Disclosure, Press Releases, and Life Support: Can We Pull that Plug After All?

I often discuss with media professionals – including PR pros – the role of the traditional press release in today’s media environment. Basically, I believe it no longer has a one.

That is, I think the press release as it’s evolved over previous decades has outlived its limited usefulness and now usually represents more of a hindrance than a help to communication. It’s time to let it go and explore new vehicles for lobbying the media as well reaching target audiences directly.

Many people (almost all of them PR pros) disagree strongly with me on this. That’s good, since I always learn more through constructive debate and I love learning. I’ve listened carefully to their arguments supporting press releases. They make good points. Gradually, through in-depth discussion, most of these people relent point by point. So far I’ve been able to successfully counter all their supporting rationales for press releases.

…Except for this trump card: “Federal regulations require press releases for financial disclosure.”

Well, yeah. My understanding so far is that this requirement does exist. So that makes it the sole undeniable rationale favoring the continued existence of traditional press releases – the life support system.

…Or does it? Of course I had to wonder, what REALLY is required? In my journalistic work I’ve often found that if you delve into a thicket of legal language all sorts of options and loopholes appear. The realm of what’s legally possible generally boils down to who has the power of interpretation.

Therefore, might close examination of disclosure rules indicate other viable communication options that regulators would allow?

That’s what Todd Van Hoosear of the tech PR firm Topaz Partners and I are going to try to find out…

On Jan 12 I posted an article pondering that received a fair amount of attention, “Rethinking Releases: Who’s Your Audience?” A few days later Todd posted an excellent response in his blog, Tech PR Gems: “ Viva la search release… but only for private co’s. There, he noted:

“I think [the 'search release'] approach has merit with all privately-owned companies. With public companies, however, there are disclosure factors that may not be addressed without using an officially condoned wire/distribution service. Are we seeing changes in the interpretation of fair disclosure given the technological leaps?”

Good question, and he hit on the key issue of interpretation.

In a comment to that posting, I asked Todd which specific laws/regs contained this requirement, and what exactly do they say? In a lengthy reply in that same comment thread, Todd quoted the relevant sections of federal regs – a very nice bit of research I found quite educational! (Thanks, Todd!)

According to Todd’s initial research, the primary requirement is in the August 15, 2000 SEC Final Ruling (17 CFR Parts 240, 243, and 249; Release Nos. 33-7881, 34-43154, IC-24599, File No. S7-31-99; RIN 3235-AH82). He quoted the relevant language, which I’m not going to rehash here because he did a great job already. (Go see his comment.)

Via e-mail, Todd and I discussed our mutual interest in exploring this issue further. So we decided to embark on a collaborative fact-finding expedition, using both of our blogs as vehicles to publicize our findings.

Today, in “ Blog series: Press releases, public companies and blogs,” Todd mapped out what I think is a very good plan of attack. Here is the forthcoming series of postings on this theme he’s planning for Tech PR Gems:

  1. Material Information: What makes certain information more important than other information? (This article is already online.)
  2. Disclosure of Material Information: What is currently being required of companies in regards to disseminating material information?
  3. Material Alternatives: What other options exist for disseminating material information?
  4. Who’s the Audience: A discussion of who public companies write for, care about, and why.
  5. Disclosure of Non-Material Information: How public companies are currently communicating non-material information to various publics.
  6. Non-Material Alternatives: A survey of other options that exist for getting out non-material information to various publics.

That sounds like a great plan to me. For my part, I’m going to try to lure some people with relevant legal expertise into this discussion, and maybe also some government folks, too. I haven’t mapped out a specific series for Contentious on this, but expect to see occasional postings reporting our recent discoveries on this theme.

POSSIBLE OUTCOMES

If it turns out that there are no legally viable alternatives to the press release for financial disclosure, I will “eat crow” and publicly apologize to the PR pros I’ve been pestering. I also will officially cease encouraging organizations and individuals to abandon press releases wholesale.

However, I would still encourage them to instead distribute fact sheets or search releases via approved press release channels – if that’s acceptable to regulators. So far it seems to me that the regs focus more on channel than format. Therefore, PR Newswire, BusinessWire, and their ilk need not fear for their future, only adapt.

However, if it turns out that there ARE legally acceptable disclosure alternatives, then that’s something every media professional should consider carefully.

Off we go!

…As always, I’d love to hear various perspectives on this matter. Please comment below.

5 thoughts on Disclosure, Press Releases, and Life Support: Can We Pull that Plug After All?

  1. Amy:

    I think the argument is going to center around what is considered “material,” and that many CFOs and IR professionals will argue on the side of caution … that is, since the rules are open to interpretation, it’s better to be safe than sorry.

  2. Hi, John

    For a good discussion of what’s “material,” see the first article in Todd Van Hoosear’s series exploring this theme:

    - http://snipurl.com/lwar

    And yes, of course conservative individuals and organizations will be slowest to change, but isn’t that always the case?

    Thanks!

    - Amy Gahran

  3. Oh, and this is just a minor detail, but don’t forget that *each* state has securities regulations of its own as well (remember that guy Spitzer from NY?). I don’t know what degree of “harmonization” exists between the states.

    And… there are also foreign countries and that thing called the European Union (and the European Commission as well). We do need to be concerned for our friends in Canada, don’t we (even the ones that *refuse* to acknowledge English as *the* primary language)?

    – Jack Krupansky

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