REUTERS, the news division of information services giant Thomson Reuters, has published an ill-informed, inaccurate and one-sided article about Google Inc.’s (NASDAQ: GOOG) announcement that it will use its website rather than paid PR wires to distribute its financial results.
I predicted this would happen in the post I wrote immediately after Google made its Q1 2010 earnings announcement on April 15. I made that prediction based on past experience with Reuters’ coverage of other companies that have made similar moves before Google, such as here and here.
In the most recent article, Reuters does what in my past life as a journalist wouldn’t pass muster for quality journalism. The article is poorly researched and, most importantly, an obvious conflict between Reuters’ parent Thomson Reuters and the subject matter is not disclosed.
Here is a rundown of the problems with the article:
Failure to disclose that Thomson Reuters owns a PR wire service and stands to lose money if more companies follow Google’s lead
Just seven months ago, Thomson Reuters bought European PR wire service Hugin Group BV from NYSE Euronext for an undisclosed sum. In December, Thomson Reuters announced that it plans to expand Hugin’s operations internationally, including to the U.S. in 2010.
But if more companies start using their websites instead of third-party PR wire services, there won’t be much business for Hugin in the already crowded disclosure wire market. Hugin must contend with four U.S. competitors including PR Newswire, Business Wire, Market Wire and Globe Newswire, owned by NASDAQ OMX.
The Hugin acquisition being so recent, you’d think that this would be a relevant fact for Reuters to include in its article, which is mostly about PR wire services being hurt if more companies follow Google’s lead.
But it is not mentioned at all. I can only speculate as to why. It’s either shoddy reporting and editing, or the article is not unbiased, or both.
The article is inaccurate and full of ridiculous contentions
The Reuters piece states that when Google issued an advisory release via Market Wire on April 15 urging investors to visit its investor relations website for the full earnings announcement, the company “was delivering something called ‘notice and access’ to investors. The U.S. Securities and Exchange Commission requires this, having ruled in 2008 that U.S. companies may use their websites to distribute market-sensitive information.”
First, “notice-and-access” is a process for delivering annual meeting materials and has never been used by the SEC in connection with news releases. And second, the SEC does not require companies to issue any news releases via a paid PR wire service, much less advisory releases. They are one of several options, but not a requirement. Companies can file 8-K reports with the SEC or they can use their websites if that is their established channel for company disclosures.
There are also these two ridiculous statements in the Reuters piece. These aren’t attributed to anyone so I guess they are either the reporter’s opinions or the views of Reuters and its parent.
The first one:
“The [advisory release] statement posed a brief obstacle for the media, analysts and others hungry for Google’s numbers. It may also suggest the company is headed down a road that could hurt companies that distribute press releases, and that some worry could disadvantage some investors.”
That “brief obstacle” Reuters refers to is that people had to click on a link. Hundreds of millions of people click on dozens of links on the web every day and we never think of them as “obstacles.” It’s ridiculous. What’s more, the statement isn’t attributed to anyone. It’s Reuters’ comment. They see links as “obstacles.”
The second ridiculous statement:
“However, some worry that this trend may harm individual and less-sophisticated investors who cannot access the blogs and websites as quickly as professionals. Others worry that not everyone will get the information.”
These unattributed statements — who exactly is the “some” who worry? — make absolutely no sense. Since when do Wall Street analysts have an advantage over average Internet users in accessing blogs and websites? Do they have special types of browsers or something that no one knows about?
The fact is, PR wires are unfair. Big Wall Street firms and hedge funds that pay for direct access to a PR wire service’s feed can get breaking news 1 to 7 minutes before the rest of the market. That enables them to trade on the information before the rest of us. And don’t forget, Thomson Reuters makes a lot of money distributing news to the financial services industry.
But as I wrote in my April 15 post, Google offers email alerts to investors and has a real-time pubsubhubbub-enabled feed that is a fairer way to distribute its information to everyone at the same time.
It’s one-sided
Only one source is quoted in the article, Scott Mozarsky, PRNewswire’s executive vice president of commercial operations. The article says that representatives from Google, Business Wire, and Market Wire did not immediately comment.
But what Reuters does not say is that Google, Business Wire and Market Wire were contacted very late on the night of April 15. The article itself first ran at 1:00am on April 16. However, in the time that has been available to Reuters to get additional comment and update its article, no update has been forthcoming.
Lastly, I will point out that I was available on the night of April 15 but no one from Reuters tried to contact me. My article was easy to find if Reuters bothered to look.
No one else cares
In the hours after Google reported its results, I went through every article about the results that was highlighted on Techmeme. Not one of the publications even mentioned Google was changing to web-based disclosure, and no one said anything about the “obstacle” that Reuters highlights.
