That's one explanation for sure.
Another may be that in the realm of transfer "news" media outlets are as clueless as to what is going on behind the scenes as we are and that in the absence of any reliable information they go with the stories that will attract click fall.
The purpose and aim of the transfer area of any media site is not to inform, it's to get your attention, hold your attention and keep you coming back.
You only need to read Arsenal forums to understand who out of Özil and Sanchez attracts more interest and favour from the fans.
It's not Özil.
Therefore if you're going to go with a big Arsenal summer transfer saga drama Alexis is your man.
As for the definite interest from City, Bayern - have senior people at either of those clubs publicly and explicitly said that they want to buy him?
I don't recall.