The following is a transcription of the May 21, 2005 edition of "FOX News Watch," that has been edited for clarity:

ERIC BURNS, HOST: This week, on "FOX News Watch":

This week, on "FOX News Watch," we'll take you behind the scenes of the mistake in "Newsweek" that apparently led to violence in Afghanistan and to anger and bitterness at the White House.

Also, some election news you haven't heard yet, and you will want to hear.

The new smash-hit series on Court TV.

And when is a movie much more than a movie?

First the headlines, then us.

(NEWSBREAK)

BURNS: George Washington supposedly could not tell a lie. "Newsweek," apparently, in a previous issue, did. "Newsweek" was the news this week, and that is where we begin, with Jim Pinkerton of "Newsday"; syndicated columnist Cal Thomas; Jane Hall of the America University; and media writer Neal Gabler.

I'm Eric Burns. "FOX News Watch" is coming right up.

"The New York Post" reacted to "Newsweek"'s retraction of its Koran-in-the-toilet story with a "Newsweek"-in-the-toilet front-page photo.

That's how the "Post" reacted to what "Newsweek" did. Jim, how do you react to it?

JIM PINKERTON, "NEWSDAY": Well, I think "Newsweek"'s credibility has been destroyed by this. That's not - not.

BURNS: That's strong words.

PINKERTON: Strong word - not just because of the original article. They published that; the hung - they got criticism; they hung tough for awhile. Then they apologized. Then they retracted. But everybody in "Newsweek" says, by the way, we didn't really retract it. We still sort of stand by it. We just have to do it because the government made us and all the other media are picking up on that line.

So, who knows what anybody is to think about what "Newsweek" really believes about the Koran-flushing story. All we know is that if they were really serious - if they were - they would fire somebody.

JANE HALL, AMERICAN UNIVERSITY: I think that "Newsweek" screwed up, and they should have said so sooner. They first said, We extend our sympathies to the people who died. But they apologized a lot more quickly than some media organizations, and I think that it's not strictly true yet - we do not know - I think it's wrong for people to say, Well, it may be true. I mean, they should say, We screwed up, but the person we talked to was a high-level source and we - he believed it, or she believed it at the time.

I think that it's not true that it may never be true, and some of that's getting lost in all the beating up on "Newsweek" endlessly.

BURNS: Cal, I've described this on the air as a minor ethical lapse, could have major repercussions. I called it minor because they - "Newsweek" did have a source; the source later went back.

CAL THOMAS, SYNDICATED COLUMNIST: Right.

BURNS: They did show it to someone at the Pentagon, who might not have been a - in a position to know whether the reporting was accurate.

But is that fair to say that they didn't do anything terribly wrong, it just had awful side effects?

THOMAS: Well, a couple of questions.

First of all, I think they should have had a second source. I don't like the anonymous sources; many publications - even "The New York Times" say they want to get away from those now. "USA Today" has cut back on them markedly.

BURNS: Seventy-five percent, supposedly.

THOMAS: Exactly. Look.

BURNS: .fewer anonymous sources.

THOMAS: Right. But this story fed into a number of templates:.

It fed into the jihadists' template, who - they're always looking for something to exercise their people in the street and to point out America's evil and rotten and hates Islam. And, of course, this fuels their media that do the same thing.

It fed into the - particularly, the conservative critics' template, who are always looking for more information - and there's plenty out there - to show that the media's liberal.

And it flew - it fed into the anti-Bush, anti-military template that - of people who believe in the media, that they're anti-Bush, anti- Republican, and anti-U.S. military.

So there were at least three templates on exhibition here.

BURNS: Neal? Four?

NEAL GABLER, MEDIA WRITER: Well, they made some big mistakes here.

I mean, one, they talked about sources when they only had one. They did not categorically ask the Defense Department official to deny each element of the story. And they talked about expected investigative conclusions. Why couldn't they have just waited for the report?

