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from: NY Post

PAID-FOR PUNDIT
By TIM ARANGO

May 3, 2006 -- Major U.S. newspapers often quote Jeff Kagan - regarded as one of the most influential telecommunications analysts - but invariably leave out the fact that he is paid by many companies in the industry to offer his comments to the media.

Kagan, who according to his Web site was quoted nearly 600 times last year, has never hidden his financial relationship with the companies he covers. His Web site declares: "Kagan is a 'fee-based' analyst. He gives interviews, analysis and insights to the media for free, and charges everyone else." But the publications that quote him rarely, if ever, mention the financial ties.

A recent Philadelphia Inquirer article on Sprint described Kagan as "an independent telecommunica- tions analyst in Atlanta." A New York Times story from last month about Verizon called Kagan a "telecommunications analyst and consultant."

The Post has similarly quoted Kagan as an independent analyst, most recently last December.

Both Sprint and Verizon are clients of Kagan's, according to his Web site. Kagan declined to talk specifically about fees, but one source said a typical arrangement is for the company to pay $10,000 a month in exchange for his services.

"Sometimes they're happy with what I say, and sometimes they're not," he told The Post.

BellSouth, a Kagan client, said in a statement that it uses various analysts and "will continue to value their services as long as the industry analyst community is able to provide independent research that is accurate and free of bias."

A rep for Sprint, which has hired Kagan in the past, said: "He's known the telecommunications industry for years and knows all the key players." Other major telecom companies that are Kagan clients either did not return calls or declined to comment.

Kagan admits he is rarely asked by reporters if he is being paid by the companies he is speaking about.

He said he is more frequently asked if he has an investment relationship with a particular company, and does not hold stock in the companies he counts as clients.

"If they don't have me on retainer I will talk about them" in the media, Kagan said. "But my comments won't be that deep."

He noted that other organizations, such as Yankee Group, Forrester and Gartner, are also funded by the industries they cover.

The Wall Street analyst scandal has made it common practice for reporters to disclose investment banking relationships when quoting analysts from Wall Street firms. But when quoting analysts from other organizations, conflicts are rarely discussed.

"It's not a securities issue," said an analyst at a Wall Street firm. "It's a question of public trust in journalism."

tim.arango@nypost.com