GM Takes Issue With Wall Street Journal Coverage

GM Takes Issue With Wall Street Journal Coverage

By Michelle Krebs

DETROIT - General Motors has gone public with the fact that it has issues with the Wall Street Journal's coverage of the automaker's situation and its constant focus on a GM bankruptcy.

In a blog post on GM's Fast Lane, the automaker points out that: "In headline after headline, story after story, the front pages of the paper have promoted bankruptcy as a solution for GM."

The final straw for a frustrated GM was a Journal story this week entitled "GM's Chief Shifts Posture on Surviving Bankruptcy," calling it "yet one more distortion of GM's position on this critical issue."

The story, GM's post said, came from a question and answer session at a March 17 media breakfast hosted by the Christian Science Monitor with GM CEO Rick Wagoner. (By the way, Wall Street Journal stories of the past year have insisted Wagoner was about to be ousted any day. He's still on the job.)

The Journal's story opens saying Wagoner, "once a staunch opponent of bankruptcy as a way of reorganizing the ailing auto maker, has softened his view, suggesting the company could possibly emerge from a Chapter 11 filing." The story claims Wagoner's comments signal "that GM no longer views bankruptcy as off the table could strengthen the company's hand in those negotiations."

GM's blog post, written by Tom Wilkinson, a journalist turned GM media relations point man, provides a transcript from the session (see below). The post insists that instead of a softening of his position on bankruptcy, Wagoner said what GM has said all along and reiterated in its bankruptcy analysis in its Feb. 17 viability plan submitted to the U.S. Treasury Department.

The blog entry closes with this: "Did The Wall Street Journal ignore what Wagoner really said so it could write the headline and story it wanted? I'll leave it to you to decide."

The newspaper had no comment on GM's blog.

The following is a transcript, provided by GM, of Wagoner's discussion with the media that led to the Wall Street Journal story in question:

"A lot of people who write about bankruptcy, I don't think have ever been in bankruptcy. And what I have learned after studying it in detail is that it brings significant risk on, and puts things out of the control of the board and management, and into the control of other parties.

"You talk about a fast 'pre-pack' that could work in 30 or 60 days. And what I have learned is that it could work. And it might not work. And if it doesn't, it could mean, in the end, a long period of bankruptcy which, I believe, would result in the liquidation of the company.

"Because all of our research, by the way, continues to support the view that consumers will shy away from buying vehicles from companies in bankruptcy.

"We can accomplish 99 percent outside of court that we would inside of court. Why in the world wouldn't we do it outside of court, save the risk, and by the way, at a much lower expense from the standpoint of support? Because if we have to file Chapter 11, there is no DIP (debtor in possession) financing other than the U.S. government, and that would be a huge, potentially huge amount of financing required.

"So I think it makes sense from everybody's perspective to do this outside of court. We have to show that we can do that. I think we can. I think it is in everybody's interest, including the bond holders and VEBA and others, to do that. But it's not done yet."

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.