Why press leaks are necessary

Marketwatch editor David Callaway wrote a column published Thursday about why leaks to the business press are so important. He cites as example No. 1 the growing scandal with Hewlett-Packard.

Callaway wrote, “Huge amounts of money and resources are spent each year teaching executives how to go on CNBC and get maximum exposure while not saying anything about their companies. Consultants and public relations managers make careers out of advising companies how to disseminate — or leak — only good news while hiding the bad.

“For an example, I look no further than my desk. On it is a note from the people running the Bank of America investment conference in San Francisco this week. Titled ‘Press Guidelines,’ the note lists a half a dozen things that journalists who attend sessions with corporate speakers are prohibited from doing. One of them is ask questions during or after the speech. Another is approach the speaker after the speech. A third is no taping of speeches.

“These so-called guidelines are presented as though they are designed to let paying conference attendees ask the questions. But they are really just another way to prevent executives from having to answer tough questions about any parts of their business they choose not to discuss. Perhaps the thinking is that press questions are just not important.

“So it’s against this stacked deck that the financial media tries its best each day to get real news out of companies. Think about the past week of news. What were the most interesting stories? The collapse of the Amaranth hedge fund? The continuing H-P debacle? The Ford restructuring? All of these were leaked in advanced. Yes, every single leak had a motive behind it, which a journalist must think about before publishing. But in the end, the leaks made it possible for a fuller story to get out, and the shareholders and general public benefited from that fuller story.”

Read more here.