For the longest time, traditional news wires have been the preferred choice when it came to disseminating information. They can send releases where it matters – newsrooms, trading desks and websites – quite fast. But although they may be efficient, they can also be costly. Calls for alternative means have been getting stronger in the past few years, thanks in part to the rapid development of the Internet. Just recently, the US SEC has finally responded. Companies may now solely use their websites and blogs to meet public disclosure requirements under Regulation FD (Fair Disclosure), as long as they follow a new set of guidelines to be released by the commission. Chairman Cox has this to say:
Ongoing technological advances in electronic communications have increased both the market’s and investors’ demand for more timely company disclosure and the ability for companies to capture, process and disseminate this information to market participants. Indeed, one of the key benefits of the Internet is that companies can make information available to investors quickly and in a cost-effective manner. The use of electronic media is arguably superior to providing company information the old way. It’s a better way to provide information to most investors since today it can be presented in interactive format that allows each individual to click through or drill down to the level of detail that’s appropriate to him or her.
This is a welcome development especially to small and medium-scale companies. Instead of spending for these wire services (who, by the way, are understandably not very happy right now), they can use their savings to promote their websites and enhance investor relations. Another great thing about shifting to online releases is that one can readily include multimedia content: accompanying YouTube videos, SlideShare presentations, and what-have-you. Furthermore, valuable additional information can be pointed to by placing links, such as wikis, blog posts, and online news articles.
Some herald this as the death of press releases, but I wouldn’t go that far. As long as people continue to read traditional media, there will always be the corresponding traditional news wires. The specific conditions for this new ruling are yet to be released, and that will determine to a great extent how disruptive this change will be. We’ll just have to wait and see.
