Almost exactly nine years ago, I spent an evening discussing the future of corporate reporting with the European head of one of the world’s major business news wires – the organisations that quoted companies were, back then, obliged to use for disseminating results and other market-sensitive information.
The big mistake that her firm’s rivals were making, she said, was to obsess about competing with each other. “In the long term, we all have one common enemy – and that's Google,” she declared.
Her point, back at that dinner in 2006, was that investor relations teams soon wouldn't need to pay companies like hers buckets of money to ensure that their results information is distributed in ways that meet global regulatory requirements. Thanks to developments like eXtensible Business Reporting Language (XBRL), Google would provide the mechanism for that – just like it does for other forms of information.
Nine years on, the wire chief’s fears are finally proving well founded – but it turns out that she picked the wrong enemy.
Earlier this month, Goldman Sachs cut out the news wire middleman and distributed its quarterly earnings statement by publishing it on its corporate website and promoting it via its Twitter feed.
Yet why has it taken so long for a really big name company to do this? After all, the US Securities and Exchange Commission (SEC) gave its blessing for corporate websites to be used for material corporate disclosure way back in 2008.
Well, back then the SEC emphasised that if companies wanted to publish market-moving material on their websites, they needed to make investors aware that that’s where to look for it. So in terms of distribution, the news wires still had an advantage – they could take care of “pushing” information across the markets – something that a website could not do on its own.
But as Goldman Sachs proved this month, a Twitter feed can provide a corporate website with the spreading agent it needs to make the business wire redundant at last (see the SEC’s guidance on social media disclosure here).
If this trend catches on, it's good news for corporate web managers and their colleagues in the IR team. They will have more control over how their results and other announcements are reported – and fewer middlemen to pay.
Not such good news for the news wires, though. Or Google.
- Scott Payton