We examine how financial news is distorted as it spreads across different news outlets, akin to the “telephone game.” Using a sample of exclusive articles from the Wall Street Journal, we use GPT-4 to quantify transmission bias as competing news outlets retell these stories. We find strong evidence that retelling articles tend to be more opinionated and negative, but less appealing than the original story. Transmission bias is amplified by less specialized news outlets, longer delays between the original story and its retelling, and more competing narratives from other news outlets. Transmission bias triggers stronger market reactions, predominantly affects retail traders, predicts return reversals, and increases disagreement among market participants.