Biz media and Black Rock: Spurring negotiations

Yvette Kantrow, the executive editor of The Daily Deal, has some of the best insights into how the business media cover corporate America, particularly when it comes to deals. She recently dissected the coverage of Morgan Stanley’s aborted negotiations to acquire Black Rock. Kantrow believes that it was that coverage that led to Merrill Lynch entering into talks to acquire Black Rock after Morgan Stanley backed away.

Kantrow writes, “Would Merrill have known there was a void to step into if Morgan Stanley’s negotiations had never been leaked to the media? It’s possible it would have, of course, since the market chatters about potential deals all the time. But the news reports here provided several advantages to Merrill. In addition to indicating that a Morgan deal was unlikely, media reports helped make BlackRock stock too expensive for Morgan to buy; BlackRock’s shares gained about 20% in the days following [CNBC reporter Charles] Gasparino’s first missive. The media coverage also exposed the market’s fear that Morgan’s deal for a controlling stake in BlackRock would have been too dilutive to the investment bank’s earnings. Merrill, by contrast, in its deal announced Feb. 15, is buying a noncontrolling stake of 49.8% of BlackRock.”

Kantrow also notes that she’s noticed a change in the business media recently in that some are beginning to question activist shareholders and stand up for executives being attacked by them. She wrote, “Since when is the media so worried about management — the same folks who for years have been portrayed as overpaid near-criminals who mislead their shareholders?”

Read her Media Maneuvers column here.