A FORMER sex worker in a blonde wig versus the executive producer of a tabloid television current affairs show. Now that's some ''she said, he said'' journalism for you. Pick your rogue; who do you believe?

It seemed impossible, but the strange tale of federal Labor MP Craig Thomson and his credit card has actually become stranger. The Nine Network found itself drawn into a debate about media standards after the lady in the wig raced off to the rival Seven Network to recant a sworn statement that she'd slept with Thomson, and he'd settled the bill by credit card.

The government wants to keep the national conversation on its cash handouts and the economy. Picking a fight with media barons would, as they say in the political backrooms, change the conversation. 

Channel Nine broadcast her supposition anyway, even though in her mind, she'd already run a mile from it (almost to New Zealand, where she'd discovered on reflection she'd actually been at the time of the alleged encounter).

Unsurprisingly, the network had to defend its decision to ignore the minor inconvenience of her retraction. The Nine defence was this: the woman had actually stood by her identification of Thomson in a conversation with reporter Justin Armsden. She'd just finally twigged the man she was identifying was that Craig Thomson - the chap who people say might bring down the Gillard government. There might just be consequences in positively identifying that Craig Thomson.

She recanted in a ''mad panic'', said A Current Affair executive producer Grant Williams. He said she'd rung them during Thomson's statement to Parliament. You could hear the MP talking in the background.

And for the record, they had not broadcast her on-camera interview. They had handed material over to police. They had never said the lady in the wig was the prostitute they alleged slept with Thomson in May 2005; in fact they were aware of allegations that there was another party involved.

This was an episode of tabloid TV Underbelly - an outbreak of prime time, bitch-slapping madness. A manifestation of the vicious competition for ratings between A Current Affair and Today Tonight.

And regardless of who was telling the truth about who said what to whom when, and of the merits of journalists continuing to investigate Thomson and his activities, the low-rent imbroglio became a neat case study for folks feeling the media in Australia is all power and swagger and no responsibility.

Which inevitably raised the question (as Bob Brown also did, when the former Greens leader said farewell to politics at the National Press Club last week): where is that Finkelstein review of our media?

In March, Ray Finkelstein, QC, recommended much tougher regulation for the print media. His contentious blueprint has not been sighted since, apart from generating a great deal of thunder in The Australian about the venality of any future curbs on press freedom - serving as a warning to the Gillard government in 40-point bold type. Back off, busters; take us on at your peril.

Word is that media policy is coming up for cabinet consideration over the next little while.

The official conversation is yet to be had, but the government appears to have mixed feelings about whether to accept Finkelstein's recommendations.

The government must also decide whether it wants all media, television, print and online, to be policed by a single regulator. A no-brainer, right? Nope, that's deeply contentious in the industry, where newspapers have had self-regulation.

Newspaper publishers are adamantly opposed to the central Finkelstein recommendation of a government-funded News Media Council. Some in Labor point to the watchful presence in the Prime Minister's office of former Fairfax executive Bruce Wolpe, who now tends Julia Gillard's relations with business. Word is Wolpe is backing the publishers, counselling Gillard to be cautious.

The Australian Press Council now has an activist chairman, Julian Disney, who takes standards and ethics seriously. Question is, is Disney proactive enough to convince Communications Minister Stephen Conroy to stick with an enhanced Press Council model for newspapers?

Some Labor backbenchers want more forceful change. Joel Fitzgibbon and Steve Gibbons used the tabloid television episode to urge the government to push on. ''Those of us with a strong interest in these matters will actively and aggressively push,'' Fitzgibbon said.

But pushing ahead with significant media reform has the potential to strand the government between political pragmatism and what some would regard as sound policy principle (those who regard this industry as lazy, lax, complacent, self-referential, over-opinionated and deserving of a good hard kick in the pants).

The government wants to keep the national conversation on its cash handouts and the economy. It's fully intent on its empathy offensive about cost-of-living pressures. Picking a fight with media barons would, as they say in the political backrooms, change the conversation.

It's a conundrum this, because the public would probably be on board with tougher media standards. If the feedback I get about our deficiencies is any indicator, the public would think - regardless of the merits of our industry's legitimate ''free expression'' rebuttal - that we had it coming.

Problem is, the media will tell the public what the government is doing on media regulation. It's an unavoidable filter - and one that has inspired governments throughout history to tread gently.

Katharine Murphy is national affairs correspondent.

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