If James Packer urging Sydneysiders to back his casino plan is 'news', then that's news to Wendy Bacon. She asked senior journalists at the SMH what they thought of Packer's journalistic debut.

The media were there for the happy snap as James and Erica Packer and Sarah Murdoch, wife of Lachlan Murdoch, arrived in the Birdcage on Derby Day at Flemington racecourse on Saturday.

Packer has lots of reasons to smile. His hotel casino plan for Sydney's Barangaroo recently passed stage one of the O'Farrell government's "unsolicited proposals" process. It seems like it may get the final go-ahead without even going to tender.

But his most recent PR coup had been there for all to see that morning. There, on the front page of the Sydney Morning Herald, was a grinning Packer under the word "exclusive" — "Why Sydney needs my casino". But it was the word underneath it that grabbed the attention of some readers: "NEWS".

Inside on page 13 of the news pages, Packer's piece led the page. Underneath was the actual news by SMH state political editor Sean Nicholls: the ex-CEO of the Commonwealth Bank David Murray will oversee the Stage two of the casino approval process and the NSW Greens have asked the NSW Independent Commission against Corruption to investigate events surrounding Packer's proposal — including government changes which appear timed to advantage Packer.

The Packer piece was not news. The only news value was that it found its way into Saturday's SMH in that form as a news "exclusive" at all. For the majority of readers who read the publication online, the situation was even worse. By 12.15 Saturday, the Packer piece was number three on the SMH website and had been tweeted and recommended far more than several other strong pieces mentioning the casino. Other pieces were buried way down the site in the National Times section. Even Mike Carlton's popular column which was scathing about the casino attracted only a fraction of the retweets and recommendations.

New Matilda has spoken to several senior Fairfax journalists who do not object to the paper running an opinion piece by Packer but strongly object to promoting the piece as an exclusive, labelling it on the front page as news, and relegating it below Nicholls' strong news story.

"News" implies factual statements that have been verified. "Exclusive" suggests there is fresh information. An action of this kind would once have led the Media and Arts and Entertainment Alliance House Committee to seek an immediate explanation from senior staff. It could even have led to a stop work meeting. However, Chairperson of the House Committee Stuart Washington told New Matilda this morning that at this stage, he has not been contacted by any concerned journalists.

Washington said he expected most readers would have been aware from the by-line that it was an "op-ed" piece. When NM pointed out that this did not explain why it had been labelled news, Washington acknowledged that the piece had been "mislabelled and you can kick the arse out of us for that". Washington said that while he agreed that the mislabelling was a problem, he is more concerned at how "editorial pages can be more covertly influenced".

Washington later contacted NM to say the Packer piece had not been mislabelled and that it was not the only opinion piece to be included on a news page, pointing to Elizabeth Farrelly's column which was also in the news section of the paper. Washington is correct in pointing to the increasing tendency to include opinion with news, but Farrelly's piece was not labelled as an "exclusive". It is extremely rare for opinion pieces to carry that label. As one journalist pointed out, it may occasionally occur with a prime minister or state premier.

Washington and other SMH reporters emphasise that this incident does not suggest that SMH journalists are dropping the casino story and NM is not suggesting that they will stop investigating and analysing Packer's proposal.

At best Packer's story could be seen as a commercial opportunity predicted to attract readers. It was a slightly updated version of the spiel supporting his casino that has been repeated since February by exclusive articles in Fairfax's Financial Review and most News Ltd outlets.

In the last couple of weeks alone, Packer was keynote speaker at both a Financial Review Deutsche Bank dinner at the Museum of Contemporary Art and a Tourism and Transport Forum (TTF) at Parliament House in Canberra. His appearance at the forum led to more news coverage and photos of him sitting next to the Chair of TTF, ex-Howard government Minister Bruce Baird — the father of the NSW Treasurer Mike Baird, who supports the casino. These planned PR opportunities were timed to match the O'Farrell Government's go ahead for the Packer's project.

These editorial opportunities have been accompanied by a bonanza of millions of dollars worth of advertisements to Fairfax's Financial Review and News Ltd publications. Only the SMH and The Age were left out in the cold. Packer is known to dislike those Fairfax journalists who continue to report independently on his company. He told The Australian in June that he regarded them as "pissants".

With some of his well known critics — including David Marr, Adele Horin and Matthew Moore — leaving Fairfax on redundancy pacakges, SMH staff know that readers are watching the SMH carefully as it negotiates its economic survival while maintaining quality journalism. Some argue that overwhelming hostile letters into the SMH today show that readers see through the spin.

The Packer exclusive piece was a small triumph for his in-house lobbyist, ex-NSW ALP secretary Karl Bitar, who has starved the SMH journalists of information on this story. But whatever arguments he used to persuade the SMH edtors to place and promote the story, he is unlikely to put its reporters on what former prime minister Paul Keating once called the information "drip" which would enable them to compete for this big Sydney story on an equal footing with News Ltd reporters.

Those who defend the editorial decision to run Packer's piece as news will argue that not a lot of damage has been done in this case. But there are bigger journalistic issues at stake for independent journalism. Those who downplay the significance of the Charter of Editorial Independence as a bulwark against interference argue that if Fairfax management appoints editors who are prepared to compromise the independence of their journalists, there is little that the journalists can do to prevent this. The appointment of compliant editors has been one of the hallmarks of the less independent corporate culture at News Ltd publications.

