Shaking Up Disclosure


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In late July 2007, Sun Microsystems scared the wits out of executives at some of the press-release distribution services, news aggregators, and financial disclosure networks by announcing its financial results via its investor relations website and company RSS feeds first, and 10 minutes later via the traditional route of an online press release that was then distributed to the wire services.

Jonathan Schwartz, CEO and president of Sun Microsystems, announced the move on his blog in a post called “Truly Fair Disclosure” in which he wrote, “We will announce our results to the general public via Sun's IR website before making that same information available through the third-party news services that traditionally distribute such information to paying subscribers.” This seemingly simple move shakes up traditional disclosure because Sun is a visible company and is seen as being at the forefront of the use of web-based marketing and communications.

While releasing financial results first via the company IR website and RSS feeds and then through a news release sent to one of the press-release distribution services may seem a small and obscure change, it signals that Sun takes direct digital delivery of information very seriously. I think it also reveals to interested people (media, analysts, customers, and employees) that if you really want to know what’s going on at Sun, the most timely and comprehensive information is available on the Sun site and via its RSS feeds and employee blogs. I expect that many other companies are analyzing this move to see what it means for them.

As I've said in the past, for decades, press-release distribution services like Business Wire, Marketwire, PrimeNewswire, and PR Newswire had a lock on the real-time dissemination of corporate financial news. Companies sent news to one of the wires, which ensured that it appeared on financial trading desks through Reuters, Bloomberg, Dow Jones, and other newswires. It has been a nice cozy relationship that allowed the wire services to prosper.

Yes, there is also a regulatory element to this story, with Reg FD requiring that all material information from a company be disclosed to all interested people equally. Sun’s lawyers determined that distribution of the news via RSS and the Sun site satisfied Reg FD, and I agree with that determination because anybody can visit the Sun site and subscribe to its RSS feeds. There is no selective disclosure problem in my mind, all things being digitally accessible.

But not everyone agrees. Neil Hershberg, SVP of global media at Business Wire, cried foul with a blog post titled “Sun’s Solar Eclipse: A Return to the Dark Age of Disclosure”. According to Hershberg, “Sun’s decision to disclose via the web and RSS feeds, followed by broad wire delivery, is disclosure déjà vu—a return to the bad old days before Reg FD made an earnest attempt to level the playing field.”

I think Sun’s move is a brilliant one and I disagree that it is a move backward because anybody can have access to Sun’s RSS feeds directly (or via services that syndicate RSS feed to aggregators), just like anyone can have access the various press-release distribution services and financial newswires. The bad old days of selective disclosure were when companies told friendly institutional investors and analysts first, and then, eventually, the general public. This is very different.

However, I do think it is critical that any company that wishes to follow Sun’s lead and deliver important information via the web and RSS always use a news-release distribution service in addition to going direct. Why? Because in order to get the news into Yahoo! Finance, Google News, and many other places people go to get timely news and information, you must send press releases to one of the wire services.

So while the Sun example is certainly an important milestone, I don’t think it signals danger to the news-release wires. In fact, I think the opposite is true. News release wires are a fantastic way for companies to reach people directly because tens of millions of regular people (who are not journalists) read news releases directly at their favorite news portals, vertical market sites, as well as in all kinds of alerting systems. The important thing, of course, is to get the word out as widely as possible.