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JPMorgan-Bear Follow-Ups Distort the Truth

Marek Fuchs

It was with the predictability of a bad military campaign that a savvy investor could predict how the early stages of this one would play out. The New York Times' scoop that JPMorgan(JPM - Cramer's Take - Stockpickr) is in discussions to up its bid for Bear Stearns(BSC - Cramer's Take - Stockpickr) by a factor of five ran and the negotiations are, as the Times made good and clear, complex, thorny and ongoing.

And who knows how they will shake out?

We've reviewed a million times before how to perform "source analysis" to gauge whether the scoop is grounded in reality or the figment of imagination and here the story seems well sourced, which does not mean the talks will bear fruit (much more fruit for Bear shareholders, that is) but sure beats scoops that read like science fiction.

While the savvy investor is not taking an inexpressible risk in believing this article that complex, thorny, ongoing negotiations are taking place, look at the reporting from other media outlets that followed this scoop, summarizing it quickly without capturing its complexity in the least.

And let it be a lesson.

In a media environment where half of what you read is re-reported hash, remember how much can be lost in translation.

Please join The Business Press Maven in looking down your nose at this unbelievably bad effort by Reuters in summarizing the Times scoop. Remember that the Times could not have been clearer that the talks were taking place, but nothing at all was determined.

Notice the present tense in the Times title: "JPMorgan in Negotiations to Raise Bear Stearns Bid" And the lead: "JPMorganChase was in talks on Sunday night..."

Well, get ready to catch your tears after reading this Reuters headline: JPMorgan to raise offer for Bear Stearns: report. Yes, boys and girls, that is the Times report Reuters is talking about -- a report that said absolutely nothing about a deal being signed, sealed and delivered. In fact, much of the article was about impediments to an eventual deal.

This article provides another lesson on the perils of headlines. The body of the article, as flawed and cursory as it is, stands very clear that negotiations are ongoing. Look at the first sentence, which gets the status of talking right:

"SINGAPORE (Reuters) -- JPMorgan Chase & Co (NYSE:JPM - News) is in talks to increase its offer for Bear Stearns Cos (NYSE:BSC - News) to $10 per share in an effort to pacify angry shareholders of Bear Stearns, the New York Times reported in its online edition."

And the second, which touches upon the giant roadblock to a refigured deal that might be the Fed's cooperation:

"The Fed, which must approve any new deal, was balking at the new offer price on Sunday night after several days of frantic, secret negotiations, the newspaper reported, citing people involved in the negotiations."

The point is, you should not risk getting fooled by a faulty headline in this case, because when you read that something was originally reported somewhere, do not pass go. Go right to that somewhere and read the original. Flaws abound in all that follows, even if they are not as bad as the Reuters flaw.

More often, important details are left out of these quick-hit follow-ups. Since nothing new is added to advance the story, there is no need to mess with them. An Associated Press story, for example, mentions that the Fed was balking but did not explain why (Answer: that a higher price would open them up to accusations of saving a reckless Wall Street firm at an unfairly high price). That's fairly convincing reasoning, no? Fed opposition without reason does not have the same impact.

Anyhow, you can forge on by yourself, comparing the original Times scoop to all that followed. Cross reference what was left out or half-explained in each follow-up summary. And then ask yourself the question: Why would you ever read one of these follow-ups that does not advance the story when the whole original is there to be read and judged on its own?