Reporters covering the Citicorp/Travelers deal: An autopsy

Daniel Dunaief, a former Bloomberg News reporter, writes in the Smithtown Times about how business journalists should have been more skeptical of the Citicorp/Travelers merger when it was announced in 1998.

Dunaief writes, “The press conference that day revealed just how different these two financial leaders were. Weill offered amusing sound bites and off the cuff witticisms straight from his self-made Brooklyn pedigree, while Reed considered his answers, often describing what he hoped the merger would achieve.

“The stock market, which was in great shape in 1998, fell in love with the deal and the sales pitch. Citicorp shares surged $35.625, or 25 percent, to help the Dow to its first close above 9,000.

“Numerous print and TV journalists — caught up in the euphoria of this marriage — started their “exclusive” interviews with Sandy Weill and John Reed that day by congratulating them on the merger. Strange as it seems now, at the time, it was perfectly normal. It was like the sports reporters who congratulate the manager of a team that had won a big game. How could they not have felt and noticed the excitement? The stock market loved the deal and the reporters often used the market’s reaction as a scorecard. On that day, Weill, Reed and anyone who had money invested in either of their companies were winners. Investors believed in the promise of the merger.”

Read more here.