A MAJOR battle is shaping up in the United States between giant Thomson Reuters (NYSE:TRI), NASDAQ OMX (NASDAQ:NDAQ) and the big PR wire services as they compete for control of companies’ financial disclosures.
So far Thomson Reuters appears to have the upper hand as its new US PR wire service, based on European technology acquired from NYSE Euronext in 2009 and now offered free to its investor relations website clients, has made significant gains this quarter in seizing business away from the big PR wire services.
But the press release companies are fighting back, targeting the hosted investor relations website business that Thomson Reuters and NASDAQ OMX have dominated for the past decade.
And in an ironic twist, specialist IR website service providers may be key beneficiaries in the battle for companies’ disclosures as large gaps in Thomson Reuters’ distribution network expose that PR wire distribution is not half as important as it has been made out to be.
PR Wires Building IR Website Businesses
The latest salvo in the “war of the wires” came last week when PR wire service Marketwire, which until earlier this year was a partner to Thomson Reuters’ news release service, launched a new website publishing product. EasySuite 2.0 takes direct aim at the investor relations website and online newsroom businesses of Thomson Reuters and NASDAQ OMX, which owns IR website provider Shareholder.com and PR wire service GlobeNewswire.
With its new website suite Marketwire joins PR Newswire and Business Wire in offering investor relations website solutions. PR Newswire launched its Investor Room hosted IR website product in 2008 and has a couple dozen clients. Recently, however, it has been pushing hard with aggressive pricing and has landed some key new accounts, including recent IPO Sodastream (NASDAQ:SODA), while its flagship client is Qwest Communications (NYSE:Q).
In December, PR Newswire sealed a strategic partnership to provide discounted news releases and SEC filings to clients of SNL IR Solutions (directory listing), a specialist IR website provider in the financial services, real estate and energy sectors.
Business Wire, meanwhile, appears to have had little success with its InvestorHQ IR website product, which it launched last September after announcing it at the National Investor Relations Institute (NIRI) annual conference in June. Currently, the company lists no clients on the new platform, and it failed to mention the service two weeks ago when it announced a $50,000 sponsorship deal with the Canadian Investor Relations Institute (CIRI).
While they are worthy contenders, the PR wire services have a long way to go before they begin to make a dent in the IR website dominance of Thomson Reuters and its long-time rival NASDAQ OMX. Together these two vendors control as much as 90% of the IR website market in certain industries, and they have continued to win a similar percentage of new IPO accounts in the past year.
Thomson One Distribution Gaining Pace Despite Big Gaps
After being slow to get out of the starting blocks after last June’s launch, Thomson Reuters’ Thomson Reuters ONE news release service has now begun to gain pace. We have counted around a dozen companies that have ditched their old PR wire partners in favor of distribution via Thomson One this quarter, and more appear to be doing focused tests of the service.
These gains have come despite the fact that Thomson One suffers from significant distribution gaps that have forced it to resort to piggybacking on the Reuters editorial feed to reach key outlets such as Yahoo! Finance, while other major website outlets continue to be missed completely.
When Danaher Corporation (NYSE:DHR) announced its acquisition of Beckman Coulter, Inc. (NYSE:BEC) February 7, it distributed the release via Thomson Reuters’ wire service rather than with PR Newswire, which it last used January 27. However, the large gaps in Thomson Reuters’ US distribution circuit meant the 7:00am release never made it to major US finance websites such as CNN Money, MSN Money or AOL’s Daily Finance. And while it did appear on Yahoo! Finance, it was via Reuters’ editorial feed and not a separate Thomson One feed.
Similarly, when Sealed Air (NYSE:SEE) released its Q4 2010 results on January 24, the release appeared on Reuters.com, but not on any of the other major finance sites, including Yahoo! Finance, which is by far the most popular finance website in the US.
Yet Thomson One’s limited distribution has apparently created no problems for investors or the financial media. Similar to the recent incident with Apple Inc. (NASDAQ: AAPL), this suggests that investors do not rely on PR wire service distribution to get disclosure information when companies’ own websites have push technologies and SEC filings are widely disseminated online.
Independents May Gain In Pursuit of Excellence
As the reality of how investors actually get their information begins to be more widely understood by IR departments and their legal counsel, the door may well be opened more widely to independent IR website specialists that offer superior website products compared to the larger providers.
Companies that want superior websites and the flexibility to choose the best providers for webcasting, SEC filings and even news distribution may well decide to go with providers such as SNL and Q4 Web Systems (directory listing).
Ultimately, though, the heated competition between the big service providers will help to create a healthier market for online IR services. It may finally give IR departments more choice and better pricing.
In such a fluid environment, IR departments should avoid signing long-term service agreements to give themselves maximum flexibility to adapt to changing circumstances and take advantage of the best deals.
We’ll keep you updated on this evolving story.