The City Wire editorial
The first time Bloomberg news fouled up a story about Wal-Mart Stores one could simply consider it a surprising and ill-advised report. A one-off, if you will. Even a smart kid in the class makes a mistake.
That first poorly-sourced and under-researched story caused Wal-Mart shares to briefly tumble. And with Wal-Mart being a component of the Dow Jones Industrial Index, the negative tumble was a problem for more than just Wal-Mart shareholders.
By way of providing detail, Bloomberg reported Feb. 16 that an e-mail leaked to the news organization from inside Wal-Mart predicted “disastrous February sales” which sent the retailer’s shares down 3%.
Wal-Mart spokesman David Tovar said at the time that the e-mail lacked context. He told The City Wire the so-called meeting minutes were not an official document in any way and the “wildly inaccurate statements were taken out of context” by Bloomberg. Wal-Mart shares did recover after the retailer attempted to put the reporter’s story into context. And, as it turned out, the February sales were not disastrous.
This week a Bloomberg reporter used (again) an e-mail from a source to produce a story about alleged deep inventory problems at Wal-Mart that (again) sent shock waves through the stock market. Wal-Mart shares dipped 3% following the news report from Bloomberg. The Wednesday (Sept. 25) story from Bloomberg about Wal-Mart canceling orders because of inventory excesses was (again) refuted by Tovar who told CNBC the Bloomberg reporter fundamentally misunderstood how retail inventory works.
This second major foul-up by Bloomberg may cause more damage to the news company than the world’s largest retailer. Some now question the news judgment of what is supposed to be a leading global media company.
CNBC contributor Jon Najarian said on air Wednesday that he was not necessarily a Wal-Mart fan, but believed the so-called e-mail leaked to Bloomberg was “over-reported and not that well researched.”
“I think the reporter got it wrong,” he said.
Najarian said he didn’t see this as news, but more like a retailer perhaps trying to secure a better pricing position with its suppliers.
Chris Horver, a retail analyst with J.P. Morgan who is neutral on Wal-Mart shares, said the report by Bloomberg wasn’t new news and he was surprised the market had forgotten that. Horver said the retailer was experiencing a little heaviness in some of its seasonal inventory, which it revealed in the last earnings call.
Melissa Lee, an anchor for CNBC Fast Money, reminded investors and viewers that this was the second time in six months that a Bloomberg report sourced from an e-mail raised false alarms. Her reminder came with an indirect suggestion that maybe the markets think twice before acting on a future Bloomberg story about Wal-Mart.
Bloomberg’s two strikes is not good news for those of us in the business of providing business news. It’s not as if Bloomberg made a minor mistake on a story about the distance from Earth of a newly-found solar system. The mistakes, which moved the markets, reflect either an inability or unwillingness by a global news company to conduct simple research about the largest global retailer.
Reporters who rely solely on leaked e-mails as a main source – and possibly supplemented by members of OUR Walmart or other organized labor groups – run the risk of, at best, getting only half the story.
Some may argue that the Bloomberg errors are symptomatic of a news era in which media corporations cut newsroom resources that diminish the quantity and quality of business and political news. The process by which we secure, price and obtain food, shelter and life-saving medicines is no match for resources needed to produce Kim and Khloe and Uncle Si and the rest of the reality TV menagerie.
Maybe. Maybe not.
What we do know is that this type of ready-shoot-aim reporting increases the chance a company will limit its interaction with the media. Reporters who don’t seek context and/or verification of insider knowledge leave a black mark on media outlets large and small. Wal-Mart already is aggressive in how it seeks to manipulate (control) media interaction with employees and execs. It’s likely Wal-Mart is now working to further limit what information is made public – and that’s not necessarily in the best interests of company shareholders, employees and customers.
To be sure, the folks at Bloomberg are not likely to consider advice from a small regional media platform like The City Wire, but if they did, we’d keep it street-smart simple: “Measure twice, cut once.”