Media as Market-Makers
One man’s “scoop” is another man’s “strategic leak.”
Who knew that one of the most honest, astute revelations of how massive deals are often negotiated through the news media would come from BuzzFeed, reviled harbinger of the inevitable journalistic apocalypse to come?
But that’s exactly what business editor Peter Lauria delivered this weekend with his simple explanation, “How to Use Media to Sell a Company.” With the cold, mechanical bluntness of a clearly written set of instructions on how to jump-start a car battery, Lauria walks us through the underlying dynamics driving most deal leaks, including how valuation floors and ceilings are set.
On Twitter, Newsweek’s Jim Impocco, rightly praised the piece, but also noted that the media serve as an “unwitting market maker.” That may be true in some cases, but most journalists are far too savvy not to know that when they convert a “strategic leak” into a “scoop” that they are effectively delivering a message wholly intended to further the business interests of one of the players in the deal.
So, why do reporters do it? Because as long as the news is delivered factually and without meaningful bias, a scoop is a scoop. And if a reporter chooses not to bite, then that reporter knows that he is basically turning that scoop over to a competitor.
The best reporters scramble to assemble as much balancing material as possible to include in their initial report. But they must do so under huge time pressure and with great discretion, or they risk triggering a news stampede that shortens the half-life of their scoop. They also know the initial report is just one story in a string of stories to come, and the shrewdest reporters use that process to play sources from the sellers and buyers against each other.
So, why are there so few of such candid accounts like Lauria’s?
Because most business reporters — particularly beat reporters — do not want to poison the well of future such scoops. And that’s why we’ll never see a sentence like this broken as news:
“A flack from an M&A boutique-agency representing one of the big M&A banks called me at home last night to tell me the minimal price his client will be willing to accept when Company X is put into play.”
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