The reports are there in black and white, telling tales of philandering, public drunkenness–even mooning colleagues at a social function.
Must be those politicians, you say, confirming the worst of our suspicions.
Try again.
They are chief executive officers and other high-ranking officials at some of the nation’s more prominent corporations, caught in the act of professionally questionable behavior and covered by a diverse array of media, from The Wall Street Journal to Vanity Fair.
CEOs and their companies long have been the object of certain kinds of polite media scrutiny, but now it has become tougher and more personal. Recent evidence suggests that the spotlight aimed at presidents and other politicians is slowly but certainly being turned on corporate chieftains.
“Not only has the private sector become much more a part of the public policy debate, but the corporate superstars have replaced Hollywood,” said veteran media observer Charles Eisendrath, director of the Journalism Fellows Program at the University of Michigan. “They are genuine actors on the public stage.
“The downside of being a media star is that you get media scrutiny, which is very much as it ought to be,” Eisendrath said.
Economic as well as journalistic reasons lie behind this, and both types reflect a perception that the real power in this country has shifted from Washington to the corporate suites. To Bob Duncan, the Thomas professor of leadership at Northwestern University’s J.L. Kellogg Graduate School of Management, the developing trend is justified and overdue.
“The genie’s out of the bottle in terms of scrutiny of CEOs. What drives it is the greed and hypocrisy of these (corporate) individuals.
“They’re being hard-nosed about downsizing while they are being paid exorbitant salaries,” Duncan said. “People have become cynical about that, and the media is just reflecting the larger society. The more scrutiny the better.”
To be sure, most newspaper business sections are still gray, containing a hefty dose of wire copy and rewritten company press releases. And there still is plenty of corporate bootlicking and unquestioning hero worship to be found in much of the business press.
But a gradual change is under way. As President Clinton said in an interview this month, “I think we live in a time when it’s become more fashionable to puncture holes in all the icons of society, which is to some extent all right.”
Messy, perhaps, but most of the time all right. However unsavory these stories may be, the behavior–even in their personal lives–of top executives can reflect their character and have a direct and critical bearing on the performance of companies, from employee morale to the rise and fall of earnings.
Of course, it wasn’t always that way. Just as gossip columnist Walter Winchell redefined entertainment reporting in the 1930s and Sen. Gary Hart unwittingly helped launch a much more personal and intrusive form of political reporting in the ’80s, the tone and approach of business reporting is undergoing its own transformation.
A recent issue of BusinessWeek featured a cover story on Silicon Graphics Inc., a computer company that has seen its fortunes tail off. The story reported that CEO Edward R. McCracken “began a public relationship with a young SGI employee. Their displays of affection shocked some workers. Says a former colleague: `When people are walking around in a funk, and Ed is walking around with stars in his eyes, they say, `What’s going on here?’ “
The same article reported SGI’s former president and chief operating officer, Thomas A. Jermoluk, admitted “he and several colleagues once mooned SGI employees at one of the company’s annual lip-synch contests.” And on another occasion, said a former manager, “Jermoluk was drinking; he threw up at a poolside sales meeting in Hawaii.”
Vanity Fair recently wrote about ABC News President David Westin’s reported relationship with ABC executive Sherrie Rollins, the estranged wife of Republican political consultant Ed Rollins.
In December, The Wall Street Journal reported on the drinking problems of Don Ohlmeyer, NBC’s top programming executive who later checked himself into the Betty Ford Center.
“Mr. Ohlmeyer was often visibly inebriated at the after-work company functions, sporting events and industry parties that are a crucial part of doing business in the entertainment industry, according to numerous people who observed his behavior,” the Journal said. “Reports filtered back to NBC’s New York headquarters that the 51-year-old Mr. Ohlmeyer had made inappropriate advances and comments to young women staffers at NBC and client companies.”
The story also said that Ohlmeyer “propositioned several women” and “approached a publicist, handed her his room key and asked her to visit him.”
A spokeswoman for General Electric Co., the parent of NBC, responded to the story by saying: “The Wall Street Journal appears to be reveling in personal anguish.”
Not all of the coverage is so personal. For instance, GQ magazine recently took brokerage firm Kidder Peabody to task for its firing of rogue trader Joseph Jett in 1994. An arbitration panel ruled in 1996 that claimants had not proved Jett committed fraud.
Overall the direction and tone of business reporting is harder and more probing. In a time of increasing media competition–especially in the business arena–the definition of “news” is changing. As always, competitors feel the need to make their coverage stand apart from the others. Tougher coverage also mirrors more aggressive shareholder activism.
The political hero has been replaced by the patriotic corporate champion–Lee Iacocca, H. Ross Perot, Bill Gates–executives often portrayed in fawning, almost godlike terms. As opinion polls show declining faith in the ability of government to solve problems, corporations and their executives are being viewed as the source of real power, of real solutions.
“We’re in an anti-politics age,” said Larry Sabato, professor of government at the University of Virginia. “What is the power center? It is corporate leaders.”
Millions of Americans have felt the effects of corporate reorganizing and downsizing. Millions more have a bigger stake in the stock market through the performance of mutual funds and other securities. Financial self-interest dictates that corporations deserve a much closer look from the media. Media companies are not immune from that attention. Walt Disney Co. and Time Warner Inc. are among the ones that have been growing exponentially in the last few years.
AT&T left itself open to criticism last year when it announced the layoffs of 40,000 employees. Newsweek featured AT&T chairman Robert E. Allen in a cover story entitled “Corporate Killers.” The long-distance giant was back in the news in June with the announcement of the abrupt departure of John Walter, hired only eight months earlier to be Allen’s heir apparent. Walter was given a severance of about $20 million.
“Corporations have earned it,” Duncan said of the criticism. “They talk about the marketplace and the importance of performance, but you see them screw up and (their executives) are being compensated handsomely while the organization goes through downsizing.
“There’s a lot of cynicism growing that as organizations tighten up, that doesn’t apply to CEOs. . . . The working public is saying something has to be done at the top.”
Sabato said the increased media attention is a natural outgrowth of journalists’ perception that corporations are unchecked and very wealthy power centers.
“Is it legitimate to criticize salaries? Sure, but keep in mind this is a free-enterprise system,” said Sabato, who wrote “Feeding Frenzy: How Attack Journalism Has Transformed American Politics.” He believes it is too soon to judge whether the media will instill the same sense of public cynicism toward corporate America that exists in politics.
But the danger exists, he said, because many stories about corporations “are overly simplistic, portrayed as guys in white hats versus guys in black hats.”
The shift to greater corporate scrutiny does not mean that politicians, among them New York Mayor Rudolph Giuliani, can breathe easier. Giuliani, who is married, allegedly has been “intimate” with his communications director, according to the current edition of Vanity Fair. Guiliani denied it, and the response from some of the mainstream media condemned the report.
“The coverage of sex and politics still sells, but it’s beginning to feel mechanical and tiresome. Maybe we’d all be better off faking a headache, rolling over and reading something significant for a change,” observed Newsweek columnist Jonathan Alter.
Don’t bet on it. Politicians will always be the plentiful fish in the journalistic barrel because the skeptical public no longer is inclined to give public officials the benefit of the doubt. Information about them is easier for journalists to obtain and–significantly–politicians are less likely to sue when attacked.
In contrast, corporations are secretive, for proprietary and other reasons. Their documents are often technical and difficult to understand. They are a major economic lifeline for the media through advertising. And, significantly, they often house an arsenal of aggressive lawyers. This should hold some of the journalistic hounds at bay.
But not all of them, apparently, and not all of the time.
