If there’s one thing all the hoopla about the potential Microsoft-Yahoo merger has made clear – it’s how powerful rumours can be, even when their reliability is in question.
Whether Microsoft and Yahoo were in merger talks at the time the two reports (in the New York Post and The Wall Street Journal) appeared last Friday is utterly unclear.
True or not, the rumour sent shares of Yahoo Inc. soaring as much as 19 percent at one point – their highest level in nearly a year.
The stock pulled back a bit later.
But barely had the impact of the original “merger” rumour abated, when other unconfirmed reports started surfacing.
The so-called merger talks, a section of the media said, were not about current events.
The article, citing “a Microsoft source in a position to know about talks”, stated that there “are no current discussions of any significance.”
It went on to say that “another source close to the situation also indicates that talks are not current.” (italics mine).
“It now appears,” the article said, “that the reports in the New York Post and The Wall Street Journal were based on talks that happened months ago.”
Bottomline: the original “merger” rumour has effectively been downgraded several notches by a fresh batch of reports.
And the Wall Street Journal (WSJ) – one of the publications that triggered all the flurry on Friday – followed up its original article about the potential merger with a much more sedate report replete with all sorts of provisos and qualifications.
While merger talks may not be active, the new report said, the door is still open to other forms of co-operation between the two behemoths.
Instead of a “wholesale merger”, the possibility was raised of Microsoft spinning its online group into a separately run Yahoo in return for a Yahoo stake.
Even this scenario, it was suggested, may not pan out – as it may be opposed by Yahoo execs, “wary of any combination with Microsoft, for whom Internet activities remain only a small part of its business.”
One spin off from this controversy is the lively discussion it has sparked on the appropriateness, and even the questionable ethics of publishing unsubstantiated reports.
One blog (by Brier Dudley in The Seattle Times) demanded the publications that first reported the story investigate the sources who tipped off their reporters.
“You can’t just drop a bombshell that jerks around 80,000 Microsoft and Yahoo! employees, rocks Wall Street and then fizzles before the day is over,” Dudley observed.
He’s right on the money, in my view.
A crucial issue to sort out is whether the story that sent Yahoo stock soaring is based on a dated event.
If so, it makes sense that the publications that carried the original article investigate – and report – if the anonymous sources who spoke to their reporters made a whack from the significant lift in Yahoo stocks triggered by the story.
Or, as Dudley suggests, if the newspaper doesn’t investigate, the SEC might want to.
We know Microsoft and Yahoo have been in discussions. The question is when did those talks peter out – after rumours sparked by two media reports boosted Yahoo stock, or before?
The entire episode also brings into sharp focus the whole issue of “anonymous sources” – namely, in what circumstances (if any) should critical facts be attributed to unnamed sources, and how much due diligence should be exercised to ensure the reliability of sources.
Of course, that’s a question that’s bedeviled journalists for years and there just aren’t any simple answers.
• Identify sources whenever feasible. The public is entitled to as much information as possible on sources’ reliability.
• Always question sources’ motives before promising anonymity. Clarify conditions attached to any promise made in exchange for information.
Good general principles to abide by but their specific application, as every journalist knows, can be very tricky.
In the end, in all such situations it’s a judgement call, and a very subjective one at that, whether to carry a story when a source refuses to be named, especially a “rumour” that can have significant consequences on people or events.
“Test the accuracy of information from all sources and exercise care to avoid inadvertent error,” the SPJ code urges journalists.
For a reporter on deadline presented with what appears to be the “scoop” of a lifetime that may be a tough one to abide by.