But having said all of that - you talk about a minor transgression. You know, I happen to think that yes, this is a relatively minor transgression. After all, the source didn't deny that he saw - there was information about the Koran being desecrated. He just denied now that he saw it in the SouthCom Report, which is the military report about Guantanamo.

The Defense Department itself - though it had called this demonstrably false - then goes on to say - actually, in yesterday's "New York Times," that even though it's demonstrably false, they are now investigating reports of the Koran's being mishandles - this is in "The New York Times" And the results of this investigation will be made public.

Well, wait a minute. It's demonstrably false, but we're going to investigate to see whether it's demonstrably false.

PINKERTON: Look, there's no question there's been abuses going on out there. "The New York Times" on Friday had a big article based on a 2,000- page report from the Pentagon about the abuses at the Bagram Air Force base. I - unless they completely fabricated that, which I don't think they did, they have a lot of evidence for what they're saying.

But what's revealing about the way "Newsweek" operated on this is that they were in such a rush to get this into the magazine, evidently, that they - that they flipped their standards, because in 1998, some people will recall, the same reporter, Michael Isikoff, had the story dead cold about Clinton and - President Clinton and Monica Lewinsky, and "Newsweek" said, Oh no, we can't run with that ever, really, until it leaked out to the Drudge Report.

That was a case where they were holding fire, I think, because they like Clinton. In this case, they pulled the trigger because they don't like Bush.

GABLER: What? You think that Isikoff liked Clinton? The reason they said..

(CROSSTALK)

GABLER: ..they could not get a confirmation from Monica Lewinsky.

(CROSSTALK)

BURNS: Let - let Jane - get us back to this particular.

HALL: Back to this particular story.

I think that Cal's point about template is a very valid point, because I have talked with a lot of people who feel that this proves that "Newsweek" was quote-unquote "out to get the U.S. military." I think the point is about Michael Isikoff is I think that shows there was not an ideological agenda, and a lot of people are regrettably concluding that.

BURNS: We began this segment with a photo from "The New York Post" and now we're going to end it with another: this one, which appeared in both the "Post" and its sister paper, London's "Sun." The parent, by the way, is News Corp., which also owns FOX News Channel.

The Pentagon is very upset by this. We will keep our eye on the coverage in the week ahead.

It's time now for a break. We will be back to ask these questions about "Newsweek":

ANNOUNCER: Did the White House make "Newsweek" retract the story? Did the Pentagon make them do it? Or did their own sense of fair play make them do it?

More "FOX News Watch" after this.

(COMMERCIAL BREAK)

BURNS: Here are presidential Press Secretary Scott McClellan, and then Defense Secretary Donald Rumsfeld, on the "Newsweek" story.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE SPOKESMAN: Look, this - this report caused serious damage to the image of the United States abroad, and "Newsweek" has said that they got it wrong.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: The only other thing I'd say about it is, people lost their lives; people are dead. And that's unfortunate. And people need to be very careful about what they say.

(END VIDEO CLIP)

BURNS: Did the "Newsweek" - I'm sorry, did the White House or the Pentagon force "Newsweek"'s retraction?

GABLER: Well, force is a difficult word to parse here.

I mean, did they pressure them to retract. Certainly they did.

BURNS: And were they right to apply pressure to "Newsweek" to retract?

GABLER: I don't believe so, and I'll tell you why.

"Newsweek" did not kill Muslims. To paraphrase a famous conservative quote, `"Muslims killed Muslims." And one journalist this week said that if Al Jazeera has reported that the government had done something, you know, atrocious to the Catholic Church, you wouldn't have had Catholics going out killing one another.

THOMAS: Look, ideas have consequences and so do words.

There is a - there are criminal penalties for incitement to riot in this country And while I would not apply that in a journalistic sense to "Newsweek," they are certainly, at least in a passive way, of inciting to riot.

BURNS: Which means that the role, Jane, of the White House, of the Pentagon, would be what? To do what they did, which is to say complain strongly?

HALL: I think they're - they have every right to complain strongly.

To be fair, neither they nor "Newsweek" seems to have understood that this was a blasphemy, a sacrilege. Days passed before they complained about the story, and there have been reports on how the State Department is angry that the Defense Department didn't get this.

