CorpComms Magazine

The member for North Essex was not happy. Bernard Jenkin suspected that the Treasury had leaked sensitive information vital to the nation's economy to the journalist Robert Peston.

In a written question to the Chancellor of the Exchequer, Jenkin demanded to know which Treasury advisers had given Peston information ahead of the Budget. Gordon Brown, the then-Chancellor, denied any leaks in a reply dated 10 July 1997.

Fast forward almost 12 years and Peston was facing more Parliamentary scrutiny of his journalism. This time he was not a hack at the Financial Times, but business editor of the BBC and, arguably, the most influential British journalist of the day. And this time, he would appear at the Palace of Westminster in person.

Rarely has the very ethos of journalism been so closely investigated. The idea of press freedom is ingrained in the British psyche, the raison d'être to inform and reveal the truth. But as unemployment makes its seemingly inevitable march towards three million and once thriving shops now face closure, journalists face accusations that their reporting has

been irresponsible and may even have deepened the crisis.

On February 4, the Treasury Select Committee finally called in five of the country's most important financial journalists to assess their contribution to the economic woes. The impressive cast list included Sir Simon Jenkins, columnist at the Guardian, and Jeff Randall, editor at large at the Daily Telegraph and Peston's predecessor at the BBC.

But it was Peston to whom the committee turned first. More than anyone in the media, he stood accused of undermining the City's confidence with a string of high profile scoops.  

NORTHERN ROCKED

When Peston revealed that Northern Rock had taken an emergency loan from the Bank of England in 2007, customers spent the next day queuing in the freezing cold to withdraw their deposits; Peston's report last year that several of the leading banks were in discussions with the government over part-nationalisation led to a £9 billion shrinkage in Royal Bank of Scotland's market capitalisation the following day.

'The publication of Peston's blog had an immediate impact on the RBS share price, and didn't give the company a chance to put forward its case,' bemoans a financial consultant with more than a decade of experience in investor relations.

The Daily Mail was moved to describe their journalistic rival as 'a market menace', and in a motion to the House of Commons, Liberal Democrat MP John Pugh accused the BBC of seeking to 'further dramatise, accentuate and underline economic woes'.

Following introductions, John McFall, chairman of the select committee, was blunt with his first question. 'Is there a case for journalists to exercise self-restraint and temporarily delay publication of a story, perhaps for a few hours or a day or two when there is a risk that immediate publication would trigger widespread market turbulence or lead to the collapse of a particular institution? Robert?'

The famously self-confident Peston replied: 'It seems to me there is public interest in letting millions of people know what is going on with their banks and what is going on with their economy.'

Talking to CorpComms Magazine, McFall says 'the last thing I want to do is inhibit journalism', conceding that the problems with the financial sector are 'systemic and have nothing to do with the press'.

But, he adds: 'I wouldn't say that journalists were perfect about it [their reporting].'

Senior corporate communicators who have covered the crisis point to a litany of stories that they deem incorrect and which have contributed to the hysteria.

One example relates to a bonus payment to former chief executive of HBOS, Andy Hornby. Last September, when Lloyds TSB had agreed to a rescue deal for its rival, it was reported that Hornby would receive shares worth almost £2m as a result of the merger. 'Reporters counted up the values of the shares in HBOS Hornby had bought himself and which he had lost money on, put it together with a possible payoff, and found the biggest number they could possibly get,' sighs one communicator.

IGNORANCE IS NOT BLISS

The news even hit the other side of the world. The NZ Herald followed up the story with a typical headline: Failed bank chief hits $5m jackpot. The less sensational truth was that Hornby had actually lost money on the shares he had bought in the market.

The problem is that the financial crisis has sent business stories, typically a specialised domain that is viewed as parochial by general reporters, to the front pages. Political and home news journalists have ended up covering stories in which they lack experience, leaving communicators exasperated that the reporters they have been talking to do not understand the weighty issues before them.

'There's a lot more spin on the front pages of newspapers,'

says one communications source. 'Those stories of bonuses at

banks... from the way that it is reported, you'd think everyone at a bank was an investment banker earning £1m a year. Mostly, these are people in retail banks, earning £18,000 or £19,000 a year, who'll be lucky to get a £1,000 bonus for hitting their quarterly targets.'

Lesley McLeod, executive director of communications at the British Bankers Association, points to articles about Northern Rock as an example of where journalists ignited the situation.

'People don't understand that when they deposit money into a current account it is not held as physical money. I have colleagues who have worked in high street banks and have seen people mark the notes that they deposit thinking they'll get the same ones back,' she says.

In other words, reporters should have made it clear to Northern Rock customers that, despite the problems, the money in their accounts was safe. By failing to do so, customers withdrew as much as they could, causing the infamous run on the bank.

But McLeod admits some fault among communicators. 'A lot of these general reporters probably take copy from the Press Association, which is fine, but then want to add their own twist to it. Then they might end up no longer understanding what they're writing. Perhaps there is a role for us in that, people like me taking more time to explain business issues to them,' she says.

BROADCAST MAYHEM

The alleged sensationalism is no better in the broadcast media, a senior financial services public relations executive argues. He points to the two-day hearing that saw former and current bosses of leading high street banks questioned by the Treasury Select Committee.

On the first day, Sir Fred Goodwin and Sir Tom McKillop, respectively the former chief executive and chairman of RBS, took their seats beside Hornby and Lord Stevenson, previously the top two at HBOS. The stories led Sky News, the BBC and ITN, for what amounted to little more than a collective apology and the supposed revelation than none of the four held a banking qualification.

The second day saw their successors in front of the committee, which wanted to know how they were going to get the banks out of their mess. 'That was a far more important, substantive session in that it was explaining what was going on and yet wasn't even mentioned in at least one of the major early evening news programmes,' says a leading communicator.

And the communications sources point to what one describes as a 'herd mentality' - that many reporters simply follow broadcast stories, those that make up the so-called '24 hours news agenda'. As a result, the first select committee hearing received a similar amount of disproportionate coverage in the newspapers the following day. 'We've found that whenever Sky News reports business news, the newspapers almost take their editorial lead from it and are on the phones to us within minutes,' says one PR executive.

SHOOTING THE MESSENGER

However, credit crunch journalism does have its defenders. Vince Cable, the deputy leader of the Liberal Democrats, has become a bit of a media star as a result of the crisis. A former chief economist at oil giant Shell, his expertise shines through during media interviews.

He describes the attacks on journalists as 'utterly perverse', adding: 'It was the bankers, the failures of financial regulation and politicians that exacerbated the crisis. Northern Rock, for example, was about reckless management, not a journalist.'

But at the select committee hearing of journalists, Alex Brummer, City editor of the Daily Mail seemingly damns his profession by his own words. McFall points to page 204 of Brummer's book, The Crunch, which stated that the BBC's 'excitable reporting' might have contributed to the run on Northern Rock.

Brummer replied that the problem was tone, not substance. 'Maybe if he [Peston] had a calm, traditional BBC voice it might not have quite seemed [as bad] as it did,' he said, referring to Peston's unique speech pattern that sees him overemphasise almost every word.

But whether Peston's journalism has enlightened or financially endangered his audience, it seems a bit harsh to blame a credit crunch and a recession on the way the man talks.  

share me: del.icio.us | digg | reddit | Tweet