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CNN RELIABLE SOURCES

ABC Names Some of DC Madam's Clients; Murdoch Bids for 'Wall Street Journal'

Aired May 6, 2007 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
HOWARD KURTZ, HOST (voice over): The network and the madam. ABC' Brian Ross names some of the clients of Jeane Palfrey's Washington escort service, but only a few. Did ABC show restraint, invade the men's privacy, or indulge in a tawdry tale for sweeps week?

Murdoch's move. The media mogul makes a bid for "The Wall Street Journal". Should the man who controls FOX, the "New York Post," "The Times" of London, a cable network, a movie studio, and a book publisher have that much power? And would a takeover help "The Journal" or tarnish it?

Plus, Chris Matthews versus the Republican candidates.

And Imus in the courtroom? Why the radio host plans to sue CBS for dumping him.

(END VIDEOTAPE)

KURTZ: After weeks of possession of hottest list in town, the phone records of the defendant known as the D.C. Madam, ABC News had to decide whether to name names. The journalistic dilemma was whether to identify some of the clients -- there are roughly a thousand of them -- of the high-end escort service run by Deborah Jeane Palfrey, who openly admitted she wanted to use the media to aid her defense.

On "20/20" Friday night, ABC's Brian Ross interviewed Palfrey and we got the answer.

(BEGIN VIDEO CLIP)

BRIAN ROSS, ABC NEWS: How do you define legal sex?

DEBORAH JEANE PALFREY, PAMELA MARTIN AND ASSOCIATES: Well, illegal sex is prostitution, which is either intercourse of any time or oral sex. Anything else is considered basically legal.

ROSS: There were no members of Congress that we could find in these phone records. No White House officials. Quite frankly, but for the few exceptions, most of the men on this list just aren't newsworthy.

(END VIDEO CLIP) KURTZ: Ross named only two men who had only been identified and one female employee of the service who committed suicide in January after being charged with prostitution. This follows a heated media debate over whether men patronizing the escort service, which authorities say is a prostitution ring, should be outed.

(BEGIN VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR: Some nervous people here in Washington and beyond.

JOHN GIBSON, FOX NEWS: The big Washington sex scandal, it's what everybody wants to know, which Washington heavyweights are on the D.C. Madam's mysterious client list?

JUJU CHANG, ABC NEWS: The woman dubbed the "D.C. Madam" is vowing to name names.

BILL O'REILLY, FOX NEWS: If it's a big gun, then you've got the voyeurism factor, and everybody's going to want to know. And you've got a scandal all over. But if it's just a bunch of guys working for a living, it's wrong.

JOE SCARBOROUGH, MSNBC: Would ABC News have us believe that they just so happened to drop it, you know, again, in the middle of sweeps month, and drop it at a time after they've been hyping it throughout the week?

(END VIDEOTAPE)

KURTZ: MSNBC's Tucker Carlson called in his own experts -- the owner of a Nevada prostitution service and two of his women.

(BEGIN VIDEO CLIP)

DENNIS HOF, OWNER, MOONLIGHT BUNNYRANCH: This lady, this madam dirt bag, you're giving up your clients? There is an oath. When you take on this business, there's an oath of privacy. And you have broke it. You should be ashamed.

(END VIDEO CLIP)

KURTZ: Joining us now, Mark Feldstein, a former CNN correspondent who now teaches journalism at George Washington University; David Zurawik, television critic for "The Baltimore Sun"; and Amy Argetsinger, co-author of "The Washington Post" "Reliable Source" column.

All right. A quick answer from each of you to this question

We'll start with you, David.

Put aside the media hype for just a second. Was this a solid and enlightening television report?

DAVID ZURAWIK, "THE BALTIMORE SUN": It wasn't. The good news about it is that they walked up to that line and didn't cross it, where they didn't name names of people who were not involved in public policy or had taken strong stance. That was the good news.

But they let -- what Brian Ross did is he let the madam drive this narrative. When they talked about -- right after he said that he didn't have any names in Congress or the White House, he then said, but there has been one victim, and he talked about the professor from Baltimore who committed suicide.

They mischaracterized that story to make her sound like a total victim, when it's much more complicated, and the facts were available. He let Palfrey define her.

KURTZ: All right. You're over your limit.

Mark.

MARK FELDSTEIN, GEORGE WASHINGTON UNIVERSITY: Substantive? Look, it was three-quarters gossip, one quarter news. But there was some newsworthy elements.

You know, prostitution is illegal, although it's alleged, not proved. So if had you high-profile people getting into it, members of Congress, that would have been interesting. Unfortunately, they really only caught a few minnows who had already come out before.

ARMY ARGETSINGER, "THE WASHINGTON POST": I'm of two minds. On the one hand, you know, ABC took a sort of a bold move. They were losing a little bit of face by presenting a story that was resoundingly unspectacular, but in the name of deciding this is not newsworthy, they took somewhat of a moral high ground.

On the other hand, as someone who works in the gossip field, I was a little put off by the fact that they did tease out things like a senior World Bank official, you know, economists, things like...

KURTZ: There were people in NASA, there were officials in the military.

ARGETSINGER: But here's the thing -- it's like a blind item, because now everyone who is in those fields is playing that guessing game -- "Oh, I'd like to know who the senior World Bank official is."

KURTZ: Well, Brian Ross told me that these people just simply weren't prominent or newsworthy enough to name. Is that a good standard? I mean, if you're a -- if you're a midlevel military official, if you're not prominent enough, but if you're a former deputy secretary of state, like Randall Tobias, who resigned after he was confronted by Ross, then you should be named?

