M&A coverage and scoops

Felix Salmon of Reuters writes about how the business press has handled scoops of mergers and acquisitions in the wake of Google’s acquisition of Motorola Mobility announced this morning not being leaked to any reporter.

Salmon writes, “Deal scoops are the most basic currency of business journalism. Once a deal is certain to get done, but before it’s officially announced, an M&A banker on one side or the other (it’s nearly always the bankers, rather than the lawyers or the actual companies doing the deal), tactically leaks news of the deal to a carefully-chosen source.

“Virtually everybody wins when this happens. The leak always takes place when markets are closed, so there’s no risk of insider trading on the news. The banker leaking the news gets to control the story, since the journalist isn’t going to call around before publishing it. And the journalist gets a big scoop.

“I’ve never been particularly impressed by these scoops: if a piece of news is going to come out in a press release in a few minutes or hours, then getting it first, while markets are closed, has little value to readers. But journalists fight incredibly hard to get them, and financial journalism’s biggest names have been made this way — think Charlie Gasparino or Andrew Ross Sorkin.

“But given the value being created for bankers and journalists alike by the existence of the market in scoops, it’s notable when a deal like this one comes along with no advance word at all — not even someone reporting it breathlessly on CNBC five minutes before the press release comes out.”

Read more here.