Two weeks ago, ABC News video blogger Amanda Congdon's for chemical giant DuPont was widely criticized. Now an editor at financial news site MarketWatch, owned by The Wall Street Journal parent company Dow Jones, has acknowledged bending the rules for veteran columnist Bambi Francisco.
Last September, Francisco was allowed by her bosses to accept a stake in Vator.tv, a start-up that intends to play matchmaker for other start-ups and venture capitalists by showcasing Web videos of those newcomers.
It's unclear how large a stake Francisco received in Vator, which is backed by. In an interview with CNET News.com, she wouldn't disclose the size but acknowledged that she didn't pay anything for her share of the company.
Francisco also acknowledged that she has a hands-on role with Vator, co-hosting with Thiel a regular synopsis of the start-ups making their pitches. Her role in Vator was first reported in a little-noticed posting on gossip blog ValleyWag last fall.
That Francisco was offered and accepted a stake in a company that operates in the industry she has covered for at least a decade is rare among journalists, who usually follow strict rules to prevent even the perception of a conflict of interest. That MarketWatch signed off on the deal is, to some, an even more remarkable sign that big media organizations are bending their traditional rules when it comes to online journalism.
"Good news organizations have checks and balances that protect the independence of the journalist," said Bob Steele, an ethics adviser at journalism think tank Poynter Institute. Steele spoke generally about journalism ethics and did not specifically discuss Francisco's situation.
"Editors challenge reporters who might get too close to sources. Organizational guidelines restrict financial investments to protect against conflicts and competing loyalties," Steele said. "Those standards, practices and guidelines, while imperfect, are still important."
MarketWatch Editor In Chief David Callaway said he gave Francisco his blessing before she accepted the offer.
"Conflicts and potential conflicts are something that journalists deal with every day," Callaway said. "We often have to deal with them on a case-by-case basis and find separate solutions. We feel that the guidelines we set up work."
Francisco is not allowed to write about any of the companies that make pitches through Vator, Callaway said, and she is not allowed to be Thiel's "marketing department," a shorthand way of saying she's supposed to steer clear of writing in favor of Thiel's interests.
Callaway acknowledged that Francisco's business relationship with Vator is unprecedented at MarketWatch. But when it comes to "solutions," Callaway said some of the practices adhered to for decades by traditional newspapers, magazines and television newsrooms may not be relevant in the Internet Age.
"You can't just totally rewrite the rules," Callaway said. "But there needs to be some happy medium...the rigid rules of the past may not always apply to new media. Is there a potential for a conflict in Bambi's case? Yes. Do I think we can avoid it? Yes."
Callaway emphasized that he was speaking only for MarketWatch and not for the entire Dow Jones company.
It already appears that Francisco has had difficulty adhering to the rules Callaway described. On November 7, Francisco wrote about a company called Powerset. The piece was penned two months after Francisco entered into her business deal with Thiel.
"Now I'm not one to get overexcited about a new technology, especially when a company keeps it mysteriously in stealth mode," Francisco wrote. "But in the case of Powerset--which received loads of blogger attention about its existence without any coverage about the actual product--there actually is a lot of substance behind the intrigue...Indeed, searching with Powerset was a far richer and more liberating experience than what you get with the rivals."
In the story, she mentioned that Thiel was joining Powerset's board of directors, but Francisco doesn't disclose her business relationship with Thiel.
In her defense, Francisco said that Thiel is on the board of many companies and that she wouldn't be able to write at all if she were barred from covering them. "I've known (Powerset's founders) outside of Peter," she said. "I've known (Powerset co-founder Barney Pell) for a while."
Francisco said she has not revealed her relationship with Vator to MarketWatch readers, nor on her personal blog because she was waiting for the company to "truly get off the ground." She said she has not written about any of the companies that have posted business ideas to Vator and that she would never give Thiel or his companies favorable treatment.
Francisco added that "old-media rules" are still important but that there has "always been a problem with judging objectivity."
On December 21, Francisco also wrote about LinkedIn, a social-networking company in which Thiel was an angel investor. She has also written about social-networking site Facebook, of which Thiel is a director. The venture firm he founded, The Founders Fund, is also a Facebook investor.
High-profile blogger Michael Arrington, who has received plenty of criticism about conflicts of interest in his tech news blog TechCrunch, said he was surprised by Francisco's deal. (Arrington proudly says his blog is all about "insider information and conflicts of interest" but argues that it's acceptable because he discloses his investments on his site.)
"Why would you give stock to a journalist?" Arrington asked. "Put it this way: I've stopped accepting jobs as an adviser for companies. These companies don't want me to be an adviser. They don't need me advising them. What they want is coverage on TechCrunch."
The issue, said Poynter's Steele, comes down to credibility and whether journalists surrender it by entering business agreements with people or companies they may have to cover.
"People practicing journalism, be it a newspaper or Web site, should adhere to the practice of independence," he said. "Journalists should have no competing loyalties."
Of course, one doesn't have to look hard to find signs that high-minded standards and practices haven't saved big media companies from questionable conduct by reporters in recent months.
Jim Cramer, host of CNBC show Mad Money, recently offered a quick tutorial on cheating the stock market, which included leaking false rumors to the press, during a recent video interview on financial news site TheStreet.com.
CNBC news anchor Maria Bartiromo caused a furor earlier this year when it was revealed that she accepted a free ride to China on Citigroup's private jet. Despite the acknowledgement of CNBC executives that they approved the trip, Bartiromo's ability to fairly cover Citigroup or its competitors was questioned.
ABC's Congdon hardly acted like a journalist caught with her hand in the cookie jar when asked about her work for DuPont. "I am not subject to the rules traditional journalists have to follow," she wrote on her blog. ABC editors fobbed off the issue, saying that since Congdon was technically a contractor, she wasn't held to the strict conflict-of-interest standards of other ABC reporters.
But for all the hand-wringing, do readers care?
"Part of fairness involves disclosure of the relationships between the reporter and the reported, particularly if payment in money or influence is involved," said DayLife., founder of online-classifieds powerhouse Craigslist and the member of an that's starting a news aggregation site called
"I'd suggest anyone just state it," Newmark said, "and leave judgment to the mass of readers who are smarter than usually credited."