Why is that the standard?

ZURAWIK: I think -- because I think there is some expectation. And honestly, I think it's the standard we're working with here.

But Howard, I want to stress this, they tried to cut it both ways, and they did. They had a full week of hyping this thing on their Web site and on "Good Morning America" with this line right out of the sweeps -- "Who will be the next to fall?" That is the sleazy part of it.

And the when they didn't name any -- you know, I have to say, I suspect some viewers Friday night felt like Al Capone's vault, the Geraldo Rivera special.

ARGETSINGER: They weren't planning to come out with more names until the reporting in the final days. It just plain didn't bear it up. And that's what I have to wonder. I mean, should they have been teasing out those things?

UNIDENTIFIED MALE: Yes, I agree.

ARGETSINGER: You know, a White House economist who turned out not to be a White House economist.

KURTZ: Well, you traffic in gossip. Would you have published the names of midlevel government military officials who were using Jeane Palfrey's escort service?

ARGETSINGER: No, because these names are not familiar to people.

KURTZ: What about a cabinet member?

ARGETSINGER: Probably.

KURTZ: What about Hugh Grant?

ARGETSINGER: Oh, yes.

(LAUGHTER)

KURTZ: Mark Feldstein, prostitution, as you mentioned, is against the law. There are small newspapers in this country that publish the name of johns who are arrested. So, is there a double standard here? She gets prosecuted, and ABC let's the men off the hook?

FELDSTEIN: There is a double standard, and ABC made that point in their broadcast. And you can make the argument that maybe even these smaller fish ought to be identified when, let's face it, Palfrey was not a household name either.

I mean, yes, it was one long tease. Yes, there was pandering, both in the legal sense of prostitution, apparently, and in the media sense of dangling it out.

KURTZ: Randall Tobias, as I mentioned resigned. He was the deputy secretary of state. Most people in the country hadn't heard of him. So why the decision to name him?

FELDSTEIN: They had a tenuous -- two things. Tenuously, he was in charge of prostitution -- or involved in trying to oversee trafficking in his job. KURTZ: Cracking down on prostitution worldwide.

FELDSTEIN: Cracking down on it. So there is the hypocrisy angle.

Secondly, he was the most prominent of the not-very-prominent johns that they identified.

KURTZ: And you keep talking about the promotion, but as we saw at the top of this segment, everybody got in on this. Everybody was doing stories on television, stories in "The Washington Post," stories in other newspapers about this, because it was seen has providing a look at sort of the hidden side of the nation's capital.

Is that not fair?

ZURAWIK: Howie, the thing is, you know, people talk about this in terms of May sweeps, in terms of that context. And they really did for a full week promote this.

Here's the dishonesty of this. Two things. One, saying we're going to name names, then not naming names. Bringing people into the tent.

You know, the job of May sweeps is for the networks to drive viewers to those affiliates. I think they did that Friday night, if the viewers weren't so mad at 10:15 that they tuned out.

KURTZ: But -- go ahead, Amy.

ARGETSINGER: But were they actually promoting this heavily? I mean, if you're a news junkie like any of us, you're very well aware of it. But if you're the average viewer, were they advertising this during "Desperate Housewives" or "Lost"?

ZURAWIK: They were -- well, they were doing it on "Good Morning America," which is -- which is a big show with a lot of viewers. I mean, you're talking of an audience of 10 million viewers. I'd call that heavy promotion, yes.

KURTZ: But, in fairness, ABC didn't decide until the final days to how far it was going to go in terms of identifying people. Brian Ross told me he personally called 25 to 30 men who were on this list, and they had to make judgments about were they (INAUDIBLE).

It's funny. There was one guy who told the escort service he is a White House economist. It turns out he was an analyst who worked across the street from the White House in an obscure government agency.

FELDSTEIN: Look, sex sells. I don't know why you should be so outraged or surprised.

We live in a capitalist system. The news media is -- you know, sells, is there to make a profit. Sex sells. You know, the very first newspaper in the U.S. did a sexpose in 1690 and got shut down soon thereafter. This is as American as apple pie.

ZURAWIK: I'm not -- I'm not upset about sex sells, Mark, as much as it is this. Let me tell you what happened journalistically.

When they -- when they couldn't name names and they shifted the narrative to "But there has already been a victim," this woman that they identified as a victim, this professor at the University of Maryland, she's -- it's a totally different story than the one Palfrey gave. Palfrey said she was at the top of her profession, utmost in respect. Actually, she had been fired from the University of Maryland Baltimore County, not University of Maryland. There were charges that she falsified data in research.

There is a whole list of things, and she left the university in 1999, not last October, as Brian Ross implied. This was a dishonest piece because they got themselves in this box with all this hype. And they had to give viewers something.

ARGETSINGER: Any student of scandal, though, should not have been surprised at 10:15 Friday night when nothing big came out. The truth is, if ABC was going to present any bigger names, we would have heard about them ahead of time. Randall Tobias, I mean, that was their one big fish. He stepped down...

KURTZ: But in fairness, ABC didn't identify Randall Tobias at the time. The fact that he resigned...

ARGETSINGER: But they were going to.

KURTZ: ... before -- they said they would have anyway because of the job that he had. All right.

ARGETSINGER: ABC almost couldn't have had any surprises in that, because if anyone important had been implicated, they would have stepped down, it would have been a news story, it would have leaked out ahead of the broadcast.

