The litany of media screw-ups in the UAL affair—that financial news blip before the current deluge—was well documented. Except, that is, for one thing: Bloomberg somehow escaped much scrutiny, despite having a key role (for better and for worse) in the fiasco.
It’s worth another look, even if the markets weren’t suffering from a combination of nervous exhaustion, hysteria, depression, bipolarity and the vapors, which they certainly are now.
On reflection, the events of September 8 were less about the dangers of junk information on the Internet, and much more about the power of the Bloomberg terminal and the extent to which it functions as the financial markets’ nervous system. The bad information came from elsewhere, but it was “the Bloomberg” that amplified the information enough to crash the price.
Meanwhile, and paradoxically, Bloomberg News, a segment of Bloomberg and an integral part of the Bloomberg product, was first to get the story right (though in the mayhem, it later got it wrong, too), and for that we offer two-and-a-half cheers to the newsroom across from Bloomingdale’s.
Let’s walk through it again: In the wee hours of Sunday, September 7, a Google News “bot” found a 2002 story on the South Florida Sun Sentinel’s site and slapped a 2008 date on it. That was bad, but the junk appears to have sat out there benignly for about thirty-three hours until a researcher for a firm called Income Securities Advisors unthinkingly picked it up and sent it out to subscribers via Bloomberg terminals at 10:53 a.m. EDT on Monday, September 8, with a headline saying “UAL Corp.: United Airlines files for Ch. 11 to cut costs”, according to the Chicago Tribune. UAL shares plummeted 76 percent, wiping out more than a billion dollars of shareholder value, until Nasdaq halted trading at about 11:07.
Here’s a not-very-easy-to-read chart (courtesy of Bloomberg, of course) of September 8 trading at five-minute intervals. Note that the stock had done very little for the hour and twenty-three minutes that the market was open until the bad information appeared on the Bloomberg.
Bloomberg News (whose stories are clearly identified on the terminals) wrote headlines about the plummeting UAL stock at 10:59, but provided no other information (and certainly nothing erroneous). Then at 11:06 it broke the news that the bankruptcy story was wrong with a headline saying “UAL HASN’T FILED FOR BANKRUPTCY, SPOKESWOMAN SAYS.”
So, Bloomberg’s terminals, not the Internet, basically spread the fire; its news service was the first to put it out, providing proof that you can be fast and good.
Though, of course, nobody’s perfect.
Bloomberg News muddied the waters by issuing an erroneous headline at 11:07, a minute later, citing the Tribune saying UAL had filed for bankruptcy. Fortunately for Bloomberg News, that came a few seconds after Nasdaq shut down trading in UAL and it didn’t affect the stock.
In any case, from a journalistic and a market perspective, the focus should really be on Bloomberg LP’s model.
Bloomberg’s amazing terminals—those $20,000-a-year machines—are delivery vehicles for an incredible amount of information, including its own news service, but also third-party news and research, such as information from Income Securities Advisors, whose stories are available with an add-on subscription fee to regular Bloomberg service. Those and all other outside submissions are clearly marked as being from a non-Bloomberg source.
“That was also lost on so many people,” says Judith Czelusniak, a Bloomberg spokeswoman. “We provide proprietary news, data, and analytic tools and are also a delivery mechanism for independent news and research.”
The error gave Bloomberg competitor Dow Jones the opportunity to whack an unnamed “major financial news service” a couple of days later with a full-page ad in The Wall Street Journal that sounds like it was written by Rupert Murdoch himself:
Old news is bad news: Dow Jones delivers credible, timely, and accurate news you can trust.
A Dow Jones spokeswoman says it doesn’t distribute third-party content on its wire that hasn’t been edited by Dow Jones journalists. A Reuters representative didn’t get back to us.
It’s a bit silly, though, to blame Bloomberg because its terminals carried erroneous information from a third party. That would be sort of (but not quite) like blaming Google and YouTube for this guy. A Bloomberg is an information conduit; it offers a variety of sources, and that is part of its strength. Dow Jones here is merely criticizing Bloomberg for offering more information, which should give you an idea why DJ had so much trouble with Bloomberg over the years. (Background available here:)
The more things you offer, the more mistakes you make. Put another way, and as every bad editor knows: if you don’t do anything, you’ll never screw up.
Still, though (and unlike YouTube), Bloomberg LP isn’t entirely blameless since it performs a journalistic function by controlling who is and isn’t allowed to post on its terminal. Thus it is ultimately responsible for any bad information that makes it on there.
There were a litany of breakdowns in the new media newsgathering process with the UAL story, but the role of the powerful Bloomberg terminal in amplifying the bad information should at least be considered. It’s not to say the model is flawed, but, again, without the terminal, nothing much happens here. Something to think about in these nervous times.
Also notable was the fine performance of Bloomberg’s news staff, which provided its readers better information, quicker than others, and helped correct the record.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.