But I think a bigger question that's coming out now is, McClellan in the press conference calling for "Newsweek" to somehow make amends by pointing out how well the United States treats its prisoners, that this is not customary, that they respect religion. Then you're going to have the media responding as they did, saying, Well, you're trying to edit "Newsweek," which is - which is not a helpful thing to be saying.

The White House, I think - it sees this as an opportunity to push the fact that they think the media are - many people think the media are out to get the Bush administration.

PINKERTON: I think John Podhoretz in "The New York Post" said it well, though: the White House trying to get "Newsweek" to do better - it's like giving a drunk driver the keys again and saying, Now, look, drive better this time. I think that's a failed strategy for the White House. The White House and the Pentagon are perfectly within their rights to demand retractions and so on.

I think there's a larger issue here, and that is: I looked up on Google, Koran and flush, and I got 40,000 hits, OK? We got to realize now that globalization, you know, which we all think of as cool because it means we can bring - put McDonald's in Nigeria and so on - also means that they're looking at all our information in real time.

And so when history of this whole incident is recorded and being say that on May 6, a Pakistani cricket player held a press conference denouncing this "Newsweek" story, and the fact that we didn't - the U.S. government didn't react and go right into Pakistan and say, Now, look, that's lie, or whatever the case may be - if we neglect the larger implications of globalization of information, we're going to keep losing these kinds of battles.

BURNS: But we're going to lose them anyhow, when - when a retraction - when it is presupposed that a retraction will somehow make people in the Muslim world feel more favorably disposed toward us.

I would submit, Cal, that even if "Newsweek" tried to make it self a PR agency of the White House in this case, it would not be able to change the minds of people who are just looking for reasons.

THOMAS: Right.

BURNS: Are they not? To protest.

THOMAS: Yes, of course.

BURNS: .against this country?

THOMAS: Yes. I had the same thing happen to me; we discussed it previously - I think last year on the show, after an interview I did for my column with John Ashcroft, who - then the attorney general, who told a little joke that he had heard about the difference between Islam and Christianity. It was three or four months it was out there before somebody picked up on it with an activist group among the Islamic jihadists, and they made a big deal of it in the media for political ends.

BURNS: Well, listen, all of this being the case, Neal, what should "Newsweek" do? Jim suggested a segment ago, one of the things it should do is fire some people. How do you feel about that? And in addition to that, what should the magazine do?

GABLER: I think "Newsweek" should have retracted on its own. I didn't mean what I - when you said earlier, you know, were they pressured into a retraction - I think they should have retracted on their own.

(CROSSTALK)

GABLER: And I think they ought to - and I think, you know, from henceforth - I mean, there's no way they can undo the damage. They're not going to get, you know, 16 people resurrected.

What they've got to do is know from this point forward, how you use anonymous sources, using them carefully - I don't think you - you go back and - and start slavishly bowing down to the administration that - we already have a network that does that. We don't need another magazine to do it.

So, you know, I think what they've got do is..

BURNS: Is that a reference - a reference to FOX? Because it cannot go unremarked and criticized.

GABLER: What we need is "Newsweek" to be better journalistically. That's the way your correct these things.

BURNS: Which is to say that in this particular case - I guess you're saying, Neal, in this particular case, there's nothing that can be done that hasn't been done. It's just in the future, we have to make sure it doesn't happen again.

HALL: Well, first of all, I think we are in a climate where there's a lot of pressure on the media. I think that, you know, there are false press releases; there are pundits being paid; there's a lot of pressure from a lot of fronts on the media against doing what a lot of people think traditionally is their job: to report the facts and let the people decide. I think that's the slogan that goes around these days.

I think The Wall Street Journal had a very interesting editorial that said, Why didn't we use some of our resources to investigate prisons in Saudi Arabia, and abuses in some of these countries that are condemning us? I actually think they have a point about that.