KURTZ: Final question, honest answer.

Is Washington so dull that even its sex scandals are boring?

(LAUGHTER)

FELDSTEIN: Yes. But, so -- you know, the Hollywood madam and the Mayflower madam, they didn't have any really, you know, big impact either ultimately.

ZURAWIK: And they made a sweeps TV show with Candice Bergen about the Mayflower madam. I don't think this one is going to make...

KURTZ: Well, here's my two cents. I think ultimately ABC did the right thing, resisting the temptation to single out a couple of guys and pump up the story, ruining their lives, when, you know, look, this wasn't the Mark Foley situation, where he was hitting on House pages. This wasn't Bill Clinton, involved with a former White House intern. It was the oldest story in recorded history, paying for sex, or sexual fantasy, as Palfrey says.

So -- well, we'd like to hear what you think. Should ABC have named more of the names of the clients of the D.C. madam? Send us your thoughts at reliable@cnn.com.

David Zurawik, Mark Feldstein, Amy Argetsinger, thanks very much for joining us.

When we come back, Chris Matthews plays hardball with the GOP. Was he fair in this week's presidential debate?

And later, things take an ugly turn in the case of Imus versus CBS.

Later today, 1:00 p.m. Eastern, join CNN's Tom Foreman for "THIS WEEK AT WAR".

Here's a preview.

(BEGIN VIDEO CLIP)

PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: This kind of homegrown recruitment could be potentially the greatest threat to the United States right now.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: There has been a coming together. This is a positive step.

UNIDENTIFIED MALE: Al Qaeda is recruiting people abroad and here in this country.

OCTAVIA NASR, CNN CORRESPONDENT: They see the war on terrorism as a war on Islam.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: This is all about the president trying to recalibrate what success means.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

KURTZ: There are 10 Republican presidential candidates. You can name them all, can't you? And they faced off this week for their first televised debate with each other, and the not so low key Chris Matthews. He soon turned the MSNBC debate into another edition of "HARDBALL," spewing out questions faster and faster and faster.

(BEGIN VIDEO CLIP)

CHRIS MATTHEWS, HOST, "HARDBALL": Governor, would the day that Roe v. Wade is repealed be a good day for America?

Why do you support the use of public funds for abortion? Has the increased influenced of Christian conservatives in your party been good for it?

Terri Schiavo, should Congress have acted or let the family make the decision -- the husband?

Governor, should Bill Clinton be back in the White House? Is it good for America?

(END VIDEO CLIP)

KURTZ: Joining me now, conservative commentator Amy Holmes, and John Aravosis, who blogs on the liberal site americablog.com.

Amy Holmes, this thing moved so quickly it was kind of like speed dating. Chris Matthews spent a lot of time on abortion and social issues. Was that fair to the Republican candidates?

AMY HOLMES, CONSERVATIVE COMMENTATOR: Well, it is a central concern for republican primary voters, and Giuliani, with federal funding question, sort of, you know, put himself in a bit of a quandary there. So, I thought it was fair to go after that, but as much as he did, I think it was a little excessive.

KURTZ: The conservative indictment, John Aravosis, is that the liberal media loves to talk about Republicans and abortion because it's seen as a divisive issue.

JOHN ARAVOSIS, AMERICABLOG.COM: I would be ecstatic as a liberal if Republicans would stop talking about abortion. No. I mean, I think the perception out there is that the Republican Party certainly is very concerned about social issues. The religious right, or conservative Christians, or whatever you want to call them, are a major base of the party, and therefore these issues are relevant.

And frankly, I think that was some of the most telling part of the debate, was to see somebody like Giuliani especially pushed on these issues, because he did squirm a little. On abortion, he kind of went both ways, and that's interesting.

KURTZ: And on that point, he said it would be OK if Roe versus Wade were repealed, it would be OK if it wasn't repealed. He didn't -- wasn't crazy about public funding of abortions, but he did support that when he was mayor of New York.

All the...

HOLMES: It was not his finest hour.

KURTZ: But all the coverage about this debate focused on that. Is that -- was that because it's the most newsworthy thing? Is that -- it doesn't trouble you at all?

HOLMES: Well, you know, it troubled me that -- you know, it used to be -- I remember in 1996 there was all this hand wringing about -- talking about the horse race. Well, that's out the window. It is a horse race.

The media is cover this, who is up, who is down, stylistic points. And I thought what I saw in the Republican debate that has not been discussed, that each of the candidates was so comfortable saying, I'm a conservative, I'm even more conservative than the guy next to me. And they were willing to talk about conservative governing philosophy, and the media didn't cover that all.

(CROSSTALK)

ARAVOSIS: They did thought. But the did. But the Ronald Reagan thing did become a major part of the debate. I thought it went a little overboard, but one would argue -- and certainly -- but it was there.

HOLMES: But in terms of the media coverage, it didn't get really into the meat and the substance of what the candidates were saying. It was, was Mitt Romney presidential? Did Giuliani not look as good as he has in the past?

KURTZ: There was a lot of that.

ARAVOSIS: Right.

KURTZ: But Mitt Romney was asked a question about whether government should interfere when Catholic churches deny communion to politicians who support abortion rights.

ARAVOSIS: Right.

KURTZ: Now, it can't be a coincidence that he's a Mormon and he got that question.

ARAVOSIS: No, not at all. But that -- but again, that's -- that's an interesting point to push Romney on.

