BUSINESS Wire, the press release distribution service owned by Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BKR.B), has launched a PR assault designed to squash growing interest from investor relations customers in low-cost notice-and-access news releases.
Quoting unpublished guidelines from the National Investor Relations Institute (NIRI), Business Wire says companies that want to use its services should include a full set of financial tables in their earnings releases. Doing so, of course, benefits Business Wire by increasing the fees it can charge to its customers.
However, what is most disingenuous about Business Wire taking this position is that there is little difference between notice-and-access releases and the earnings releases that Berkshire Hathaway itself uses. Berkshire Hathaway acquired Business Wire in 2006.
Instead of including a full set of financial tables in its earnings releases, Berkshire issues a summary release containing a link to the full disclosure on its own website. A sample Berkshire Hathaway earnings release is embedded below.
Meanwhile, Business Wire has cleverly roped editors from Dow Jones and Reuters into supporting its case by spinning notice-and-access releases as earnings releases that do not contain financial tables. Obviously, no one would support such a thing, and I certainly never have.
However, this misrepresents the notice-and-access approach, which the SEC’s new guidance for corporate websites explicitly approves. The fact is a notice-and-access release is simply a notice containing a direct link to a full-text earnings release on your website — including your company’s usual full set of financial tables. There is little difference between notice-and-access releases and Berkshire Hathaway’s approach.
One of the many important benefits of linking to a release on your own website rather than distributing it via Business Wire is that it gives you the ability to control the formatting of the financial tables. Wire service financial tables often appear garbled and hard to read when entered into wire services’ distribution systems.
Below is an example of Business Wire client Allstate Corp.’s recent Q4 earnings release posted on Reuters’ website. The last column in the table is cut off and the line item labels break poorly over multiple lines.
For me, the biggest irony of Business Wire attacking notice releases is that my recommending them actually benefits Business Wire.
That is because the SEC’s guidance does not require companies to issue such a release via a wire service at all. Companies could simply notify investors in advance in an 8-K filing or earnings call notice about where and when the company will post its earnings materials on its website. See this White & Case legal memo.
So if companies really want to save money, they can just completely skip the wire services for their earnings releases. I don’t think that’s a good idea because investors should be told when the release has actually been posted because they might forget.
The thing that most disappoints me about Business Wire is their persistent willingness to twist facts to suit themselves, such as misrepresenting Phd student Eugene Soltes’ work, and to lie about their service delivering information simultaneously to all investors.
IR is a profession that requires high levels of trust, and I don’t trust Business Wire one bit after this.