NEWSWIRES ARE taking a wait-and-see approach to the Securities and Exchange Commission (SEC)'s recent announcement that it will address how to disclose information on a corporate Web site in ways that adhere to Regulation-FD and Sarbanes-Oxley rules. Although some in the industry argue the proposed changes won't dissuade large corporations from using the newswires to release financial information, most agree that the SEC proposal signals a change in financial communications.
"[There's a] movement away from static information to interactive information," says Jeff Morgan, president and CEO of the National Investor Relations Institute, which was involved in the CIFiR report. "I think there will be a host of products and services developed that will harness this and make it a turnkey operation for investors."
Sun Microsystems has been using its Web site in conjunction with wire distribution for its earnings releases for a year. When it first announced the tactic, it was big IR news.
"It's great to see the SEC evaluating it," says Karen Kahn, Sun Microsystem's VP of global communications. "It's the only way to move along the state-of-the-art [path]."
However, the SEC guidance does not declare newswires obsolete.
"You're always going to have traditionalists," Kahn says. "Capital markets will want to receive information via the wire. I think what we're seeing is... there are emerging communities who are interested [in material information]."
Kahn foresees that RSS feeds and other multimedia press release components, like video, will become more important to companies as IR integrates more technology.
Lex Suvanto, MD of operations and strategy for Abernathy, adds, "This makes it imperative for companies to make RSS feeds available on their Web sites."
Business Wire also recently issued a statement that maintains the company's belief that the spirit of Reg-FD mandates more than just Web disclosure.
"Corporate Web sites are an important component to communications," Cathy Baron Tamraz, president and CEO of Business Wire, tells PRWeek. "We don't see that it's competition; it's complementary. The onus is still on the company to comply with Reg-FD."
Companies with smaller staffs and budgets might find the new focus harder to handle.
"For small companies, the switch to self-dissemination will be slow," says Dian Griesel, chairman and CEO of The Investor Relations Group, which handles IR for companies with market caps below $500 million. Griesel believes that companies of all sizes need to use wire services and the Web to reach audiences, but large-cap companies will be more likely to drop the newswires than smaller ones.
"The... large clients are going to say, 'I don't need you now,'" Griesel says. "But [newswires] won't be able to make up the business by charging small companies more. The competition for their fees is going to get sharp quickly."
Shoba Purushothaman, CEO of The NewsMarket, which offers video earnings announcements, but not for disclosure purposes, says the SEC's move comes at a fortuitous time.
"Everyone is looking at budgets," she says. "This is a line item that no one needs to have. [The SEC proposal] speaks to the way communications are changing."
Newswires that contacted say they see the continued value of their work, and had no immediate intentions of changing prices.
Tom Becktold, SVP of marketing at Business Wire, says, "Our pricing model isn't an issue in any way, shape, or form... We think our prices are extremely competitive."
Doug Ventola, VP of NASDAQ OMX, which owns PrimeNewswire, says the service is already active in online communications.
"We've already synchronized our newswire disclosure service... into the suite of Web 2.0 shareholder communications solutions from Shareholder.com," he wrote, via e-mail.