He is a Mormon. We haven't had a Mormon -- well, we haven't had a Mormon president before. And if he becomes president, we'll have a Mormon president and a Mormon head of the Senate, which is kind of fascinating. Two of the three jobs will be Mormon. It's interesting, and I think it's a fair point to ask the man about.

HOLMES: I thought it was silly.

ARAVOSIS: Why?

HOLMES: And in fact, I thought Mitt Romney's answer was, you know, brilliant, and that most Americans would agree. Like, government obviously shouldn't be involved in the Catholic Church. He said something, why...

(CROSSTALK)

KURTZ: You said he should be -- journalists should push him on being a Mormon?

ARAVOSIS: Absolutely. Look, the Republican -- I won't even just say the Republican Party. All right?

The religious right believes that their religious views should be viewed in all policy. Whenever we discuss gay issues, social issues at all, the bible ends up coming up.

HOLMES: But John, that's not fair. That's not fair.

ARAVOSIS: Why should we not -- but that's exactly...

KURTZ: Did you believe that journalists should have...

ARAVOSIS: We're not talking...

(CROSSTALK)

KURTZ: Did you believe that journalists should have pushed Joe Lieberman on being an Orthodox Jew?

ARAVOSIS: If it -- if it was relevant to his position on issues, absolutely. But -- look, I'm sorry. I think -- was it Huckabee -- I don't know -- who made the point during the debate which I agree with totally as a liberal Christian, or whatever, was you can't go say you're a Christian and that these -- your beliefs in God and the bible and everything influence your views, and then turn around and say, but, hey, those views, never going to have them actually influence the decisions I make on policy. Either you are or you aren't a good Christian, and it does influence, what you -- what position.

HOLMES: But Democrats are Christians, too, and they don't get pushed on these questions in this debate.

ARAVOSIS: Well -- but they do not embrace religion in the same way that Republicans do as far as the agenda.

HOLMES: But Howie, I thought the silly questions were actually what seemed to be sort of Chris Matthews' hardball preoccupations, the questions about Karl Rove, Scooter Libby, Terri Schiavo, Bill Clinton. It didn't tell us anything about the candidates. It didn't inform the viewer or the voter of who these people are.

(CROSSTALK)

KURTZ: All right. We have agreement on that.

Now, Republicans were willing to participate in an MSNBC debate with a guy who used to work for Jimmy Carter and Tip O'Neill. Should Democrats be refusing to debate on FOX News?

HOLMES: No.

ARAVOSIS: Yes.

KURTZ: Why are they?

HOLMES: Why are they refusing? Maybe they are worried that they're going to get tough questions the way Chris Matthews was pushing, you know, Mitt Romney on his Mormonism or Giuliani on abortion.

ARAVOSIS: Because FOX News isn't a real news network. It's a Republican Party propaganda organ.

Chris Matthews, on the other hand, has gotten a lot of criticism from the left that people feel he's gone too far right over the years. So I think at least Matthews, it's debatable what side of the party he's on. Sort of like George Stephanopoulos now.

Stephanopoulos has cleansed himself of the liberal thing. I mean, he goes after everyone.

FOX News doesn't go after everyone. They go after liberals.

KURTZ: Well, I would just say, if you can't handle questions from Brit Hume, how can you...

ARAVOSIS: Why give Brit Hume the opportunity, is the point, Howie. You're -- some people -- some people say are you left, some people say are you right. I think are you fair. I do not think Brit Hume is fair. There's a difference.

KURTZ: I would disagree with that.

But let me turn now -- "U.S. News" cover story here. "Bush's Last Stand" is the title. We see it up there. Part of the headlines says, "Is he resolute or delusional?"

Now, the president obviously vetoed the congressional war-funding withdrawal bill this week. Is he being portrayed as taking a stance for principle, or being out of touch, or even delusional?

HOLMES: Oh, I think that the coverage of this has been totally unfair. We knew from the very beginning that the president was going to veto the war supplemental because of the restrictions on him as commander in chief. And it's a real constitutional issue. And I don't think that that has gotten a fair hearing in the media that this has to do with executive power, versus congressional power. And if he were a Democratic president, he may have the same dispute.

KURTZ: What about the coverage of Democrats? Are they portrayed as fighting for principle or cutting and running?

ARAVOSIS: I think it's been critical against both. I think the media looks at the Democrats as they're always falling apart, and the media looks at Bush as being delusional. I would think that Bush is leaning a little more towards delusion, but I think there is always criticism of Democrats in the media as well.

KURTZ: The media? You're saying all of the media, most of the media looks at President Bush as being delusional?

ARAVOSIS: Well, no. You asked the -- you used the word "delusional".

KURTZ: Yes. ARAVOSIS: I'm throwing it back on you.

KURTZ: It's here on the magazine cover.

ARAVOSIS: But what I -- what I think the media has done with Bush, which I think is fair, is they're saying something isn't jiving with what the president keeps saying and what the facts are. And at some point, when are you at 28 percent in the latest "Newsweek" poll, and we know things are going bad in Iraq...

(CROSSTALK)

HOLMES: But, you know, when you have "TIME" magazine putting their 100 most influential people, and they leave President Bush off the list, what does that tell you? That that is an editorial decision, it's an editorial statement about the president.

(CROSSTALK)

KURTZ: Got to go.

It says to me that "TIME" magazine is trying to get some attention.

Amy Holmes, John Aravosis, thanks for joining us.

