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.
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.