Sep 1, 2008 12:00 PM, Patricia Odell / Executive Editor

For McDonald's, it was a true breakthrough: a deal to place its product — cups of (fake) iced coffee — in a place that had been strictly off limits: front and center on the anchor desks of a live daily morning news program.

It's “innovative” and “really creative,” McDonald's spokesperson Danya Proud says.

For KVVU, the Las Vegas TV station, a Fox affiliate owned by Meredith Corp., it was a deathblow to its journalistic integrity and raised the very real specter that such agreements could spread to other serious news gathering enterprises.

If Meredith had been flush with cash when approached about the placement, McDonald's and its agency, Karsh and Hagen, would likely have been laughed out of the newsroom. But it was not.

Meredith, like many other ad-supported businesses, has seen its sales plummet. Revenue for the year dropped 10%, to $385.2 million from $428.5 million one year ago. Broadcasting revenue was down 8.6% and magazine pages declined 20%. Fourth-quarter profit plunged 63%.

To right this listing ship, Meredith is executing a plan that includes — here's where the product placement deal comes in — diversifying its revenue streams, many of which are not dependent on traditional advertising.

When asked if the placement deal, reportedly the first on a news program, was driven by the company's financial state, Paul Karpowicz, the president of the Meredith Broadcast Group, says, “Not completely.”

“It's not as if we said, ‘Oh, gosh, the economy is bad; we’re going to open up different platforms,' ” he says. “It's our responsibility to continue to look for creative ways to serve our advertisers without jeopardizing or diminishing the high standards we have always had as it relates to our news content. In this case, I believe we have not crossed the line.”

Karpowicz reasoned that the broadcast, “Fox Five News: Live in Las Vegas,” which airs from 7 a.m. to 9 a.m., wasn't really a news program, but rather “more of a lifestyle show with more features.” But the word “news” appears in the name of the show, which might lead regular-thinking people to believe it's a news program. “That's true,” he says.

Over the years, marketers have worked hard to seek out creative, innovative product placement deals that have delivered enormous exposure and success for some brands. But news desks should be off limits.

The McDonald's arrangement has exposed a vulnerability that led at least one news outlet to lower its standards. That means these enterprises have to take an even stiffer stance to protect the honor of both their journalists and journalism.

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