Up next, journalists at an immigration rally get pounded by police. And one newspaper just says no to the annual dinner extravaganza with administration big shots.

That and more in our "Media Minute" just ahead.

(COMMERCIAL BREAK)

KURTZ: Time now for the latest from the news business in our "Media Minute".

Protesters in Los Angeles demonstrating this week on behalf of illegal immigrants weren't the only ones on the receiving end of what looked like excessive police violence.

(BEGIN VIDEO CLIP)

KURTZ (voice over): In the clash that erupted, a number of photographers and journalists were attacked by police officers, as we see in this footage shot by Spanish language network Telemundo as its anchor was preparing to go on the air.

(END VIDEO CLIP)

KURTZ: Police Chief William Bratton has personally apologized to the Telemundo anchor Pedro Sevcec..

(BEGIN VIDEO CLIP)

RICH LITTLE, COMEDIAN: OK. Got ya. Got ya. KURTZ (voice over): Rich Little wasn't the only part of the White House Correspondents Dinner that bombed this year. Every year there are complaints that the beltway media establishment shouldn't be wining and dining administration officials.

Well, now "The New York Times" has decided its reporters and editors will no longer attend. "The Times" Washington bureau chief Dean Baquet told "The New York Observer," "This is a moment when people already think the press is too cozy with government."

But the event has become so embedded in Washington's spring social calendar that it will undoubtedly survive.

(END VIDEO CLIP)

KURTZ: OK. I can't resist this one.

Alycia Lane, an anchor at Philadelphia's KYW -- you see here there on the left -- sent some bikini-clad photos to Rich Eisen, an anchor at the NFL network. Oops.

As "The New York Post" reported, the pictures were intercepted by his wife, former sports reporter Suzie Schuster (ph), who wrote back, "Boy, do you look amazing in a bikini. Congrats! Whatever you're doing (Pilates? yoga?) keep doing it. It's working for you.

Alycia Lane says the pictures were absolutely innocent and she and Eisen are just friends.

Coming up in the second half of RELIABLE SOURCES, Rupert Murdoch wants to gobble up "The Wall Street Journal". Can one media mogul have too much power?

And Imus isn't keeping quiet about being fired by CBS. Roland Martin on the prospect of the I-Man's $120 million lawsuit against his former network.

(COMMERCIAL BREAK)

KURTZ: Rupert Murdoch make as a bold move to expand his empire with a bid for The Wall Street Journal. Would he help the paper or tarnish it? But, first, here is Betty Nguyen at the CNN Center in Atlanta with a check of the hour's top stories.

(NEWSBREAK)

KURTZ: Thanks, Betty. The president of The Wall Street Journal's union joins us to says why he sees a Rupert Murdoch takeover as a horrible idea. That's next.

(COMMERCIAL BREAK)

KURTZ: Welcome back. Rupert Murdoch has always had a big appetite. That's how the Australian-born newspaper owner built a global media empire. From television to movies to publishing to the MySpace Web site. But he has long had his eyes on other nope prize, the nation's top financial newspaper. Tuesday morning on CNBC came world of an audacious gamble.

(BEGIN VIDEO CLIP FROM CNBC'S "MORNING CALL")

DAVID FABER, CNBC ANCHOR: News Corp., the giant media company controlled by Rupert Murdoch, has made an unsolicited $60 a share all- cash offer for Dow Jones, the publisher of The Wall Street Journal, according to people familiar with the matter.

KURTZ: The Journal's union is appalled at the prospect of a Murdoch takeover. And many journalists there are just plain unsettled. Buying the newspaper would help Murdoch with his planned launch later this year of a FOX business channel to compete with CNBC. But most of all, it would enhance the prestige of the media mogul best known for his stewardship of The New York Post and FOX News.

Joining us now from New York, Daniel Gross, who writes the "Moneybox" for slate.com. In Philadelphia, Ali Velshi, CNN senior business correspondent. And here in Washington, Steve Yount, president of The Wall Street Journal's union, the Independent Association of Publishers Employees Local 1096.

Steve, you union waited about, oh, 12 minutes before denouncing Rupert Murdoch and his plan to take over The Journal, why?

STEVE YOUNT, PRESIDENT, IAPE LOCAL 1096: I think that what we're talking about from a standpoint of the employees at Dow Jones is the preservation of the quality of The Wall Street Journal. We're not talking about just an ordinary newspaper in this country. There are right now perhaps three great newspapers. And The Journal is one of them.

Dow Jones has a unique position. There is an unquestioned commitment to quality, integrity, objectivity that doesn't exist in any other newspaper.

KURTZ: And why are you so sure that Murdoch would doom (ph) that?

YOUNT: I think that if you look at the track record of News Corp., you are going to find instances where -- there have been cases where that commitment has been called into question. One of the things that just recently happened, The Wall Street Journal won two Pulitzer Prizes, one of them for international reporting on conditions in China in the industrial revolution.

There is a history of very extensive business relationships that News Corp. has in China that has impacted apparently some of the decisions they have made onto stories we covered in China.

KURTZ: All right. We'll come back to that. I want to get Daniel Gross in. You have said that in some ways a Murdoch takeover could be a plus for The Journal, why?

DANIEL GROSS, "MONEYBOX," SLATE.COM: Currently the Wall Street Journal has to carry the entire Dow Jones Corporation, a publicly-held company, investors want 15 percent annual earnings growth and they are not getting it.

