Investigation by The Independent reveals conflict of interests over coverage promised by media firm to software giant
By Ian Burrell
Thursday, 29 September 2011
Microsoft has been sucked into the row surrounding a London-based media company currently under investigation by broadcasters for making editorial programmes without declaring it had a commercial relationship with some of those it featured.
Both the BBC and the US-owned broadcaster CNBC are investigating FBC Media following an investigation by The Independent which showed it had made numerous factual programmes about Malaysia after being allocated millions of pounds by the country's government to promote it.
This newspaper has evidence that Microsoft was "guaranteed" coverage on a flagship programme which FBC was commissioned to make for CNBC – which is screened in Britain – for a major launch that the global technology company was planning in Europe. CNBC recently suspended the show, World Business, pending the outcome of its investigation.
The Independent has seen a nine-page letter written to Microsoft's senior communications managers, in which FBC promised coverage of its opening of the European Microsoft Innovation Center in Aachen, Germany, and a second project in St Petersburg, Russia.
The document referred to World Business under the heading "FBC Guaranteed Distribution Placement". It told Microsoft: "Our flagship programme, World Business, is a weekly half-hour business news magazine, which covers the trends shaping business, particularly from a European perspective.
"We can foresee placing coverage of the Aachen opening within the programme the weekend of May 1&2, which means guaranteed placement on CNBC Europe, PBS-TV in the US, Star World Asia and 12 national broadcast markets in Western and Eastern Europe." PBS is America's public service broadcaster and Star World is part of Rupert Murdoch's global News Corp media empire.
In its letter to the Microsoft PR chiefs, FBC pointed out: "Due to our distribution agreements with each of the broadcasters, FBC maintains final editorial control over the reports featured within any of its broadcast programmes."
Last night CNBC said: "We have suspended all broadcasts of the World Business programme indefinitely. We cannot comment further for legal reasons."
FBC, which ran a hybrid business combining public relations work with factual programmes, featured the Microsoft founder Bill Gates in its publicity material. Alongside his picture, FBC said "clients include heads of state, governments and ministries, special economic zones and property projects, companies and international organisations".
The FBC letter to Microsoft, dated 2 March 2004, is jointly authored by John Defterios, until recently FBC's former Group Vice President for Content and host of CNBC's World Business between 2000 and 2007.
He is now a presenter on the global news network CNN. The document is set out as a "proposal outlining the broadcast/production strategy" for Microsoft's European initiatives, which included a good news story of Microsoft working with the United Nations High Commission for Refugees (UNHCR) and Red Cross to provide technology for refugees.
Microsoft in Russia
"The project event April 15th in St Petersburg tells a wonderful story of how technology can enhance the everyday lives of those who need it the most, immigrants and refugees trying to establish a foothold in society after economic and social displacement or upheaval," said the FBC document. "The UNHCR-Red Cross initiative is a perfect example of public-private partnership, which often goes unnoticed within the daily news flow of any given day."
FBC promised "to provide a 'daily news hook' to what in essence is a rich feature story linked to one of the most pressing issues today: how to help those in need make a fresh start. We believe this story, enhanced by similar project partnerships by Microsoft in the region, can be of particular interest."
It offered Microsoft "guaranteed" coverage of the St Petersburg event on Tech Watch, a monthly technology programme it produced for airlines to show as part of their in-flight entertainment.
It is unclear whether UNHCR or Red Cross knew of the Microsoft/FBC PR campaign associated with this initiative. In a statement, Microsoft said it had had a commercial relationship with FBC Media from 2003 until March this year. "Where FBC guaranteed that news items would appear in their World Business programme, we understood this was based on the content meeting FBC editorial selection criteria in line with their agreements with CNBC and other broadcasters and subject to final editing before transmission," it said.
FBC promised to make every effort to obtain coverage for the St Petersburg project on the BBC, including on the respected technology format Click, which is shown on the BBC News Channel and BBC World News. "FBC would deliver 'same day' coverage of the event...and couple that effort with feature story placement on the major Pan-European and national broadcasters who have specialised programming highlighting technology and economic development," it said.
FBC denies any impropriety in its programme making. Its lawyers have told The Independent that the company ran production and commercial divisions, which "are and always have been quite separate and distinct". The programmes it has made "have always been fair, balanced and impartial".
Malaysia
The BBC, which declined to comment on the Microsoft letter, continues to investigate FBC after screening a series of programmes on BBC World News made by the company and covering controversial Malaysian issues, especially its contentious palm oil industry.
The BBC said FBC had not told it of its commercial relationship with the Malaysia government. The Independent has established that entries in the Malaysian government's Supplementary Budget 2010 show that FBC Media (UK) was allocated 28.35m Malaysian Ringgit (MYR) – nearly £6m – for work on a "Global Strategic Communications Campaign" ordered by the Malaysian government in 2009. In a previous statement, the BBC said: "FBC has now admitted that it has worked for the Malaysian government. That information was not disclosed as we believe it should have been when the BBC contracted programming from FBC."
The BBC has decided to stop showing any FBC programmes while it reviews their relationship.
Indonesia
FBC is also being investigated by US news magazine The Atlantic, for which the FBC founder Alan Friedman produced a blog from the World Economic Forum in Davos this year. Friedman wrote a favourable review of the "statesmanlike debut" performance of the Indonesian President Susilo Bambang Yudhoyono, while the FBC powerpoint presentation lists Indonesian Tourism and Tourism Malaysia as past clients.
The US website Politico noted how other commentators at Davos focused on the Arab Spring and largely ignored Mr Yudhoyono's speech, which Friedman, a former Financial Times journalist, hailed "the most impressive, crisp and even visionary speech given by any world leader here in a long time".
Paper trail
Microsoft began its commercial relationship with media firm FBC in 2003. A nine-page strategy document written in 2004 obtained by The Independent contains excerpts which show that when the technology giant launched its European Microsoft Innovation Centre in Germany in 2004, FBC drew up a plan for Microsoft to target broadcasters with its "corporate messaging" and gave a guarantee to Microsoft that it would "place" coverage of the launch event on World Business, the weekly programme it made for the CNBC network. CNBC has suspended the show and is investigating FBC.
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