health.newsbios

WSJ & DJNS Got Core Merck-Schering Number Wrong

We may never know who is the goat at The Wall Street Journal and/or Dow Jones Newswires who flubbed the key number -- the value of the transaction -- in yesterday's coverage of the blockbuster merger of Merck & Co. and Schering-Plough Corp.

While the two giant pharma companies put a price tag on the combination of $41.1 billion, WSJ.com and Dow Jones Newswire insisted for much of Monday that the true value of the cash-and-equity offer was only $32.6 billion. 

In a WSJ.com post at Health Blog (2:13 p.m. yesterday), the Journal's Sarah Rubenstein wrote:  "An update on the deal's size: Though Merck and Schering-Plough put it at $41.1 billion, it clocks in at $32.6 billion when taking into account only the cash and stock that Schering-Plough shareholders will received.  "The other $8.5 billion is Schering-Plough debt that Merck will take on."

Oops!  That was wrong. 

As the Journal makes clear today in its front page coverage, the deal is valued at $41.1 billion and the $8.5 billion figure is actually debt that Merck is taking on to help pay for the transaction.

It's far from clear that Rubenstein is the goat.  Or if she is, she's certainly not alone.

Other Journal and DJNS staffers who wrote stories yesterday relying on the erroneous $32.6 billion figure include Heidi N. Moore, James A. White and Peter Loftus.

Besides the obviously embarrassing question of how could the Journal have goofed up such an important fact and not caught itself all day long, the episode points to an important newsroom insight: reporters don't do enough of their own thinking, relying heavily on what their colleagues report.

Did any of the at least four reporters, including M&A expert Moore, ask their fellow reporters or editors the hard question of why the Journal was the only news organization to go with and stick with the $32.6 billion figure?

Like an infectious disease, once the Journal got the bug, it spread unchecked throughout the newsroom.

As usual, Health.NewsBios's request for comment or explanation from Journal reporters, editors and PR people has gone unanswered.

POST SCRIPT:  Rather than append a correction to each and every erroneous post published yesterday at WSJ.com, the editors of the site mostly reposted the same stories with the corrected number included.  One post, by James A. White, carries this note at its bottom:  "Correction: Merck agreed to buy Schering-Plough for $41.1 billion in cash and stock. An earlier version of this post incorrectly said the deal was valued at $32.6 billion."

Early Monday Blockbuster - Merck to Buy Schering-Plough for $41B

It will be a busy Monday for business-health journalists as Merck announces it will acquire Schering-Plough Corp. in a deal valued at $41 billion.  Health.NewsBios is blogging media coverage of the combination here, now, and throughout the day.  Check back for frequent updates.

• The math just doesn't add up for The Wall Street Journal and Dow Jones Newswires, which can't seem to make up their minds as to the true value of the Merck bid for Schering-Plough.  Frankly, it's embarrassing.
  
  On Health Blog this afternoon (2:13 p.m.), Journal reporter Sarah Rubenstein wrote: "Though Merck and Schering-Plough put it at $41.1 billion, it clocks in at $32.6 billion when taking into account only the cash and stock that Schering-Plough shareholders will receive.  The other $8.5 billion is Schering-Plough debt that Merck will take on."
  
  Later, at 4:16 p.m., James A. White repeats the $32.6 billion figure, which is repeated a third time by DJNS's Peter Loftus at 4:58 p.m.  Then at 5:57 p.m. EDT, DJNS runs a correction to Mr. Loftus's story saying the correct figure is "a cash-and-stock deal with an equity value of about $41.1 billion."  Oh, my!
  
  They can't all be right, but they could all be wrong if the $32.6 billion figure first mentioned by Rubenstein was in error. 
  
  We'll try to see if anyone at the Journal or DJNS cares to explain.  Usually, Journal folk don't respond to Health.NewsBios requests for comment.
  

