MARKET FOCUS: NEWSWIRES - Good news for newswires. Robin Londnerdiscovers how layoffs, Reg FD and new technologies are keeping the cashflowing for newswires

Manny Ruiz had an epiphany. After spending too many hours of his

life on the phone, faxing and following up with reporters, the

Cuban-American co-founding partner of Porter-Novelli's national

multicultural practice quit his job and opened Hispanic PR Wire to cater

to a market he understands: minorities.

"When we launched, we wondered if it was crazy to challenge PR Newswire

and Business Wire," says Ruiz. "But as of this week, we're distributing

to 2,316 journalists in 1,025 media outlets. There's room for


Better-connected than ever

More than a year after wire services received a revenue kick from the

press release mania that followed from the dot-com boom, new factors are

keeping them healthy. Although economic ills have meant that the volume

of press releases are down an estimated 25% according to one source, the

wire services are doing nicely by selling greater numbers of their

added-value services.

For example, agencies and corporations are outsourcing more distribution

tasks due to cutbacks. Reg FD forces public companies to release

material financial information to the public, and newswires are emerging

as the preferred vehicle to carry information to the street. Multi-media

advances, including video and audio news releases, now allow newswires

to offer higher-end services at higher-end prices. Plus, newswires are

betting that financial globalization will keep them in the black far

into the future.

David Armon, president of PR Newswire Americas says it's painful to

acknowledge that layoffs at agencies and corporate PR departments help

wire services.

"We see a lot more reliance on our services in the places where there

have been cutbacks," says Armon. He adds that new business from investor

relations services has doubled. "Companies used to have a staff to

update investor relations pages with bells and whistles. They don't have

the bodies to put against that now."

Economic woes have led to fewer press releases for product

introductions, new personnel announcements and mergers and acquisitions.

But, due to Reg FD, financial press releases are longer and more

specific with more detailed disclaimers. Armon says this has meant big

money for newswires.

PR Newswire, as part of a public company (United Business Media) is,

regrettably, the only company to release financial results. The numbers

are instructive. With revenues up 27%, to dollars 210 million, the

Webcasting service had a 200% increase in business between January 2000

and January 2001. Earnings releases went up 28% over the same period,

while mid-quarter earnings projections announcements were up 78%. Web

conference calls shot up 147%. The investor relations business is so

important to PR Newswire, it has even sent its own staff to fill space

at agencies, including GCI Group.

"We've offered to send our staff into the agencies to sit at a desk that

used to be occupied," says Armon. "We're calling this an outsourcing

program where we offer our expertise in-house."

However, not all newswires agree with cashing in on Reg FD. Bill

McCarren, president of USNewswire, says his 15-year-old public

affairs-focused wire has, and wants, no part of the financial feeding

frenzy. He says financial releases are a legal requirement, and they

should not be confused with news.

"If you look at what companies like PR Newswire are distributing, which

is often financial results for a Nasdaq company you and I have never

heard of, this copy is not going to attain any news coverage anywhere,"

says McCarren. "While that may be a nice business, it's not a very

attractive channel for reporters who want to find and write stories that

will appear in the paper."

Regardless, Reg FD and new tech capabilities have spelled big business

for most wire services. For example, most services are eager to

transform company Webcasts, which usually consist of a few PowerPoint

slides and the disembodied voice of a CEO, into impressive presentations

with interactive streaming audio and video.

And, with visions of increased fees for increased services, newswires

also want to add the latest technologies to the lowly press release.

Michael Lissauer, SVP of marketing and business strategy for Business

Wire, says his company is a year or two ahead of widespread technology,

and estimates that news releases with photos, logos and flash graphics

will become a major trend in the next two years.

"Agencies are somewhat behind the curve with technology," says


"Business Wire came out with a product called the Smart News Release

about four years ago that embedded within a press release audio, video,

flash. We're putting out between 1,200 and 1,500 news releases a day,

yet only 40 to 50 have multimedia."