Each time a line protecting independence is crossed, it get easier to repeat the action on the next occasion.

New Matilda attempted to contact SMH Editor in Chief Sean Alylmer without success.

UPDATE: 6 November

After we published our article yesterday, the Editor of the Saturday edition of the Sydney Morning Herald Judith Whelan contacted the author. Whelan was responsible for the decision to publish Packer's opinion piece on the news pages and to promote it on the front page as an "exclusive" and as "news".

Whelan said that a member of SMH staff (she declined to name this person) contacted her to suggest the piece, and that she agreed because the proposal was "intriguing". She thought a piece by Packer in the SMH would surprise readers and that as one "purpose of newspapers is to surprise their readers", she accepted. She sees no problems with her decision and promoted it on the front page because that way "you grab the attention of readers".

Like Washington, Whelan argues that readers would be aware that the piece was opinion and that, the SMH is an "organ of balance" and there were other pieces by reporters presenting different perspectives on the casino. She said that the online version of the article attracted many readers. When asked whether there was more of an issue online because casino pieces by SMH reporters and Michael Carlton were buried towards the bottom of the home page, she said she that she is not responsible for the presentation of the online edition.

This highlights the issue of the continuing separation of editorial decisions across different platforms. The placement of the Packer article highlighted the article and drove its distribution across social media in a way which dwarfed that of other casino reports, especially Sean Nicholls' news breaking story. New Matilda was not able to speak to Online Editor Conal Hanna so asked online expert and journalism academic Julie Posetti for her opinion of the journalistic issues raised by the online placement of articles. Posetti, who will join the University of Wollongong in 2013, does regular social media training at Fairfax.

Posetti told NM:

"Prominent placement of a story on a homepage can help drive traffic to a piece, traffic which is increasingly amplified via social media. It's a bit of a self-fulfilling prophecy when such promoted links end up with the most clicks, which in turn push them up the online story rankings."

Posetti compared this to the promotion of stories on the front page in print and went on to explain that the "risk of both approaches is that much significant, worthy content can be skipped over or under-viewed by readers".

Whelan's answers belie anxieties expressed by reporters on Fairfax mastheads about the company's approach to the casino issue. For a start, there is concern that Fairfax CEO Greg Hywood has joined Team Packer.

The Financial Review Deutsche Bank dinner was accompanied by an excited AFR blog post which records how the crowd was "hanging on their every word" as Packer and his interviewer AFR Deputy Editor James Chessell took to the stage after eating from a "delightful" menu. (One is tempted to hope the blog was intended to be humorous.)

The blog features snaps of Hywood with Packer, AFR editor Michael Stutchbury with Packer's sister Gretel, Crown Lobbyist ex-Labor senator Mark Arbib with Gretel and Erica Packer, and so on. Introducing Packer, AFR editor Clegg was quoted as saying, "we need more people having a go". There can be no doubt after that event that AFR senior editors are strong supporters of Packer — an embarrassment to some of their most independent reporters.

But Hywood dropped any semblance of media independence at the the Tourism and Transport forum last week when, as reported in The Australian, he said it was "absolutely critical" that the tourism industry support the casino proposal and rally behind Packer, who had had managed to get people to understand the "full power of gaming".

"So you have a leader. Rally around James. He's got the scale that translates into influence," Hywood said.

Hywood has close connections with the tourism industry. Before he rejoined Fairfax, he was head of Tourism Victoria from 2006. Just before he was appointed as a Director and then CEO of Fairfax in 2010, he was reported to be in line to become CEO of Tourism Australia, whose current Chair is Geoff Dixon, a director of Crown. As NM reported last week, TFF CEO John Lee, the ex-head of NSW Premier and Cabinet under Labor, embraced the casino proposal in February by urging the government to "get the digging machines out".

Back in his days at Tourism Victoria, Hywood had a formal role as a booster for Crown as the casino and Tourism Victoria had a memorandum of understanding to promote each other. In 2007, the Herald Sun reported Hywood as saying Crown was a "gateway to the Asian market for Victoria" and that it's contribution to Melbourne was "enormous".

On Saturday night after Derby Day in Melbourne, Packer partied with his friend Karl Stefanovic at Crown casino. Stefanovic, who is another good media mate, recorded a sympathetic interview earlier in the year which was broadcast on Channel Nine's Sixty Minutes on October 25 — well timed to coincide with the O'Farrell government Stage one go ahead with the Barangaroo hotel casino .

Packer's casino story still has a way to go. NSW Legislative Council member NSW Greens John Kaye has referred the O'Farrell government's changed tendering requirements under its "unsolicited proposals" procedure to the NSW Independent Commission against Corruption. Others — including Fairfax columnists — are questioning why the public interest should not be protected by a tender and thorough probity process which all other casino operations in Australia and the region have gone through.

Packer's various PR opportunities, rather than being surprising as SMH editor Whelan hoped, are noticeably repetitive. Today, Packer will continue to celebrate in his new Crown marquee at the Melbourne Cup. One thing Packer is celebrating is the bipartisan political support which he loves. Let's hope, for the public's sake, Crown does not achieve this in the media.