was bad. - todd shriber