The stock of Dow Jones before this bid was basically where it was in 1987. The Journal has great journalists, best of breed, their management has been poor. The result is that the financial results haven't been good and so the ability to continue to invest in the kind of quality journalism that Steve was talking about is diminished each year.

The Journal does not pay a living wage for journalists in the New York area where cost of living has gone up greatly. They are cutting back the size of the European Journal. It's down to a tabloid. They are reducing international coverage. They are losing talent to Conde Nast Portfolio.

To the extent there is an arms race in journalistic talent, they can't compete like they used to. So the question you have to ask is, is The Journal having to pull this train as Dow Jones as a public company as problematic for continued quality, so would it be better off under some other ownership structure where maybe it was one of 10 divisions and there are all of these other profitable divisions that were contributing to the ability to continue to invest?

KURTZ: Interesting point. Ali Velshi, whether it's schlocky comedies on FOX, or that the awful O.J. "If I Did It" special that later got canceled, Murdoch has always been a lightning rod in this business.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes, he is a lighting rod and he knows how to make money in this business. I think both Daniel and Steve are right. He's a meddler on one hand and it may not be good for the workers, and Daniel's point that The Wall Street Journal could benefit from better resources and not having to carry this big company around might be right.

But I'm not sure the editorial departments get the benefit of that thing. Rupert Murdoch needs The Wall Street Journal more than The Wall Street Journal needs Rupert Murdoch. It's a good newspaper, it's a big newspaper, it's makes more money online. Rupert Murdoch does like trophy prizes.

The same way I want to own big successful newspapers. And however the financials of that company work, The Wall Street Journal is a big successful newspaper. It is also a newspaper that has made a lot of inroads online.

So whether this is just about Rupert Murdoch's ego or the fact that he has had a sense of being able to read the future and be provocative about it, this is an interesting play. What you might see is how much more it triggers in the industry. But we have seen Thomson Corporation bidding for Reuters. So that could get involved.

KURTZ: Right. Let me come back to Steve.

(CROSSTALK)

YOUNT: There are a couple of points here. First of all, The Wall Street Journal is not a good newspaper. The Wall Street Journal is a great newspaper. There are only three left in this country.

KURTZ: I'll stipulate that point.

YOUNT: And we're not talking about being in a position where we have to find somebody that can save this corporation. Here. First, The Wall Street Journal is right now the very best there is in the country. The kinds of things that Rupert Murdoch might be able to bring as far as financial interests at this paper are not worth the danger of tarnishing immediately the reputation of that paper.

KURTZ: All right. Here is what Murdoch told The New York Times. He said that he is not coming into this to try to cut costs. In fact, he's paying -- he's offering (INAUDIBLE). He's offering...

YOUNT: OK.

KURTZ: Let me just finish the question. He is offering a price that was 67 percent higher for the stock than the day he made this bid. And he says he wants more Washington coverage. So what is wrong with that?

YOUNT: Well, wait a second. Hold on. He tried to assuage some of the fears that reporters might have about his taking over the paper. He said he likes The Wall Street Journal. The stories are too long, he can't finish them all. He doesn't like "Pursuits," he doesn't like the Saturday Journal. Mossberg he reads, but he doesn't really understand it.

KURTZ: That is Walt Mossberg, the technology columnist.

YOUNT: He doesn't want The Wall Street Journal. He's not buying that great engine of journalism. He's buying a brand name. And this is not about Rupert Murdoch and News Corp., this is a larger question of the independence and the integrity of The Wall Street Journal.

There are stories that you know that you will see in The Wall Street Journal you will never question the motives, there is no political agenda, there never has been, there never will be.

KURTZ: All right. Let me go back to Daniel Gross, because, look, every owner who comes in makes some changes. That's why you spend the money. But Murdoch owns a lot of different kinds of properties. They are not all The New York Post. For example, he owns The Sun of London, which has the "Page Three" girls, "scantily clad" would be the euphemism. And here we see the Sunday -- The Times of London as well as The Sunday Times of London.

He has not done much to ruin the prestige of those newspapers. So is Murdoch smart enough not to tarnish The Journal's reputation?

GROSS: You would hope. You know, if I were a Journal employee, I would certainly be fearful of this, because you look at The New York Post, FOX News Channel, The Weekly Standard, their standards are really not up to snuff, and in some elements an object of derision.

KURTZ: Well, hold on, The Weekly Standard is an opinion magazine. How is it...

GROSS: It's also a joke. But if you look at Harper Collins, which is Murdoch's U.S. publishing unit, you know, they've had some issues with Judith Regan and all that, but they publish a lot of quality books from left, center, and right. You don't hear a lot coming out from Harper Collins about Murdoch's sort of political views, political influence influencing the content and the independence of editors there. I don't even know if that should reassure journalists every day, but it is a piece of the puzzle.

KURTZ: Ali Velshi, give us a reality check here. Murdoch owns The New York Post, has lost a lot of money over the last 20 years. He owns The Weekly Standard. That magazine loses money. Why is he willing to risk paying this premium price for The Wall Street Journal and losing more money?

VELSHI: Media companies are a mystery. People pay what they are prepared to pay in the market sense to catch up to that. It doesn't seem like a sensible amount of money. But it didn't seem like a sensible amount of money when he bought MySpace. And it didn't seem like a sensible amount of money when Google bought YouTube.

