Ask any casual readers of business press releases whether they care if the release was distributed by either Business Wire or PR Newswire, the two dominant wire services, and the answer would be a resounding no, accompanied by a yawn. Journalists and writers who make their living by reading the releases (ahem!) don't even really care whether the news originates from one of the smaller services, such as MarketWire, PrimeZone, or Jupitermedia's
In short, business news is a commodity, available from a plethora of sources.
But if that's the case, why would Warren Buffett summon the resources of his Berkshire Hathaway
While PR Newswire is the world's largest business news service, churning out releases for more than 40,000 clients to over 3,600 news outlets, websites, and databases with reported sales of $182 million in 2004, Business Wire handles more press releases each day, even though 2005 sales came in at only $125 million. Business Wire also sports a couple of other classic Buffett indicia: It is privately owned, and the founding chairman is still at the helm.
Sarbanes-Oxley and Regulation FD have made the business of business news more lucrative. Because companies are required to disseminate material information and financial data to as broad a population as possible, so as not to run afoul of the securities laws, they must turn to the wire services out of necessity to broadcast the news. That makes the services of Business Wire a repeat business with a virtually captive audience. That audience will grow over time as overseas businesses are required to disclose more information to their shareholders.
Even with the advent of the Internet to distribute information more quickly, satellite feeds are still a prime component of distributing the news. The reach of PR Newswire and Business Wire is what sets them apart from smaller brethren such as PR Web and US Newswire, a subsidiary of MediaLink
Average readers don't care where they get their news, but generally, more credibility is attached to a release from Business Wire or PR Newswire. It's that credibility, along with a powerful reach, that allows PR Newswire and Business Wire to maintain their dominance. Buffett realizes that and so bought himself a valuable commodity.
Better stop the presses.