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Several widely publicized incidents of inaccurate reports by major news organizations might not harden the media liability market, but they should prompt news organizations' risk managers to look closely at their insurance coverage, some experts suggest.
The four incidents have sparked allegations ranging from seriously flawed reporting to obtaining information through illegal means to fabrication of events and sources. The situations have resulted in apologies by the organizations, dismissals of employees and, in at least one case, a sizable cash settlement.
Media liability experts say the events taken together could strengthen plaintiffs attorneys' allegations in libel cases that reporters have invented information or gone about their business recklessly. And, in the worst case scenario for media liability insurance buyers, that ultimately could result in higher prices for the coverage.
The incidents this spring and summer include a series of articles by The Cincinnati Enquirer on the business practices of Chiquita Brands International Inc. The newspaper ran a front-page apology three times for the articles and put the apology on its World Wide Web site. It also paid Chiquita a settlement of more than $10 million.
In its apology, the newspaper said it had determined information in the stories was untrue and created a "false and misleading" impression of Chiquita's business practices. The apology further contended that some information in the stories was obtained illegally.
CNN and Time magazine, meanwhile, retracted and apologized for a report that aired on a cooperatively produced program in June that claimed the U.S. military had used chemical weapons on American defectors during the Vietnam War. In a statement aired repeatedly on CNN, the network said its "system of journalistic checks and balances" had failed in the preparation of the report. CNN fired two producers and reprimanded a correspondent.
Also over the past few months, a Boston Globe columnist resigned after admitting to fabricating information in her columns, while an associate editor for The New Republic was fired after the magazine said it had determined he had fabricated material in 27 articles written over the past three years.
"The Cincinnati Enquirer paid $10 million before they were even sued," said Chad Milton, a senior vp at liability insurance underwriter Media/Professional Insurance in Kansas City, Mo. Mr. Milton said he doesn't expect CNN to be sued, but "the incident undercuts the credibility of the media in general. It makes it scarier."
Media/Professional does not cover any of the organizations involved in the recent incidents.
While the false reports in The Boston Globe or The New Republic also might not ultimately result in legal action, "that kind of thing lends credibility to claims in other cases that reporters have made things up," Mr. Milton said.
"It's conceivable that it could have that affect," said Leib Dodell, underwriting manager for the media liability program at Executive Risk Management Associates in Simsbury, Conn.
"But the experience that I think you'll find corroborated by most litigators is that jurors already approach these kinds of cases with that attitude," Mr. Dodell said. "That's why we've seen not just in the past six weeks but over the past few years a sizable increase in the amount of jury awards."
Mr. Milton offered a similar view about the trend toward larger awards. "Our losses have been going up year by year," he said. "At the same time, the market has been softening year by year."
While reluctant to characterize the current media liability market as "soft," Mr. Dodell said, "I think it's certainly true that there are a number of markets out there, and there is significant competition both in terms of coverage and price."
Thomas Harrington, director of risk management for The New York Times Co., which owns The Boston Globe, said he doesn't expect the recent cluster of events to turn the media liability market.
"I wouldn't think so," Mr. Harrington said. "I think maybe long-term this could be a factor. But I don't think there's going to be any impact in the short-term, and I would think that any impact is going to be pretty subtle unless there is a continuation of the situation."
While conceding that it's difficult to predict what jurors will think, Mr. Harrington suggested that because the news organizations involved took quick action when the problems arose, it should send the message that they strive to report the news responsibly.
"I think with The Boston Globe, when they discovered there was a situation they took action to correct it," he said. "They sent a message that this would not be tolerated, as did the other organizations."
Mr. Dodell said so far he's seen no effect on either media liability coverage availability or pricing.
"I think it's to some extent coincidental. . .that there have been somewhat similarly themed incidents that hit the headlines in a short period of time," he said. He added that the incidents are the sorts of events news organizations and media liability underwriters are aware of as potential exposures.
"What it does reflect is the whole variety of problems that media organizations can find themselves getting into and why they need to take a close look at their coverage," Mr. Dodell said.
For example, he said the questions of gathering information illegally in The Cincinnati Enquirer case and the possibility of the paper being subpoenaed for information on how that information was obtained highlight a frequent gap in news organizations' coverage.
Newspapers frequently are subpoenaed for details on sources of information, he noted. But the legal costs associated with fighting such subpoenas might not be covered.
"It's not as infrequent as you might think," Mr. Dodell said. "But that may not be something that's covered at all."
And, he said, while incidents of reporters fabricating information might not occur as frequently, such incidents are not unheard of. "And as underwriters, we're aware these things can occur, and that's one of the things we're in the business of providing coverage for," Mr. Dodell said.