• Roche Holding AG has raised its bid for Genentech to $95 a share says Jessica Hall at 5:44 EDT on the Reuters.com site.  Hall attributes the news to "a source familiar with the situation." Earlier, The Wall Street Journal speculated that such a move could happen today, although no official word on the matter has come from Roche.
  
  Hall writes as if it is a done deal.  The higher price "marks the second increase since  Friday," she says.  "'The new price was enough to get both sides to the table,' said the source, who was not authorized to speak to the press," Reuters reported.
  
  It is interesting that this unauthorized source, who is supposedly violating a fiduciary confidentiality, is still trustworthy enough for Reuters to count on him or her.  Usually in similar circumstances, unauthorized sources are in fact 'authorized,' only they want to make it seem they are not.  That is how the game is played.

• Kudos to Bloomberg News's Alex Nussbaum and Shannon Pettypiece who on Saturday wrote, Schering-Plough May Be Next Drugmaker Acquired by a Rival. How did they know?  The two reporters didn't miss the fact that on Friday, March 6th, shares of S-P rose the most in a month.
  
  Now, James A. White over at WSJ.com is blogging that "if the Securities and Exchange Commission wants to prove its worth after missing Madoff and other scandals, perhaps it might take a look at the latest instance of a pre-merger stock runup."  White credits the Journal's Heidi N. Moore for reporting that today's blockbuster announcement "doesn't seem to have been a surprise to everyone in the markets."

• You won't find any streaming video on the Merck-Schering combination at WSJ.com, unlike January 26th when Pfizer agreed to buy Wyeth.  Why not?  Could it be because last month the Journal laid off long-time pharmaceutical reporter and editor, Scott Hensley, who did the video duties in January?  Hensley also oversaw the site's Health Blog and helped supervise reporters Jacob Goldstein and Sarah Rubenstein.
  
  Health.NewsBios has tried to get the Journal's PR department or John Carreyrou, Health & Science editor for the paper, to tell us who will now oversee Health Blog.  But no one has responded to our inquiries.  It always strikes us as ironic that journalists such as Carreyrou, who admonish companies to be more open to press queries, go hiding when they themselves are approached by a reporter working on a story.  We'll bet Carreyrou & Company are missing Hensley's talents and experience today!

• Out of curiosity and to make sure we are not missing any important coverage, we clicked on over to the homepage of Investor's Business Daily to see what that paper has to say about the Merck deal.  The answer: nothing.  At 4:48 p.m. EDT, the word "Merck" appears nowhere on the paper's main page.

• The Financial Times, down one pharma reporter with the departure of Boston-based Rebecca Knight, has put together an impressive package of coverage nonetheless, led by London-based Andrew Jack, a journalism workhorse.
  
  Health.NewsBios is particularly impressed with Jack's An dose of pharmaceutical competitiveness, which offers some fly-on-the-wall details concerning how the deal was struck.  "Last December, only weeks after Barack Obama had won the race for the US presidency, Richard Clark, the head of Merck, arranged a meeting with Fred Hassan, his opposite number at Schering-Plough," Jack writes.
  
  Jack says the holdup in agreeing on a deal surrounded price.  S-P, Jack states, "was being courted by another New Jersey peer, Johnson & Johnson, which some analysts argue was a closer fit."
  
  Jack's Lex colleagues quickly posted their own take on today's announcement: "Allow for these synergies, and Merck's post-tax return on investment will be a respectible 10 per cent," Lex calculates, a figure not spotted elsewhere in the media today.
  
  In New York, M&A reporter Julie Macintosh offers her take on a streaming video available from FT.com.
  
  Photo: Julie Macintosh

• Certainly every journalist covering the Merck acquisition would like to interview CEO Richard Clark today.  So it is interesting to note who gets to the big guy, and who is left quoting his statements or interviewing members of the public relations department.
  
  Bloomberg News's Shannon Pettypiece, in her most recent story iteration, quotes from an interview with Clark.  Score one for Pettypiece!
  