But the fact is the future isn't clear as to how they make money. The Wall Street Journal online has almost a million paid subscribers. It is more successful on that front than anything else comparable. The newspaper is solid and has a remarkable combination of a conservative editorial viewpoint but a balanced coverage -- reporting coverage standpoint. So it is interesting.

Rupert Murdoch has, as Daniel just said, a mixed record of getting too involved in some things and slanting and spoiling the angle on things, and on other levels keeping it open. So newspaper coverage, particular for The Wall Street Journal, for that big, successful newspaper, depends on the people who buy it and the people who subscribe to it believing that it continues to have the integrity it has. Rupert Murdoch does bring that into question.

YOUNT: And that is a key point. That is an absolutely key point is that every everything that we do depends on the perception of the people that depend on this newspaper and the company that brought it.

KURTZ: And is that perception -- could that perception be undermined by the fact that Murdoch once gave $1 million to the California Republican Party, more recently hosted a fundraiser for Hillary Clinton, after which it seemed to me at least The New York Post treated the senator with a little more respect?

YOUNT: There is going top be just through any change in ownership with News Corp. taking over -- if it ever happens, and I hope it never does, there will be immediately that perception that The Wall Street Journal, the most trust name in Journalism, now belongs to FOX News. That is not good for the readers or for the reputation and we can't afford to lose that precious institution.

KURTZ: All right. Well, here is my two cents. Murdoch is a very smart businessman. This is a guy who created a fourth American television network, bought the rights to the NFL, created the top rated cable news network. If he starts bringing in Australian hacks and re-writing headlines, then in fact he will tarnish the brand of The Wall Street Journal. He could ruin one of America's great newspapers.

But he also might be savvy enough to keep his hands off the editorial product, at least in major ways. Although he might cut down on the length of some of those stories, Steve. And we'll see if he indeed gets control of the newspaper.

YOUNT: It's not a chance that we need to take.

KURTZ: All right. Steve Yount, Ali Velshi, Daniel Gross from Slate, thanks very much for joining us.

Still to come, did CBS violate Don Imus's contract when it dumped the morning man for his slur against the Rutgers women's team? We'll call in Roland Martin on Imus' plans for a big bucks lawsuit.

(COMMERCIAL BREAK)

KURTZ: It took just over a week for the media firestorm over Don Imus to reach white hot intensity. And his apologies for that slur against the Rutgers women's basketball team seemed unable to cool things down.

(BEGIN VIDEO CLIP)

DON IMUS, RADIO TALK SHOW HOST: I'm not a bad person. I'm a good person, but I said a bad thing. But these young women deserve to know that it was not said with malice.

(END VIDEO CLIP)

KURTZ: The story seemed to dissipate last month after MSNBC and then CBS radio dumped the sharp-tongued host. But now Imus' lawyer Martin Garbus tells me his client will sue CBS this week for the bulk of the $40 million deal plus damages, arguing that Imus was wrongly dismissed under the wording of the contract. Joining me now from New York, radio talk show host and CNN contributor, Roland Martin.

Does Don Imus have a case? You have heard the contract language. Let's just read a little bit for our viewers who are not up on this. Said that his services to CBS were to be of an extraordinary and irreverent and controversial and personal character and was desired by the company, desired by CBS.

ROLAND MARTIN, CNN CONTRIBUTOR: Well, this is the fundamental problem that CBS faces. I mean, they hired him for exactly what he did, and so, frankly, he crossed the boundaries of taste. Now whether or not he violated his contract, that is a whole different deal. You know, we talked about this with Jeffrey Toobin, CNN's legal correspondent, and what he said is that from their standpoint they had to notify him or a written reprimand for his comments. Do we know that it happened? According to Imus' lawyers, that did not happen. So that's a critical issue. I mean, you know, look, let's just be honest, Howard. CBS had to confront the reality of losing a significant amount of dollars from advertisers by keeping Don Imus on. They frankly chose to make the least costly decision. Sure it might cost them with a settlement or with a lawsuit, but they would have lost a lot more money had they kept him on the air.

KURTZ: It was hardly a state secret, Roland, that this guy was doing four hours a day of at times locker room humor that sometimes went up to the edge, sometimes went over. Look...

MARTIN: Well, I wouldn't say locker room humor, I would say racist and sexist.

KURTZ: Well, that's, of course, at the heart of the debate. Look, what he said in the case of the Rutgers women's team was horrible offensive, as he acknowledges as he has apologized repeatedly. I also think, as somebody who was occasionally on the program, that there were many good aspects to the show, interviews with politicians and journalists and the like.

He lost his job because the critics turned Don Imus into a symbol of a toxic popular culture. Now if he is found to have been wrongly dismissed, and CBS has to pay him a bunch of money, is that argument undercut?

MARTIN: Well, but again, though. The bottom line is we see lawsuits all the time. And so companies have to make a decision. CBS did not make a moral decision. They did make a decision that was in the best interests of women. They made a financial decision. First of all, when he made the comment, they initially issued their own statement distancing themselves from that comment. Same with MSNBC. Then he apologized. Then they suspended him. Then when the heat did not go down, then they fired him.

And so they had to recognize that. Les Moonves is a smart guy, he knew that advertisers were pulling out, that critics were then going to target the other radio shows. Then if that wasn't -- if that wasn't all, they would target the television network. And so they had a lot more money to lose.

And so if he sues, and they pay him, I mean, it's going to cost them less money than had they kept him.

KURTZ: But I guess my question is, would that bother you and would it bother you, Roland Martin, if Don Imus gets back on the air in some other capacity?

