Microsoft (MSFT) felt compelled to deny a rumor that it would buy Electronic Arts (ERTS) after shares in the game company rose over 7% on speculation of a deal.
BusinessWeek had to say that it was not closing after a Twitter message to that effect leaked to the public.
Last week, and again this week, there were persistent rumors that Deutsche Telekom (DT) would buy Sprint (S) and put it together with its US cellular operation T-Mobile. The fact that the two companies run on incompatible networks did not seem to matter.
CBS (CBS) approached members of the press after stories that it might go Chapter 11 appeared based on a study by well-regarded research firm Audit Integrity.
The age of business and economic rumors has reached full flowering, driven to a large extent by the rapidly with which information is distributed over the internet. On Labor Day, CNN reported that a ship had fired volleys near Washington. The network has to retract that report when it turned out that it was merely US ships on maneuvers. CNN believed that it could be scooped by another cable network which would have meant it was sacrificing ratings.
Any viewerss of CNBC or Fox Business or reader of Barron’s or Huffington online will pick up several rumors a day. They have become a sine qua non of the news and online commentary businesses.
It did not make any sense for Microsoft to buy a video game company or for DT to buy a struggling US cellular carrier. These notions lasted only a few hours, but they were enough to effect stock prices and give news organizations something to do when everyone else was running the same stories about the G20 summit and the FOMC news on the future of the economy.
The rumor mill will get worse and worse. It is part of the price that gets paid for a remarkably competitive “news” media.
Douglas A. McIntyre
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