The editor's note on the 'Newsweek' investigation is eye-popping

The latest breaking story about the ongoing controversy at Newsweek comes from the magazine itself — and has an editors' note that is a must-read.

The story, published late Tuesday, is a two-pronged exposé into the business dealings of Newsweek Media Group, which owns the magazine and other outlets including the International Business Times, and the parent company's alleged attempts to quash its own magazine's reporting.

Pressure loomed over the editorial staff during the reporting of this latest story, and the journalists involved considered resigning, they say in an editors' note preceding the story. They didn't get to. 

As the story was in the works, editor Bob Roe, Executive Editor Ken Li and Celeste Katz, who was a senior politics reporter, were fired  "for doing their jobs," the editors' note says. Also, "reporters Josh Keefe and Josh Saul were targeted for firing before an editor persuaded the company to reverse its decision."

A draft of the story was shown to subjects of the story by a company executive "who should not have been involved in the process," the journalists say in the editors' note. Eventually, a top editor intervened and ensured "newsroom autonomy going forward," they wrote.

This turmoil comes after the Manhattan District Attorney's office raided the company's offices in January. The magazine's parent company, Newsweek Media Group, is the focus of a grand jury investigation, Newsweek reported at the time. After Katz and the two editors were fired, several other reporters resigned, too.

Editors' notes appear occasionally atop stories, but this one is unparalleled. "That's an extraordinary note, basically saying they tried to kill our story and we got it through anyway," said Mark Feldstein, professor of journalism at the University of Maryland. "Usually when there’s that kind of pressure the story just disappears completely."

Newsweek's latest story chronicles the questionable financial dealings between its parent company and Olivet University, a San Francisco Bay Area evangelical college, at a time when Newsweek Media Group was in financial straits.

Olivet offered free Newsweek advertising, valued at about $149,000, to Dutchess County officials in southeastern New York where the college planned to build a satellite campus, the story charges.

At the time the ads were offered in 2016, the university was seeking tax exemptions and permit approvals — and Newsweek's parent company (it changed its name to Newsweek Media Group from IBT Media in 2017) was mired in financial troubles, the story says. During the year, the parent company fell behind on its rent and utility payments, missed payroll and laid off dozens of staffers, the story says.

The ads promoting the region's tourist offerings ran in Newsweek between March and May 2017. In May, the Internal Revenue Service placed a tax lien on IBT for not paying more than $400,000 in taxes. (The IRS also hit IBT co-founders Johnathan Davis and Etienne Uzac with tax liens of $3.1 million and $1.2 million, respectively, in late 2017.)

The Newsweek story also reported that tax records show its parent company had paid Olivet more than $2.8 million for licensing and research-and-development agreements.

In an interview for Tuesday's Newsweek story, company co-founder Davis said Olivet provided IBT Media's digital publishing and advertising systems. “We wouldn’t have a company without their help,” Davis said. “We’re re-paying back that technology investment that they gave to us.”

Newsweek Media Group did not respond to a request for comment.

While the firings of some of the Newsweek's journalists may not be illegal, "from a press freedom perspective they are disturbing because they challenge a norm at the heart of American journalism, which is that the business side stays out of the newsroom and does not dictate coverage," wrote Joel Simon, the executive director of the Committee to Protect Journalists, in a column on the Columbia Journalism Review’s website.

Ties with Olivet

Questions have surfaced before about the ties between Newsweek's parent company and Olivet University, which was founded by David Jang, a pastor from South Korea. 

In 2014, the company said it had made donations to Olivet. And there are many executives in Newsweek's parent company with connections to the university.

Davis is one of the five current or former top officials at Newsweek Media Group who have held roles at Olivet, the story says. His wife, Tracy, is the school's president, a 2012 Christianity Today story detailed.

Last month,  Newsweek Media Group co-owner Uzac, who had previously been the treasurer at Olivet, resigned from the company and so did his wife, Marion Kim, who was its finance director. She previously served as press secretary for the World Evangelical Alliance, which is closely associated with Olivet, according to a 2014 story in The Guardian. Olivet is a member of that alliance, and Jang is on the alliance's North American council.

Outside the ties with Olivet, other reports alleged the company propped up its traffic in underhanded ways and overlooked concerns about a senior editor. Earlier this month, BuzzFeed News reported that Newsweek Media Group had engaged in “fraudulent online traffic practices” to fulfill a digital advertising campaign for the Consumer Financial Protection Bureau. The company said the report "mischaracterizes (the company's) business behavior as unethical and distorts the truth."

Also adding to the turmoil: The company's chief content officer Dayan Candappa was put on leave in late January after after it was reported he had left Reuters following a complaint of sexual harassment. Several reporters quit after Candappa returned to work this month, the New York Post reported.   

Newsweek's prospects don't look good, Feldstein says. "We don’t know what the prosecutors know, but even if (the parent company's executives)  haven’t crossed the line to outright criminality, the conflicts of interest have already been exposed," Feldstein said.

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Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.