Zachary Roth, who reported on the “Karen Ryan” video news releases, emails to explain how it works:
Here’s what happens: a government agency (say, HHS) decides it wants to promote the Medicare drug legislation or whatever. It hires a PR company to handle all aspects of this, including making a VNR. That PR company (I think it was Ketchum, in the case of the Medicare legislation) hires another company (Karen Ryan’s company) to make the thing. Then it hires another company (often a company called Medialink) to distribute the VNR. That company distributes the VNR by paying for transmission time on various satellite news feeds, run by CNN, Fox, CBS, AP or whoever. Local stations also pay the owners of the news feeds to gain access to the stories.
So CNN, for instance, is getting paid both by the local stations who take the stories, and by the company distributing the VNR (say, Medialink). That company is getting paid by the PR company, and the Pr company is getting paid by HHS. So if you connect it all up, you could say that the government is paying the media outlets. But there are enough steps in the chain that HHS can appear to have clean hands. It’s laundering, basically.
After I exposed CNN’s role in the Karen Ryan business, they changed their procedure to ensure that they send out VNR material to local stations on a separate feed, rather than mixing it in with their legitimate CNN-produced news stories, as they had previously done. I have no idea whether they’ve kept to this.