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Rorschach and Nite Owl II learned by Mark Felt that someone (whom the heroes presume to be Underboss) meant to kill two reporters. On November 5 of 1973 they found that both of them are already dead, lying in the Underboss' car together with a stock of weapons delivered to him by an unknown ally. Underboss claims he had nothing to do with it, and that he was set up. In the end, the duo manage to corner him, but the Comedian sniped him from afar, causing to fall into a coma, before he could reveal who set him up preventing thus the publication of the scandal.
Probably, the whole Underboss case was designed by Nixon's government to eliminate the reporters in a realistic way, as Underboss previously had a grudge against them. Nixon thus continued his Presidency term.
The assassination of Woodward and Bernstein is an important point of divergence between the alternative world of Watchmen and the real world. The investigation of Watergate was buried and Nixon remained in power into the 1980s.
The event is mentioned in the comic book and there is some speculation that the Comedian was the assassin, under governmental orders. The video game Watchmen: The End Is Nigh gives more details surrounding their assassination and and also establishes the involvement by Underboss, Nite Owl and Rorschach in their discovery. These are not mentioned in the book.