CLARIFICATION--AN ARTICLE IN YESTERDAY'S STYLE SECTION GAVE AN INCOMPLETE DESCRIPTION OF A DALLAS MORNING NEWS STORY ABOUT ITS PARENT COMPANY BUYING PART OF THE DALLAS MAVERICKS. THE MORNING NEWS STORY RAN ON THE FRONT PAGE OF THE BUSINESS SECTION IN MAIN EDITIONS OF THE PAPER, AND QUOTED TWO PEOPLE OTHER THAN THOSE WORKING FOR THE PARENT COMPANY. THE STYLE STORY REFERRED TO A SHORTER VERSION THAT RAN IN SUBURBAN EDITIONS. (PUBLISHED 08/11/99)

When the company that owns the Dallas Morning News bought a $24 million stake in the Mavericks basketball team, some newsroom staffers cried foul.

Three city hall reporters complained in an internal memo that the investment was "disturbing" and "troubling" and the paper's coverage "unbalanced and incomplete." What's more, they said, a tangle of financial ties between parent company Belo Corp. and the Dallas establishment creates, "at a bare minimum, a PERCEIVED conflict of interest."

The flap involves more than how the paper's sportswriters cover the NBA team. Belo's move to buy 12.4 percent of the Mavericks also puts the company in business with Ross Perot Jr., the team owner and a major Dallas developer, and takeover king Tom Hicks, owner of hockey's Dallas Stars and baseball's Texas Rangers. And it gives the media company a stake in a controversial venture to build a downtown basketball and hockey arena, which is being subsidized by a new levy on taxpayers.

The griping prompted Executive Editor Gilbert Bailon to hold a meeting last week with nearly 150 staffers. In a computer response to the newsroom, Bailon said he was "stunned" by the reporters' posting of the memo and that "it's probably a self-fulfilling prophecy that our credibility will suffer because of the arena investment."

In an interview, Bailon describes "the perception of an awkward situation. I don't think it creates the problems that some of our staffers and some of the public may feel. We'll overcome that by showing we're going to do stories that are tough and balanced."

But critics see the Morning News as too close to such projects as the $335 million arena venture. "I just don't see how they can ever be objective in reporting on it," says City Council member Donna Blumer. "People in Dallas are used to having a newspaper that's one-sided and boosterish. Every big project that comes before the voters, they're a virtual PR campaign."

Says Jim Schutze, a reporter for the alternative Dallas Observer: "People feel the News is so hip-deep in local real estate and related issues that it can't be believed on a whole array of public-policy stories."

Belo dismisses such concerns. "I don't see that a minority ownership in a sports franchise--in which the organization has no actual say-so in the running of that franchise--is really much less of a conflict than the fact that 85 to 90 percent of our revenue base comes from advertisers in our community," says spokesman Harold Gaar. "We face these issues all the time."

The sports ownership dilemma is hardly new; the Chicago Tribune's parent company has owned the Chicago Cubs for years. But it is not easily finessed. "After meticulous research, I have discovered there is nothing to criticize about the Mavericks," deadpanned sportswriter Tim Cowlishaw in a column on the Belo move.

The larger problem is "the perception of the community that we're in bed with the powers that be," one staffer said. As the city hall reporters put it: "Our track record is not good in covering issues in which Belo, the Morning News or top officers have a vested interest or strong personal viewpoint."

Belo, for example, gave $5,000 to the Yes! For Dallas committee to promote the tax for the basketball arena. The company has pledged $100,000 toward the city's bid to land the 2012 Olympics. And Belo is a financial backer of the Dallas Plan, a group pushing for the massive Trinity River redevelopment project, which involves $246 million in local bonds.

Last year, on the eve of the bond issue vote, city hall reporter Robert Ingrassia filed a story whose lead paragraph said that members of the Dallas Plan were endorsing the bond issue and former Dallas mayor Adlene Harrison was opposing it. The piece ran in the first edition. But Publisher Burl Osborne then ordered that Harrison's comments be taken out of the lead and buried deep in the story, after it jumped from the front page.

Ingrassia vowed to remove his byline, and a compromise was reached in which Harrison's stance was dropped to the fourth paragraph. Ingrassia declined to comment.

"On the face of it, it looks like it was done for a political purpose," says editor Bailon. "It wasn't really done that way, but that's the perception." Ingrassia's story, he says, was "not as balanced as it should have been."

In another incident, television critic Ed Bark wrote a column last year on the impact of a popular anchor defecting from WFAA-TV, the city's highly rated ABC affiliate. The paper's president spiked the column, saying the matter had been covered enough. Belo owns not just the newspaper but also WFAA.

"It was disheartening," Bark says. "I was given a reason; I don't think it was a valid one. We analyze other events ad nauseam." He says corporate sensitivity was "unquestionably" involved.

When Belo bought a chunk of the Dallas Mavericks late last month, the Morning News ran an 11-paragraph story on Page 2 of the sports section. Only Belo's chairman and a company spokesman were quoted.

Later than evening, the city hall bureau called in a reaction from City Council member Blumer, who said she didn't see "how anybody can trust what they read about the arena from here on out if Belo is part of the ownership."

Bailon ordered that Blumer's comments not be used because, he said in his memo, the article had no other reaction. "The story cried out for more than a bombshell quote standing alone," he said.

The editor maintains that the Morning News, while including "disclaimers" about the company's interest, will remain aggressive in covering the civic projects. "I've told our reporters, 'Don't worry about Belo's involvement,'" he says.