Karleff says Post editors give her leeway on such decisions. “Diane—she’s been around a long time,” he says. “She knows the boundaries, she knows what would be crossing the boundaries and I would trust that decisions she makes in her position and years of being financial journalist, that she would know when she should disclose that. As editor at large, we do leave a lot of those decisions up to her.”

Still, Karleff acknowledges: “It’s a good point to raise and something we will consider in the future.”

In this case, the Post made a serious mistake.

Fairfax’s stake is neither “tiny,” “passive,” nor remotely comparable to that of an advertiser.

While Fairfax has little voting power, it owns about 10.5 percent of Canwest’s economic value (known as market capitalization). It beggars belief that Watsa and Fairfax don’t have clout, if for no other reason than their ability to push the stock price down by selling off their stake at a time when Canwest can ill afford it: Its shares are down 70 percent so far this year.

Tell us an advertiser that can do that.

Second, even before the Francis’s columns ran, Fairfax had a well-established history as an active, not to mention controversial, investor. For instance, it was among a small number of companies to sue analysts and short sellers for allegedly trying to take to take it down by spreading false rumors about its accounting—and soon thereafter announced—that’s right—a major accounting problem. For background, here is a good Fortune piece from last year, which has eye-popping details like Fairfax’s law firm allegedly hiring “tails” to follow hedge-fund workers.

Here’s how the Post’s sister paper, the Edmonton Journal, described the company in August 2007 (before Fairfax bought its big stake in their parent):

Fairfax has been a tempting target for short sellers. The company headed by Watsa, who built his property-casualty insurer through acquisitions, has been plagued by erratic earnings and accounting errors.”

What’s more, Fairfax, much like Warren Buffett’s Berkshire Hathaway and unlike a mutual fund or other passive investors, has often built stakes in and bought companies outright (indeed, last week it bought a controlling stake in a Minnesota animal-feed company). And—wouldn’t you know?—the day after the second of Francis’ columns appeared, it emerged in the Globe and Mail that Watsa and Fairfax were in talks with the Asper family to take struggling Canwest private.

It is odd that Karleff would say—even today—that the investment is passive, when the “passive” investor was in talks to buy his paper’s parent. What’s more, the Post’s most recent news stories about Fairfax haven’t mentioned the relationship or the Canwest/Fairfax talks. How does that work?

And the “everybody knows that” defense doesn’t wash either. Everyone on earth knows Rupert Murdoch owns The Wall Street Journal, but that doesn’t prevent it from disclosing the relationship when it writes about News Corp. That’s just being fair to readers.

There is no suggestion Francis or her editors knew about the discussions, which had to be going on at the time of the columns—before they ran—but the turn of events illustrates why it’s important for the press to get everything on the table. It just looks bad to speak kindly of a company that owns a significant part of your parent without disclosing it. It looks much worse when that company is engaged in talks to bail you out.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.