Investors, the public, the media and the bloggers who follow Google don’t have a problem with Google using its IR website to report its results. The only outlet that has a problem is Reuters.
And they have a vested interest in making sure there’s a problem.
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.
Reuters’ conflicted reporting on Google’s earnings release practices http://bit.ly/9uVZXT via @AddToAny
RT @timbray: Dominic Jones catches Reuters with its pants way, way down: http://is.gd/bxEL0
RT @timbray: Dominic Jones catches Reuters with its pants way, way down: http://is.gd/bxEL0 /via @samj /V bad form
Reuters’ conflicted reporting on Google’s earnings release practices | IR Web Report: http://bit.ly/dvaSrS
This is one of the most interesting pieces I’ve read in a while, thanks!
Ethan, HP
@hpnews
maybe @felixsalmon can explain reuters conflicts in this post http://stk.ly/bEHVIE as seen by Dominic http://stk.ly/ae4Y3k $$
Sharing: "Reuters’ conflicted reporting on Google’s earnings release practices | IR Web Report" ( http://bit.ly/bnmicf )
did Reuters blow the Google earnings release/website issue out of proportion because of a conflict of interest? http://is.gd/byGIB
RT @mathewi: did Reuters blow Google earnings release/website issue out of proportion because of a conflict of interest? http://is.gd/byGIB
[...] apparently worry that this move could therefore “disadvantage some investors”. And as Dominic Jones pointed out, saying that “the statement posed a brief obstacle for the media, analysts and others hungry [...]
RT @mathewi: did Reuters blow Google earnings release/website issue out of proportion because of a conflict of interest? http://is.gd/byGIB
Linkage: Reuters’ conflicted reporting on Google’s earnings release practices >> IR Web Report http://bit.ly/dvaSrS #fb
[...] schmeckt Reuters erwartungsgemäß überhaupt nicht. Spicers Meldung ist reine Werbung für den Erhalt der Tradition, ordentlich Pressemitteilungen zu [...]
[...] Read more here. [...]
Disclosure–I’m an exec. at Vocus (www.vocus.com), a company that sells software and services like PRWeb (www.prweb.com) that, among other things, help companies promote their news online and to journalists. Great article Dominic, although it’s a sad statement on the deterioration of journalistic standards. More broadly, companies need to be rethinking how they distribute earnings in a digital world where all investors have access to online content. Just as with other content, both distribution method (web, wire, social media, etc.) and format (text, video, chat, automated slides, etc.) matter if engagement is your goal. I think Jonathan Schwarz and Sun (http://bit.ly/akqcId) started the whole discussion back in 2007. Should be interesting as more and more companies follow the lead of these pioneers.
The problem is that wire services like Bloomberg, Reuters etc. have systems in place that can put out information very quickly when it is distributed through PRNewswire and BusinessWire. The systems can't catch info posted on Google's website. Hence investors aren't going to get their share prices etc. in the seconds following an earnings release, like they are used to. This costs investors millions of dollars and makes them place angry phone calls to newsrooms. And yes, putting out EPS in seconds is how the wires make their money.
The problem is that wire services like Bloomberg, Reuters etc. have systems in place that can put out information very quickly when it is distributed through PRNewswire and BusinessWire. The systems can't catch info posted on Google's website. Hence investors aren't going to get their share prices etc. in the seconds following an earnings release, like they are used to. This costs investors millions of dollars and makes them place angry phone calls to newsrooms. And yes, putting out EPS in seconds is how the wires make their money.
I understand what you're saying, but two corrections. 1.) Investors will still get their share prices etc. because share prices don't come from Google. 2.) The news algorithms can still get the news directly from Google and any other company that chooses to follow Google's lead.
Bloomberg and others have electronic scrapers that can pick up the news from the website automatically, or they can do what anyone else can do and pick it up off of Google's real-time RSS feed. Only a small elite of investors gets news from the professional news services in the way you describe, so saying that it will cost “investors” millions is wrong. Millions of investors are subsidizing a small group of traders, who typically don't hold shares for more than a few minutes and which may actually be computers rather than people.
Seems to me that IR departments have no incentive to subsidize this high frequency trading activity and the real shareowners shouldn't be footing the bill for a group that can afford to pay the bill themselves.
I understand what you're saying, but two corrections. 1.) Investors will still get their share prices etc. because share prices don't come from Google. 2.) The news algorithms can still get the news directly from Google and any other company that chooses to follow Google's lead.
Bloomberg and others have electronic scrapers that can pick up the news from the website automatically, or they can do what anyone else can do and pick it up off of Google's real-time RSS feed. Only a small elite of investors gets news from the professional news services in the way you describe, so saying that it will cost “investors” millions is wrong. Millions of investors are subsidizing a small group of traders, who typically don't hold shares for more than a few minutes and which may actually be computers rather than people.
