The simplest but perhaps most cynical explanation is that companies provide reporters with early, embargoed information because they want to manage or control the way that information is packaged into a story. In other words, companies want to be able to spin the information in a way that best suits their corporate interests.

So, when a drug company calls me to discuss the results of a pivotal phase III trial, they want to apply their positive spin to the data before they are released publicly. This is especially true if there's some wrinkle in the data that the company fears will be construed negatively.

I like to think that after more than a decade covering drugs and biotech I'm immune to these corporate spin jobs. I can't speak for the rest of media.

A less cynical explanation but also valid: Embargoed information is a courtesy to reporters who need time to report and write stories that can often be complicated to explain. This is why medical journals, for instance, give reporters a 5-7 days advance notice on newly published studies. Companies also use embargoes to ensure media coverage of good news -- I'm more likely to cover something that I receive in advance.

The Verdict on Mayer and Yahoo!

I'm not a securities lawyer but this practice doesn't violate SEC laws, in my opinion. The sharing of material information is kosher, within limits. It becomes illegal -- insider trading -- if or when someone acts on the material information by buying or selling stocks. I'm also assuming that companies provide me with embargoed access to material information only after checking with their lawyers that the practice is legal. And remember, reporters only gain access to embargoed information after pledging not to disclose until an agreed-upon time.

Is all this fair? Not really. I understand and sympathize with investors who will be angry after learning about this secret media perk. It's not fair, which is one of the reasons why I'm blowing the lid off the practice with this column. I've also taken a very public stance against unfair, selective disclosure practices, like what occurred this spring at the European Association for the Study of Liver Disease annual meeting.

I'm agnostic about media embargoes. Yes, I take advantage of them when offered but I wouldn't care one lick if they disappeared tomorrow. On balance, embargoes help a little but raise too many risks and cause too many problems, as evidenced Tuesday with the Vivus-USA Today fiasco.

So, now you know.

How do you feel about media embargoes of material information? Should this practice be banned? Is it okay as long as safeguards are in place? Share your thoughts or ask questions in the comment section below.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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