By the end of this year, Business Wire is planning to complete its

conversion to XML, or Extensible Markup Language, a platform-independent

format for structured documents and data. When written in XML,

structured documents, which include spreadsheets, address books,

financial transactions and technical drawings, can be viewed in text

format even if a computer does not have the program that produced the


"XML will change everything," says Cathy Baron Tamraz, chief operating

officer for Business Wire. "The recipient will be able to pull out

whatever they need, and news releases will be put together very

differently than they are today."

The value of technology

Of course, extra technology costs the customer. Business Wire charges

dollars 525 for a 400-word text release with US distribution to all

major media, databases, trade publications, online services, the

investment community and the Business Wire Web site. Video is an

additional dollars 800.

"As the news release gets more robust, with more components, it will be

priced accordingly," says Tamraz. "What you're buying is the ability to

do more with the press release."

However, Michael Terpin, co-founder and chairman of Internet Wire, a

company that cast its lot with new technologies when it was named two

years ago, won't bet the farm on multimedia as a revenue powerhouse

anytime soon.

"In terms of multimedia as growth revenue, I don't see a time in the

near future when the volume of multimedia will be anywhere near the

volume of text," he says. "Although digital cameras will help somewhat,

right now it's a lot easier to write a quality press release than it is

to film your CEO."

Terpin says guaranteed publication via Web syndication is a more

immediate added value. He says five years ago, 90% of newswire press

releases would not be written about in mainstream media, so discounting

people with fax or Lexis-Nexis subscriptions, many press releases never

reached their audiences. Today, he says, 100% of the press releases sent

out on a newswire, minus anything deemed inappropriate by a Web portal,

can potentially reach millions of Web viewers.

"Like how BusinessWeek has a million readers, but not everyone reads

your four paragraphs on page 38, being placed on a portal is a

relatively sizeable impact compared to six years ago when a very small

number of people might see a release," says Terpin.

However, McCarren cautions against wires promoting Web-only

distribution. He thinks the standard press release should still be

written and distributed to a target audience of reporters.

"From our business perspective, the real value for press release

distribution is to do a good job distributing to media and therefore

give your client the best chance of their story receiving attention by

the largest papers, television shows and magazines," says McCarren. "AOL

and Yahoo! can help get the word out, but news consumers value the

vetting that is done by the media. People want to see how the media

interpret raw news."

Terpin insists that the media is also his top priority. He says current

advancements like e-newsletters and targeted press release technology,

which keeps PR messages from cluttering journalists' desks, will

continue to help the wire service trade reach its primary target.

"What will make news wires successful going forward is there are a small

number of aggregators journalists know they can contact to get the

information they need," says Terpin. "If everyone sends out their own

releases, it gets like the heyday of fax, and there's overload."

Global glory

Meanwhile, in the rest of the world, PR Newswire and Business Wire have

spotted potential for greater use of their services and are building up

their global infrastructures. The industry is building out, anticipating

demand, betting Reg FD-like laws will be passed around the world,

beginning in Western Europe.

Earlier this year, Business Wire opened an office in London - its first

full-service office outside the US. The company sees Germany as its next

logical step. PR Newswire had less than 12 people in Europe two years

ago. Now it has more than 200 employees in the region, and Armon says

financial regulations - and the newswire money - will begin to flow

first in England.

"Later this year, every stock on the London Stock Exchange will be

issued through a commercial service like ours," says Armon. "The

Financial Services Authority is driving this, and we've been undergoing

an infrastructure build-out to have editors, security and other things

there in time."

At Business Wire, international distribution comprises 15% of the

company's revenues, and Tamraz says the company is willing to invest in

global branding. "There's international business to be had," she says.

"Countries are looking to the US and Canadian models for distribution.

They want US exposure, and they want to promote themselves within

Europe. We're willing to spend what is necessary to be able to work in

those markets."



Headquarters: New York

Affiliations: Americas, Europe, UK, Africa, the Middle East, Asia and


International offices: 11


Headquarters: San Francisco

Affiliations: Americas, Europe, UK, Netherlands, Asia, the Middle East

and Africa

International offices: Five


Headquarters: Washington, DC

Affiliations: Americas, UK and Germany

International offices: Three


Headquarters: Los Angeles

Affiliations: Bloomberg, Dow Jones, Yahoo!, Associated Press, Reuters,

CBS Market Watch, Lexis-Nexis

International offices: US only

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