PINKERTON: And Tom Friedman made a similar argument in The New York Times. He said, Look, part of the game here is changing the subject. Yes, bad things happen. It's what (INAUDIBLE) called friction in war. But when there's a bigger issue going on at hand, including the fact that all this - as Neal said, all these Muslims killing each other - that should have been more of a focus and the U.S. government should have put its resources on that.

BURNS: It's time for another break. We'll be back with our "Quick Takes."

ANNOUNCER: The final returns are finally in. Who did the media vote for in 2004?

And is this a movie or a life-changing experience?

That and more when "FOX News Watch" continues.

(COMMERCIAL BREAK)

BURNS: It's time for our "Quick Takes" on the media.

Headline number one: "Kerry Wins in a Landslide!"

The Department of Public Policy at the University of Connecticut has asked 300 journalists who they voted for for president in 2004. Sixty- eight percent of them said they voted for Kerry; 25 percent said they voted for Bush.

Which tells you, Jane, what about their coverage?

HALL: Well, you know, I don't have enough information about this survey, frankly. I don't know how - 300 does not sound like a large sample. Did they interview people in the surrounding area?

I mean, I know this confirms a lot of people's prejudices about the media; I'm not sure it's true.

PINKERTON: There's a phrase in law: res ipso loquitur, which means the thing speaks for itself.

BURNS: Yes, we all know what it means.

(LAUGHTER)

(CROSSTALK)

THOMAS: Look - in fact, it templates again.

This isn't an isolated poll. Poll after poll over the last 25 years have shown exactly the same thing: most of the media, by whatever category you put them in and how many you survey, vote liberal, vote Democrat in every election.

GABLER: Vote - now see, this is the problem with this survey. The majority of people in this survey, first of all, were not reporters, number one. Only 43 percent were reporters.

BURNS: Who - who were the rest of them

GABLER: There were editors, there were columnists, there all sorts of people thrown into this hopper.

Number two.

BURNS: But they all had an impact on.

GABLER: Well, a columnist is different than a reporter.

PINKERTON: How about headline writers? Do they have an effect?

GABLER: Secondly, 54 percent of them regarded themselves as moderates. And overall, only a very small handful regard themselves as liberals. If you think that voting for John Kerry makes you a liberal - I mean, I think - I don't think you understand how this country operates.

PINKERTON: Most journalists say they're moderates - that's by definition. And most people say they're moderates.

GABLER: Most people say they're moderates.

HALL: OK, but how about?

PINKERTON: What they vote is a different story.

HALL: Let me make a point - if I were a left-winger, I would make the point that the people who own the media tend to be Republicans. So what does that say about media coverage?

THOMAS: No connection.

GABLER: I'd make a point: look at the coverage of Kerry and Gore and say that they - liberals - the media's liberal.

BURNS: "Quick Take" headline number two: "If You Report It, They Will Listen."

Court TV has one of its biggest hit shows ever these days. It is daytime coverage of the Michael Jackson trial, and it's resulted in ratings 146 percent higher than its ratings for the same time periods last year.

Cal, we discussed on this show how - a few weeks ago, how this - the Jackson trial is not playing with - in the all-news networks because it's so offensive, the charges are. But obviously, there is an audience for it.

THOMAS: Well, a hundred - sure, about 114 percent. I mean, if I'm.

BURNS: One hundred forty-six percent.

THOMAS: A hundred forty-six percent.

If I'm dining alone and have somebody come in, I've the dinner companionship by 100 percent, so.

BURNS: Let me say, in defense of Court TV, Jim, that it's - has more than one person watching.

PINKERTON: It does, but only 416,000, which, out of a country of 300 million - I'm actually kind of encouraged and heartened there's only 416,000 creeps in this country.

BURNS: That are watching that? Jane?

HALL: As an old TV reporter, I used to have that experience: our ratings are up from 0 to 2, OK?

But I do think that this (INAUDIBLE) - this proves the niche of niche of niche: Nancy Grace has moved on to CNN - you know, is on Court TV because she is somebody who is, as they said, a pounding-of-tables court reporter on this story.