  "What convinced me as a CEO of Merck was to have our head of research come back and talk about the quality of the scientific programs," Pettypiece quotes Clark as saying during a telephone conversation.  "This is about the science and not just synergies and that is what makes this different than other deals in the past."
  
  Among the likely factors weighing on which journalists get access to Clark and which don't: who their readers and viewers are; who the Merck public relations executives trust to be balanced; which reporters hustle the hardest. Chances are those journalists who don't perform well on all three criteria get handed the news release.

• Veteran Reuters pharma reporters Edward Tobin and Ransdell Pierson share a byline on the wire's 2:35 p.m. post at Reuters.com.  Ben Hirshler in London and Sam Cage in Zurich also contribute, with editing by Lisa Von Ahn and Andre Grenon.
  
  Their afternoon update notes that Merck has deeper pockets than Schering-Plough and "would help fund research on Schering-Plough products, including promising blood clot and hepatitis C drugs.  The reporters repeat analysts' speculation that Johnson & Johnson could launch a rival bid for S-P, adding that "J&J officials couldn't be reached for comment."
  
  What are the folks in the J&J public relations department doing today to be so unavailable? Ducking the press, perhaps?

• Mike Huckman has posted his first Pharma's Market item on the Merck-Schering deal, pointing out that his adopted state of New Jersey stands to be the big loser in terms of jobs and tax revenues.  New Jersey, writes Huckman on CNBC.com, "is already reeling from the banking crisis because of its proximity to and dependence on Wall Street. And now a consolidation wave in big pharma is threatening to take the state under."

• We've heard back from Phil Mintz, who we asked to explain why BusinessWeek.com is touting his reporting on the Merck merger as a "BW Exclusive".  Here's  Phil's response:

Thanks for pointing that out. That’s a technological artifact from when we used to have a module on our home page called BW Exclusives. Our story page template pulls in the top of our home page into that module. We re-named the Home Page module News and Analysis some time ago, but apparently that change never made it to our story template page. Our design folks are now on the case.

• Even while we typed the next item, Forbes' Matthew Herper was cranking out some fresh insights.  He's back with Four Thoughts on Merck-Schering. They include: "In a sense, this is the end of Merck;" and the merger "does not solve the fundamental problems regarding innovation."

• Forbes.com labels the Merck-Schering combination as "Another Merger of Weakness."  The Forbes.com homepage has a package of four pharma-related articles.  Mathhew Herper, health care reporter, writes that "more than anything else, the deal shows how tough times have gotten for drug companies."  His sources include: Barbara Ryan, an analyst at Deutsche Bank and Tim Anderson at Sanford C. Bernstein. 
  
  Herper writes that the merger will help Merck's earnings "and protect its dividend during a time when drug companies are being hurt not only by the global economic crisis but also by years in which the industry as a whole has failed to invent enough drugs."
  
  For those keeping track, Herper posted at 10:30 a.m.

• Not sure why, but BusinessWeek.com is touting its story, Merck Is Buying Schering-Plough for $41B, as a "BW Exclusive."  The story by Phil Mintz, news editor, doesn't appear to Health.NewsBios to have any real scoop.  We'll email Mintz and ask him why.

Alicia Mundy's First WSJ Page One Story: 'Lobbying Drove FDA Process'

Alicia Mundy, who has specialized in probing the links between FDA policy and lobbying efforts by drug-makers and other health care companies, delivered her first front page story on the subject in Friday's The Wall Street Journal.

Ms. Mundy, who joined the Journal in March 2008, penned the 2,500-word investigative story, Political Lobbying Drove FDA Process, in which she pours over internal FDA documents to report that "The recent approval of a new device to treat knee injuries followed a lobbying campaign that overcame repeated rejections" by FDA scientists.

The article focuses on Menaflex, made by New Jersey-based ReGen Biologics Inc., and quotes former FDA Commissioner Andrew von Eschenbach saying "we fumbled that process" when the agency agreed to fast-track approval of the product that is used to repair a torn meniscus in the knee.  Mr. von Eschenbach was in charge of the government regulator at the time it allowed ReGen to skip past standard clinical trials on its path to approval.  The FDA approved Menaflex on December 20th.

