The Uneasy Aftermath of the ABC Settlement   

In just three weeks in August, Capital Cities/ABC fell from the zenith of being worth $19 billion to the Disney Co. to the nadir of being slammed daily in print for two weeks after apologizing to tobacco companies. The low point of the ordeal found the network in the position of admitting to a mistake in an investigative report asserting that the Philip Morris and R.J. Reynolds Tobacco companies "spiked" their cigarettes with significant amounts of nicotine from "outside sources."

As ABC News staffers seethed over each successive media slam, some began to blame Cap Cities' business policies. Those critical of ABC's decision to admit defeat in the more than $10 billion dollar defamation suits filed against the network by Philip Morris and R.J. Reynolds say the precedent set by the case has serious implications for the future. They're worried that the bottom-line mentality of corporate owners puts investigative journalism at risk.

One investigative producer says ABC's willingness to turn over the detailed expense records it requires from reporters, combined with its unwillingness to defend the reporting of its correspondents in court, "scares the hell out of me and signals the inevitable death of investigative journalism."

Some ABC News producers blame the cost-cutting approach instituted by Cap Cities 10 years ago for ABC's decision. That ignores the opinion of others at ABC that what was described early on as Cap Cities' "penny-pinching" left the news division in a strong position to protect its leadership during the recession and subsequent advertising slump of the late '80s and early '90s.

Half a dozen ABC investigative reporters and producers, who spoke anonymously because of tough news division orders barring contacts with the press in regard to the case, suggest that if Cap Cities settled the suit for business reasons, it raises a number of troubling issues.

ABC News insiders say that in spite of the company's libel insurance, too much was at risk to fight the tobacco companies' potentially exorbitant suit. ABC's insurance, they say, wouldn't even begin to cover a judge or jury award into the billions of dollars. Many ABC News staffers suggest that mere exposure to such financial risk, especially in the face of an impending closing on Disney's purchase of the network, did not set the stage for gutsy decisions on ABC's part.

One veteran media lawyer recalls the days when media owners and publishers were aggressive in defending their stories because "settlements were thought to be like honey to a fly, only leading to more suits." ABC News staffers contend that network lawyers no longer have carte blanche to fight through trials and appeals, since it's more costly than reaching a pretrial settlement. But ABC News is currently in the process of vigorously defending a number of cases, such as the Food Lion suit over a 1992 "PrimeTime Live" hidden camera report alleging the supermarket chain tricked customers into buying spoiled meat, fish and poultry.

Former ABC News investigative producer Stanhope Gould expresses concern that "if makers of defective or dangerous products understand news organizations aren't going to slug it out in court they'll be suing right and left." On the other hand, some news organizations, such as the New York Times, already have no-settlement policies in place.

Another common concern expressed by ABC News staffers is the risk of a chilling effect on sources, given the precedent set by the Philip Morris case of subpoenaing expense reports. Philip Morris went all out in going after vouchers submitted by ABC correspondent John Martin and producer Walt Bogdanich, hoping to trace their steps and reveal the primary source for their story, nicknamed "Deep Cough."

ABC investigative producers say they're uncomfortable providing the level of voucher detail required by Cap Cities, which includes even such specifics as pickup and drop-off points for taxi rides.

Veteran "60 Minutes" producer Lowell Bergman says he's able to protect his confidential sources by simply not naming them, although he doesn't have the leverage he had in the '70s when his contract specified he would never have to disclose names in vouchers. Now, says Bergman, "people managing media companies have no idea what investigative reporting really means. They want it, but don't want the consequences."

Another question raised by insiders at ABC News concerns the apology itself. Why, they ask, would ABC News admit to a mistake but reward the journalists who supposedly made that mistake with long term contracts? If you're wrong, they say, issue a correction and punish the people who were responsible. If you're right, they counter, don't cave, especially since the critical word "spike" was in a "Day One" teaser and was never used in the story.

Either way, says Berg-man, it was a minor mistake, and "a decision to issue an apology and pay legal costs would have been made by people thinking not about the reporting, but about their own future and the profitability of the company."

In their defense, Capital Cities/ABC officials argue that they corrected just one mistake, taking care to stand by the thrust of the story. ABC News Executive Vice President Paul Friedman told the Washington Post that ABC has continued to report aggressively on the tobacco industry, and that "the vague idea that we've pulled in our horns is bull."

Not everyone agrees. The end result of the case, says one discouraged ABC News investigative producer, may be a tendency to go after soft targets, resulting in a spate of stories chasing after government waste and Pentagon spending, while avoiding the more hard-hitting product liability cases.

Gould's warning is one shared by many ABC News insiders: "The danger is you'll have to pay attention to the ability and likelihood of a company suing, and it will affect your decision on what stories to do."