GABLER: I'm with Jim. In a country of 300 million people, at least 400,000 need to get a life.

BURNS: And that's not very many, as you point out.

All right. "Quick Take" headline number three: "In Case You Haven't Heard."

The final "Star Wars" movie opened this weekend. But you probably have heard, since it has gotten more publicity than all the other events of the 21st century put together.

Jim, at this early stage, you are the only one who's seen it - and I think there's something serious here going on. What -- what is it about these movies that makes them, I guess for some people, not just a must-see, but kind of a life-transforming event?

PINKERTON: All these people dressed up in costumes; it does appear - to borrow some of Callister - like it's a religion, worshipping George Lucas, so - but I will make - and there's an interesting sideline to this. Lucas - the last couple of movies were not critical successes. They were financial successes, but not critical successes. Lucas is going to get good ink on this. AO Scott in "The New York Times" said this movie is better than "Star Wars," the first one. And why? Because it's anti-Bush. There's that line, Anakin Skywalker says, If you're not with me, you're against me. A pure play on Bush.

All the critics - David Edelstein in Slate, David Ansen in "Newsweek" - they're all jumping on the left-wing politics.

BURNS: There has to be more to it than that.

GABLER: Well, there's also the possibility that it could be opening.

BURNS: You mean the movie?

GABLER: Yes.

BURNS: Better than the first two?

GABLER: The first two were so awful..

THOMAS: This is another in a long line of boomer God substitutes. There's the good versus evil, there's the redemptive plan. It's a convenient god-requires-nothing-of-you, you just go and have a good time.

BURNS: We have to take one more break. When we come back, it'll be your turn.

(COMMERCIAL BREAK)

BURNS: About journalistic ethics, which one way or another is usually the subject on this subject, here is Loren from Creve Coeur, Missouri: "The simplest and most annoying case of bad ethics is a headline that is not backed up by the actual article, and often the article contradicts the headline. Could that be simple bias by the headline writers?"

About the man killed by police at the end of a car chase, covered live on Los Angeles television, here is Lance from Santa Monica: "The suspect demonstrated a reckless disregard for human life and he got exactly what he deserved. If more criminals would see the results broadcast, there would be fewer suspects leading cops on high-speed chases."

Rick from Swarthmore, Pennsylvania, believes such stories should be broadcast as well, but for a different reason: "Anytime the police are judge, jury and executioner, all America needs to see it. To do less is censoring our news. Besides, you report, we decide."

About the sting operation conducted by a Spokane, Washington, newspaper against Mayor Jim West, charged with homosexual pedophilia, here's Jerry from Hawaii: "Couldn't the news organization have gathered up all the data they could to support their story, then go to the police and tell them of their suspicions? Then if the police department does not respond adequately, make what they know public?"

About the use of the words "liberal" and "conservative" by broadcast- network news programs, here's Carrie (ph) from Eagle Pass, Texas: "I found it interesting that no one on your panel could or would state the true reason the media reference conservatives so often, while ignoring the label for liberals: the media would like everyone to believe that liberals are the norm and conservatives are out of the norm."

About the so-called church of Oprah, here is Doug from Webster, Wisconsin: "When Oprah dies and fails to rise from the dead, she will long be forgotten and so will her show."

Finally, when we were discussing Oprah last week, the words "Media Goddess" appeared at the bottom of the screen, leading to this e-mail from Dave in Tampa, Florida: "I loved seeing the words `Media Goddess' under Jane Hall while she was providing her comments. Maybe you should do that every week."

Actually, Dave, we call her media princess in the green room, and that's enough.

Here's our address: newswatch@foxnews.com. Please write to us. When you do, give us your full name and let us know where you live.

That's all the time we have left for this week. Let's go to yet another shot of Jane. And that's Jim Pinkerton next to her. Thank you both. Across the table, thanks to Cal Thomas, Neal Gabler.

And I'm Eric Burns, thanking you for watching. We hope you'll do it again next week, when "FOX News Watch" will be back on the air.

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