MARTIN: Well, first of all, it wouldn't bother me if he got back on the air. I would hope that he changed. I mean, he was taught a lesson. Other people have been taught similar lessons.

And that is what happens, when you cross the line, there are repercussions. He has a First Amendment right to say what he wants to say. But we also have a First Amendment right to protest what he had to say. And so the marketplace decides, hmm, do we keep him based upon First Amendment rights or do we recognize the protest? And so the marketplace always decides that.

And so -- but what Don Imus should do is, again, he wants to get back on the radio, look, change your act, change your game, understand that are you no longer a 12-year-old guy. You are 66 years old. And that's the other deal, Howard. How many $8 million a year jobs are hanging around? He has no choice to sue. If I was Don Imus, I would do the exact same thing.

KURTZ: Well, did talk about changing the tone of the show before he was let go by CBS. And, look, a lot of people like the program, there is no question about that.

MARTIN: And a lot of people didn't like it.

KURTZ: Well, sure, but of course, in broadcasting you only need some people liking it in order to get enough of an audience to make that kind of money.

MARTIN: Right.

KURTZ: I don't make that kind of money because I don't have that kind of audience. Now in today's The New York Times, there was this kind of a survey of what's still on the air on some of these, shall we say, edgier radio show. Mancow from Chicago once -- not once, but recently referred to a caller as a brain dead fetus. And Nick DiPaolo is a host, I believe, in New York, talking about the actress Kim Basinger said, what did she play, an old tampon?

So the tone of radio in some quarters, not exactly cleaned up after the Imus fallout.

MARTIN: But again, Howard, this boils down to standards. I mean, first of all, you just finished a conversation about Rupert Murdoch. I mean, we know what to expect from The New York Post. But do you want to see that in The Wall Street Journal? I mean, it is all about standards. The reason this reached the level it did, because Don Imus frankly was on MSNBC, and so he was operating in a different area.

You don't see presidential candidates going to hang out with Mancow. That's the difference there. And so it's a different platform, a different level. That's why he was targeted. And he being a traditional shock jock, it would (ph) have (ph) been the same.

KURTZ: I understand. He is in a different category. But you and I disagreed a couple of weeks ago about whether the Imus uproar was going to lead to a broader debate about entertainment and degradation in popular culture, in music and on the air. And I don't think it has. What happened to that debate?

MARTIN: Well, first of all, you are seeing a conversation but it shifted the debate in terms of talking about hip-hop. Look, the same thing happened after Janet Jackson, you know, in terms of breast exposed. And so people get to look at sex on television, violence on television. This thing ebbs and flows. The only way the conversation continues is if those groups that exhibit the pressure, if they continue the dialogue and begin to keep the conversation moving. The industry is not going to change itself. The industry is only going to change if there is pressure from the outside forcing it to change.

KURTZ: All right. And I think the media have a responsibility as well to continue this conversation and not just let it be...

(CROSSTALK)

MARTIN: I agree.

KURTZ: I know you agree. And that's why we have you on. Roland Martin, thanks very much for joining us this morning.

MARTIN: Thanks, Howard.

KURTZ: Merger mania in the media. Up next, why do journalists go overboard over every corporate courtship? That is coming up after the break.

(COMMERCIAL BREAK)

KURTZ: The business press is pretty excited these days. Nothing gets financial journalists more pumped than merger manna. It is like covering campaigns. Who is talking to whom? Who is mounting a takeover bid? Who is playing defense? Who is looking for a white knight? Which CEO will run the new company? And which one will get the golden parachute?

As we mentioned earlier, you've got Rupert Murdoch trying to buy Dow Jones. Microsoft, they are trying to buy Yahoo! or team up with Yahoo!, according to conflicting news accounts. The Canadian firm Thomson wants to gobble up Reuters wire service.

But the question that doesn't get asked often enough, is this really a good idea?

(BEGIN VIDEOTAPE)

KURTZ (voice-over): Remember the DaimlerChrysler merger, a combination of two auto giants? Well, that worked out so well that the German company is now desperately looking to sell Chrysler.

Sears hooking up with Kmart was supposed to bring in that overused cliche, synergy. But, well, hasn't.

The merger between freewheeling Kinko's and buttoned-down FedEx has led to what The New York Times calls a giant paper jam with lots of layoffs and internal strife.

As for media companies, the marriage seven years ago between America Online and Time Warner, CNN's parent company, which itself was the spawn of Time Inc. and Warner Brothers, was hailed in the press as a brilliant combination of old media and new media. Now it's widely viewed as one of the worst business moves in modern history.

After the dot-com bubble burst, the new company went so as to drop AOL from its name.

It was also in 2000 that Chicago's Tribune Company won plaudits for buying Times Mirror, which included The Los Angeles Times, Baltimore Sun, and Newsday. That was such a mess, particularly when The L.A. Times revolted against deep budget cuts, that Tribune wound up selling itself to Chicago billionaire Sam Zell.

(END VIDEOTAPE)

KURTZ: Nice work, guys. The truth is many of these giant acquisitions turn out to be flops. But when the merger rumors start flying, the press starts hyperventilating again. Given the recent track record, a little more skepticism about whether bigger is always better might not be a bad idea.

Well, that's it for this edition of RELIABLE SOURCES. I'm Howard Kurtz. Join us again next Sunday morning at 10:00 a.m. Eastern for another look at the media.

"LATE EDITION" with Wolf Blitzer begins right now.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com

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