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When I covered small cities in Connecticut years ago, having a real news-generator in your midst was a blessing, to be milked to the hilt. The Day of New London did such a great job covering the General Dynamics (NYSE:GD) defense plant that for years that company pulled its ads from the paper and boycotted its reporters.

Today in Utah, the ordinary news media dynamics just don't work that way. Overstock.com (NASDAQ:OSTK), which is based in Salt Lake City, isn't about to boycott the media in its hometown. On the contrary, they're solidly in its corner and have been for years -- systematically serving up a diet of pap to the people of Utah. It's reached the point that the Salt Lake Tribune and Deseret News, as well as the Associated Press bureau, at times seem almost to function as extensions of Overstock.com's p.r. department.

By that I mean that bad news about the company is either ignored or spun the way the company wants it spun. When there is good news, they lavish attention on the company. Critics of the company are referred to disparagingly, even slanderously, by the famously foul-mouthed CEO Patrick Byrne, usually without given an opportunity to respond.

Lastly and perhaps most importantly, any actual investigative, critical and in-depth reporting of the company, despite its national reputation for questionable conduct and an ongoing SEC investigation, is entirely neglected. The Day staff of the late 1970s, and even my own understaffed Hartford Courant bureau, would have been all over an Overstock like a wet rag.

The sheer awfulness of the Utah papers in their "coverage" of the company was on full display in the week leading up to Christmas. Both the Salt Lake Tribune and the AP churned out puff pieces on Overstock's latest p.r. stunt, an auction of excess inventory. The Trib's story can be found here, and the AP's here.

There's nothing wrong with the media serving up pap like this on occasion. It's called "balance." But if that's all they do, if there is no negative or skeptical coverage when warranted, the only explanation is a simple absence of guts. Caused, I presume, by fear of the famously vindictive Byrne.

Both newspapers and the AP bureau have said not a word about Byrne's famously nutty outbursts, such as the outburst in the state legislature that went unreported in the Utah media in 2007. His misogynistic tantrum in 2005, in which he speculated about a female reporter giving "blowjobs to Goldman Sachs traders," has gone unmentioned in the Utah media to this day.

Ditto for total radio silence on Byrne's Facebook pretexting scheme.

More recently, they've uttered not a word about the libel suit against Byrne that has resulted in the shutdown of Byrne's conspiracist site, Deep Capture. It has remained shut for the past two months.

Not even a pending motion to hold Byrne in contempt of court has stirred the Utah media to write a single word. If the media there were to write about it, however, you can bet that it would side with Byrne.

The AP article was written by one of the most shameless defenders of Byrne in the Utah media, business writer Paul Foy. Foy gained his reputation for spinelessness as the author of an awful piece in March 2010 on Overstock's first ever reported profit. It contained gems like the following:

Byrne, who owns nearly 30 percent of the company's shares, says Overstock's accounting errors were generally conservative. The latest involved 0.1 percent of revenue and gave the company no advantage, he said.

This is beyond bad journalism. It is Journalism 101 that you don't publish lies just because the person you're interviewing is a liar. Foy knew perfectly well, because he had spent days interviewing white collar crime blogger Sam Antrar, that what he called "accounting errors" was actually a raunchy accounting, later corrected in a restatement, that had turned a much-ballyhooed fourth quarter 2008 profit into a loss. When the phony fourth-quarter profits were announced in January 2009, it pushed up Overstock shares by 21%.

Byrne minimized the significance of the restatement and Foy, who knew better, let him. In effect, he was an accomplice to Byrne in his effort to mislead the readers of AP dispatches.

Foy's disgraceful conduct was typical. No one in the Utah media pointed out the significance of the restatements or that they vindicated Sam Antar, who had been viciously attacked by Byrne for correctly pointing out that Overstock's accounting was faulty.

Foy's article was not a spot-news piece, I must add. It was days in the making. Instead of pointing out any of the stuff I just mentioned, or quote Sam's blog, he cravenly quoted Byrne likening Sam to Bernie Madoff, with no response from Sam.

Similarly, the Deseret News is so frightened of Byrne that it stays away from reporting on the company except to generate puffery.

When I pointed out a few weeks ago that the Utah media hadn't made any mention of the company's abysmal third-quarter report, or its disclosure that it was close to defaulting on banking covenants, I received an email from the News's business editor, Jordan Burke.

"We're building up the staff so we haven't had time to go after all the stories we'd like to," he said.

I wrote back: "Just out curiosity, is that your explanation for not covering Overstock's third quarter earnings? You didn't have the staff?" There was no response.

You can bet your life that if the Deseret News ever does "staff up," it will set loose its hungry reporters not on actual journalism about Overstock, but on glorified public relations. After all, there's plenty of competition on that score from the AP bureau and the Salt Lake Tribune.

What's sad is that this kind of systematic cowardice is not unique to Utah. Newspapers around the country are cutting back on their staffs. Reporters are forced to seek jobs elsewhere, and to cling to the ones they have. There's simply nothing to be gained by writing stories about a local businessman that are going to result in angry approaches to one's boss.

Writing puff pieces, on the other hand, results in praise, pats on the back from the local burghers -- and, who knows? Perhaps a job somewhere down the pike. The only drawback, I guess, is that you've got to look at yourself when you shave every morning.

Source: Utah Newspapers, AP, Continue To Shill For Overstock.com