Seems to me that IR departments have no incentive to subsidize this high frequency trading activity and the real shareowners shouldn't be footing the bill for a group that can afford to pay the bill themselves.
First off putting an earnings release on the wire is NOT that expensive, wire services have small distributions that are inexpensive and meet disclosure, without costing an arm and a leg. Secondly what journalist do you know, yourself aside, that has the TIME to click a link and sort through any companies earnings release on the companies website? Journalists and investors often have systems in place to scan tables and grab relevant information in very little time. Putting N&A and then requiring a manual scan of the website is just going to irritate journalists, and the “small fish” are not going to get any positive coverage if they follow in Google's HUGE stumble.
How is posting the information on their website “fair”? I have a feeling if more companies do a silly move like this, we will see an increase in insider-trading. Wire Newsrooms have regulations regarding how information is handled, most companies, outside of their IR department, dont.
Granted Reuter's article was lame, I'm not arguing that. But think before you speak/write about something you obviously know so little about. Did you read ANY of the other articles? Did you interview the newsroom editor from Dow, AP or Bloomberg to see how they felt about this type of release?
There is a reason REAL news outlets rely on the wire, obviously you don't get it.
For the sake of transparency, please note that the above comment from user “lottiemack” emanates from an IP address belonging to Business Wire 208.1.253.163.
First off putting an earnings release on the wire is NOT that expensive, wire services have small distributions that are inexpensive and meet disclosure, without costing an arm and a leg. Secondly what journalist do you know, yourself aside, that has the TIME to click a link and sort through any companies earnings release on the companies website? Journalists and investors often have systems in place to scan tables and grab relevant information in very little time. Putting N&A and then requiring a manual scan of the website is just going to irritate journalists, and the “small fish” are not going to get any positive coverage if they follow in Google's HUGE stumble.
How is posting the information on their website “fair”? I have a feeling if more companies do a silly move like this, we will see an increase in insider-trading. Wire Newsrooms have regulations regarding how information is handled, most companies, outside of their IR department, dont.
Granted Reuter's article was lame, I'm not arguing that. But think before you speak/write about something you obviously know so little about. Did you read ANY of the other articles? Did you interview the newsroom editor from Dow, AP or Bloomberg to see how they felt about this type of release?
There is a reason REAL news outlets rely on the wire, obviously you don't get it.
For the sake of transparency, please note that the above comment by user “lottiemack” comes from the IP address 208.1.253.163 belonging to Business Wire.
For the sake of transparency, please note that the above comment by user “lottiemack” comes from the IP address 208.1.253.163 belonging to Business Wire.
The opinion expressed is purely mine and in no way reflects the opinion of Business Wire, its parent company or affiliates.
Everyone is entitled to an opinion without ulterior motive.
The opinion expressed is purely mine and in no way reflects the opinion of Business Wire, its parent company or affiliates.
Everyone is entitled to an opinion without ulterior motive.
Put your name to what you say and state the fact that you work for Business Wire because it is relevant to understanding the context of your comments. Posting anonymously isn't transparent.
Put your name to what you say and state the fact that you work for Business Wire because it is relevant to understanding the context of your comments. Posting anonymously isn't transparent.
But let's analyze your comments:
1. That it's hard for journalists or investors to click on a link. Well, if it's too hard for them, then they can subscribe to a feed from the company directly and get the information pushed to them in real-time. They'll get it faster that way, just not ahead of others, as wire services are doing for them now in clear breach of Reg. FD's spirit.
2. That small companies won't get positive press. They don't get covered now and they pay the same fees to PR wires as big companies yet get zero return on their investment. Our research indicates that most companies' wire releases are hardly ever read and that most of the readership is generated by their own activity and has nothing to do with the PR wire.
3. You have a feeling that insider trading is going to increase. This makes no sense. Companies have policies and controls to guard against insider trading. Indeed, sending their releases outside of their companies to vendors increases the risk of insider trading.
4. Did I ask other news services? Yes, actually, in confidence some tell me they don't have an issue with Google's approach. Those who have complained don't understand the technology that is available to them. When it's explained, they quickly realize that companies have no reason to use PR wires anymore.
Perhaps Google will also lead the way in authenticating real content links in their own results. Search results could enable facts or disclosures higher visibility than they currently do.
That curated, “popular”, SEO-driven and commercial links purposefully rise to the top of search results makes it difficult for basic corporate or government issued information to be found. At the moment, the deals the Search giants have cut with the wire services are their only way to index that information as important or relevant. Except for their own disclosure information, of course.