Web disclosure rule challenges status quo

Though companies are still in a 'wait and see' mode, the SEC's move to allow disclosure through Web sites could have a lasting effect on newswires

When the SEC issued interpretive guidance on August 1 outlining the ways companies can use their corporate Web sites for the dissemination of material information (including earnings), the immediate response from newswires was both strong and measured.

“Wait-and-see” still seems to be the popular approach. All newswires stand behind the continued value that their services provide. Business Wire (BW) reasserted the belief that the “spirit of Reg FD” required a level of full and fair disclosure that cannot be achieved on a company's Web site and sees this as just the evolution of the industry.

“We feel that [our] proposition is still solid,” says Tom Becktold, SVP of marketing at BW. “For an individual company to replicate [our services], it wouldn't be easy or technically possible. It just seems to be another step in the process of using the Internet.”

While the full effect of the guidance has yet to be determined, it clearly signals another shift in the newswire industry's landscape. The 50-plus-year history of newswires has seen the advent of the Web 2.0 technologies that have revolutionized the way information is shared. But the past eight years of Reg FD placed newswires in a critical, federally mandated position with its clients. With companies rethinking their communications practices, newswires will likely see that position change.

As companies still learn about the guidance and weigh their options, the newswires aren't rushing to make any changes to their offerings.

“We're already at a point where PR Newswire (PRN) is much more of a platform for the distribution of content – all sorts of content – to audiences like consumers [and] bloggers, as well as traditional media and investors,” says Dave Armon, president of PRN.

Thom Brodeur, SVP of global strategy and development for Marketwire, says, “We've committed to our clients that as this guidance becomes a little more clear, we'll be there as a partner to help.”

All three newswires point to advancements in their service offerings: BW's patented NX delivery system, which it says offers to-the-second simultaneity; PRN's MediaRoom service, which hosts interactive media sites for clients; and Marketwire's use of HTML platforms, XML technology, and RSS feeds.

Capabilities notwithstanding, companies now have the option to reconsider the role newswires play in their communications efforts.

“All information should be readily available on a company's Web site,” says Albert Lopez, VP of strategic communications for Ticketmaster, which recently began trading independently from Internet conglomerate IAC. Lopez says Ticketmaster has used PRN and GlobeNewswire (formerly PrimeNewswire).

“We intend to... provide all relevant news and information not just on our IR site, but in the company's media center – presentations, all multimedia, news releases, public proclamations of any shape or form,” he adds.

Lopez says Ticketmaster will still use newswires to “get every bit of exposure we need” with media outlets, but points to “information democratization” as a guiding principle behind use of the company Web site.

A matter of size
Reaching maximum exposure is of particular concern for smaller companies. Wausau Paper, a company with about $1.3 billion in annual sales, uses BW for disclosure and other company information.

“We will continue to use as many vehicles as we can,” says Perry Grueber, director of IR for Wausau. “For large companies with large sell-side followings, perhaps their Web site can play an even more critical role. But we are still trying to raise awareness of our company on the Street.”

To reach that goal, however, Grueber sees the advantages of a more robust use of the corporate Web site.

“It's hard for me to imagine that we would completely move away from wire distribution, but I like the fact that information I place on the Web is now taken with similar weight in the marketplace as information I distribute through a press release,” he says. “It's more cost-effective to distribute a press release to direct people to our Web site. I see it as an advantage potentially to a company my size.”

The newswires maintain that their costs are affordable.

“Regardless of the size of the company, the overall slice [of the budget] for distribution is small,” says Brodeur.

“When you think about what small and midsize businesses have to spend to be compliant, they're spending significantly more money than what they would ever spend with Marketwire, Business Wire, and PR Newswire on distribution.”

GlobeNewswire occupies a unique place in the newswire industry because it's a Nasdaq OMX company. (Companies listed on the exchange are not required to use the service, according to company representatives.) While the rules may have changed, the company's position hasn't, according to Jeff Stacey, senior MD with Nasdaq OMX.

“The role of trusted intermediary will continue even with the new initiatives from the SEC,” he says. “[The SEC is] not discounting the importance of press releases or the trusted relationship we have as an intermediary. [It is] recognizing that the corporate Web site is part of the multidimensional strategy of communicating a company's message.”

Technology aside, being part of that multifaceted strategy will prove to be the key newswire capability.

“Change is coming, change is here, change is happening,” says Lopez. “The right way is [for them] to embrace change and figure out how to be relevant in that value chain.”

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