To support her reporting, Ms. Mundy cites "emails reviewed by the Journal," although she doesn't make clear how she obtained access to the internal FDA communications.  This is similar to a story Ms. Mundy wrote on January 14th, Glaxo's Emails on Avandia Reveal Concern, in which she notes that Senator Chuck Grassley of Iowa was preparing a report "containing excerpts from Glaxo documents."  In her Page One story, Ms. Mundy also mentions that Sen. Grassley "is also looking into the Menaflex approval process" -- making the Senator's office a leading candidate as the source of her materials.

Two other supportive sources Ms. Mundy cites are Jay Mabrey, the chief of orthopedic surgery at Baylor University Medical Center, who served as chairman of the FDA advisory committee weighing Menaflex; and Larry Kessler, who now heads the Health Services Department at the University of Washington, but who was previously with the FDA and directed the laboratory that reviewed Menaflex. 

Dr. Kessler told Ms. Mundy the Menaflex approval "shows the FDA at its worst."

Ms. Mundy's past reporting has been controversial leading one critic affiliated with the Center for Medicine in the Public Interest to accuse her last year of her own conflicts-of-interest, having worked at as a New America Foundation Fellow prior to joining the Journal and written an article for the "far left" American Prospect magazine.  Additional details are available in Ms. Mundy's Health.NewsBio.

Ms. Mundy is the author of Dispensing With The Truth, which alleges a deliberate deception by Wyeth-Ayerst (a division of American Home Products) pertaining to the risks of the diet drug, fen-phen.

Jared A. Favole, who covers the FDA for Dow Jones Newswires, is credited at the bottom of Ms. Mundy's front page story for having contributed reporting to it.

To order Ms. Mundy's full Health.NewsBios dossier, phone 866-NEWS-070, x.2.  It is available, like that of dozens of other influential health journalists, for $69.95.

TIME Magazine’s Alice Park Named February’s Top U.S. Health Journalist

Beverly Hills, CA (March 4, 2009)  – Alice Park, who has reported on medicine and health for TIME magazine since 1993, was named the top health journalist in the country for the month of February 2009.

Health.NewsBios, an affiliate of NewsBios.com, reviewed the performance of more than 50 leading national reporters and editors covering health and medical-related topics and selected Ms. Park as the journalist who turned in the most impressive performance.

 In the space of roughly one month, Ms. Park had two cover stories in the print edition of TIME – including a controversial 3,850-word article on stem cell research – and contributed numerous posts to Time.com.

Her posts at Time.com included stories on: efforts to develop a flu supervaccine; preventing hearing loss in teens; bacterial infections in hospitals; the benefits of statins and the relationship between a mother’s obesity and birth defects.

“Unlike some health reporters who pretty much cruised through February – a slow news month, Ms. Park hustled and behaved like a reporter who is still ‘hungry’ for the opportunity to report,” says Dean Rotbart, founder and executive editor of Health.NewsBios. 

Mr. Rotbart said that while some critics, including fellow journalists, took issue with Ms. Park’s reporting on her February 9th cover, Stem Cell Research: The Quest Resumes, he was impressed with her willingness and that of her editors to take on a topic that is fraught with heated opinions.   “Even those who feel Ms. Park didn’t have sufficient balance in her article have to admit that she stirred the pot, and indirectly at least, also provided them fresh cause to air their own views,” Mr. Rotbart explains.  “Discussing controversial issues is an important journalistic role.”

Ms. Park’s second cover story, Going Nuts Over Allergies, appears in the magazine’s edition dated March 9th.

“There are other news outlets with much larger health and science teams and many more windows with which to cover health and medicine,” Mr. Rotbart observed.  “But Ms. Park really gives fresh meaning to the expression, ‘an army of one.’”