WE don’t believe there is any value for investors or companies in continuing the practice of sending full-text news or earnings releases via PR wire services.
As such, we are proposing an alternative model that uses PR wire services as notification systems rather than news distribution systems. This will lead to substantial cost savings for public companies and their shareholders, and facilitate and foster expanded use of the Web for securities disclosure.
What we are proposing: notices not news
Disclosure news releases that are distributed via wire services should simply be notices of where investors can access the news on a company’s website and/or on a public regulatory database.
These “notice-and-access” news releases should include links to the information on the company’s website or regulatory database. Ideally, the links in the notices should go directly to web pages that contain the information being disclosed. At minimum, the links should go to a page that includes a prominent link or links to the information.
The information on the website should be made public simultaneously to the notice being distributed via a PR wire service or immediately after it is disseminated, but never before. Coordinating release times is easy to do if companies have a content management system with scheduling capabilities, or it can be done manually by posting the information once distribution of the notice is confirmed.
The content of notices should be limited to an announcement of the availability of the full disclosure. No information contained in the full disclosure documents should be disclosed in the notice. This will prevent companies from selectively including certain facts in their notices which could be misleading if read out of context of other information in the complete disclosures.
Cost savings to invest in new technologies
Since news releases are almost always accessed electronically on Internet-enabled devices, the electronic notice-and-access model for material news dissemination would not disadvantage any investor more than would be the case under currently approved practices.
Moving to a notice-and-access model would likely result in savings of millions of dollars each year for companies and their shareholders since most newswire services bill their clients based on the number of words in their releases. The substantial savings from this model would give companies greater flexibility to invest in new technologies such as XBRL.
If you can think of reasons for or against this “notice-and-access” concept for material news releases, we’d love to hear them. Please use the commenting form below.
See a demo release using this model.
IRWebReport.com was founded by Dominic Jones in February 2001 to promote best practices for online investor relations communications. In July 2010, the site had more monthly visitors than IR Magazine and IR Alert combined, according to Compete. We would like to thank our readers for their continued support and interest.
I would presume that you would further suggest that companies send their earnings directly to the appropriate media outlets via email or RSS?
Rob,
Yes, companies would continue to use their own push tools, but not before the notice is distributed via a newswire.
At some companies (Sun Microsystems, for example), RSS and email alerts are ready to replace PR wire services, but we are not there yet for *all* companies. Most companies still don’t offer RSS, many don’t have email alerts and there are no dominant corporate RSS aggregators to make the process easier.
So this notice-and-access model keeps the existing system (which should please the wires), but makes it much cheaper for issuers and their shareholders without sacrificing utility for investors. We already use this model for webcast notices, for instance.
Do you see smaller companies going this route, as well as the major players? What about US companies listed on the LSE? I’d love to reduce US wire fees for my clients.
Jennifer,
Smaller companies are perfectly suited to this approach.
As for the LSE, you’ll have to ask them. It will be interesting to know what they say because of the obvious conflict of interest that exists between the Exchange as a disclosure standards setter and as a wire service owner via RNS. Same goes for NYSE Euronext and Hugin, and NASDAQ and PrimeNewswire.
What incentive do these for-profit exchanges have to approve new practices and innovations that reduce the need companies and investors have for the exchanges’ wire and IR services businesses?
Which is why I think exchanges owning wire and IR services is simply a bad idea.
Jennifer,
See my comment on the other post for an example of a small company that is already doing something similar.
[...] A “notice-and-access” model for news releases [...]
[...] improvements for both companies and their investors. One is for the SEC to give an official OK to a “notice-and-access” model for news releases, which is important to do because at least one newswire service refuses to carry such releases, [...]
[...] and Access model for the distribution of your news – send notices via newsires, not news - see the Notice and Access model just posted by IR Web Report for a great model to [...]
[...] used for earnings and other material non-public information, since 2006, revisited the idea again last October, then again in June in a post by TheCorporateCounsel.net editor Broc Romanek. Relatively few [...]
[...] relations website to obtain the full earnings announcement. The advisory release approach, which we first recommended in 2007, has been adopted by at least two other U.S. companies, BGC Partners (NASDAQ:BGCP) and Expedia, [...]
[...] Instead, the company said it would use a “notice and access” process, a term IR Web Report first used in 2007 to describe the advisory release process. To avoid confusion with the proxy delivery process of the [...]