June 30, 2005


Lawyers for Time Inc. are considering turning over documents that would reveal the identity of a correspondent’s anonymous source, according to the reporter and people with knowledge of the matter.

The correspondent, Matthew Cooper, faces a prison sentence of as much as 18 months for contempt of court if he refuses to reveal the source to a federal grand jury by next Wednesday; if that were to happen, lawyers for Time Inc., a unit of Time Warner Inc., believe the company could be exposed to legal liability or government sanctions. . . .

Time Warner depends on government approval for a number of matters. It is, for example, awaiting antitrust approval for its acquisition — with Comcast Corp. — of Adelphia Communications’ cable assets. It depends on the government’s largesse to issue securities. And though it is a cable operator and holds no broadcast licenses from the Federal Communications Commission, the company is vulnerable to FCC pressures on issues of media content.

One other potential issue is a deferred-prosecution agreement struck last year between the Justice Department and Time Warner relating to America Online. A deferred prosecution contemplates cooperating with the government in its ongoing investigation into specific wrongdoing, in this case alleged accounting fraud.

“Time Warner has got to be inclined to be as cooperative with the government as they can on all fronts,” says Washington attorney Hank Asbill, who is representing a former America Online executive charged with securities fraud.

Sounds like another argument against media consolidation. My USA Today piece on reporters’ privileges from yesterday is here.

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