Very rarely in business journalism do you see an instance of one prominent media outlet reporting on a business story and then another prominent media outlet reporting on the same story but essentially saying that the other media outlet got it wrong.
But that’s the case with the coverage of money manager Private Capital Management’s attempt to force newspaper chain Knight-Ridder to sell the company to another newspaper chain.
Here are the particulars:
Last week, the Wall Street Journal reported that the operators of PCM stood to receive a bonus payment of $300 million if it was able to keep Knight-Ridder’s stock at a high level — either through a sale of the company or other means. The story can be read here. The implication in the story was that the money managers were forcing the sale to ensure their big payday.
But now, business journalism heavyweight Allan Sloan, whose piece in this morning’s Washington Post basically refutes everything that was said in the Journal story. Sloan notes that the $300 million payment to the PCM guys is not based on how well the portfolio performs, but how much revenue the money manager generates for its owner, Legg Mason.
Said Sloan: “[T]he timing of [PCM manager Bruce] Sherman’s campaign against Knight Ridder, which became public on Nov. 1, has nothing to do with performance targets. Rather, I think, it has to do with Knight Ridder’s bylaws, which had a late November deadline for nominating dissident candidates for the company’s board. On Nov. 13, the company changed its bylaws and made the deadlines much later, a victory for Sherman.”
I wonder if the Journal will run another story correcting its earlier story, or simply write a correction. The problem with running stories like this in many cases is that the principals involved don’t talk, which forces the journalists to often make a leap of faith in interpreting what they’re reading in the public documents. While the Journal story shed some light on PCM’s operations, it was Newsweek’s Sloan who got the story right.