Making news is making news. Like bookends on 2006, the two major newswire services have been targeted by third parties. At the beginning of the year, Warren Buffett's Berkshire Hathaway
While details of the proposal haven't been disclosed, London's Sunday Times said that Apax was planning an offer worth about 500 million pounds, or nearly $1 billion, for the news service. Only recently, PR Newswire had been valued at somewhere between 560 million and 620 million pounds. So it's quite possible the Apax bid might be too low to accept.
United Business Media has previously said there are no "synergies" between its press release subsidiary and its trade press and exhibition businesses. But it can't be denied that distributing corporate news is a cash-generating business -- one which PR Newswire's parent might be loath to let go of, considering that some of its other businesses are struggling. The clean lines of news distribution and the healthy cash generation are two of the things that attracted Warren Buffett to Business Wire. That and the fact that the company founders are still in place made the purchase attractive.
With the advent of tougher SEC regulations and voluminous reporting requirements, it suddenly became big business to print what companies had to tell the investing public. Sarbanes-Oxley alone added reams of paper to SEC regulations covering what companies were required to disclose, while Regulation FD -- the rule The Motley Fool helped enact, which leveled the playing field for corporate disclosure -- also churned up business for press releases.
Business Wire and PR Newswire are the two main players in the industry, with lots of lesser-known ones filling in the gaps and covering corporate butts. There was another merger just last month, when PR Newswire itself bought U.S. Newswire from MediaLink Worldwide
While PR Newswire is believed to generate more revenue than Business Wire, it's the latter that actually distributes more press releases. Both have been in business nearly the same length of time, have news bureaus in dozens of countries around the globe, and can target specific industries for disseminating news.
United Business Media didn't confirm the sale rumor, though recently management has said that if someone was willing to "write a massive check," anything was possible. Should they take Apax up on its offer, you can be sure PR Newswire will scoop the other services.
Extra! Extra! Read all about it with this related Foolish article:
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