Forget the demise of so-called R200-million legislated subsidy, or the obligatory financial advertising in the print media that has been touted as the biggest threat to financial journalism.
The traditional business of financial news faces far greater threats.
Lest financial journalists think they might be immune to the effect of technological innovation, came the news last year that computers threaten their jobs too.
A company called Narrative Science in the United States has for a while now been providing the reports that were the standard fare of the business sections of newspapers for years; that is, short reports summarising and previewing company results. Financial news organisation Forbes has been using the services of this company to produce such brief articles. For example, this is the opening paragraph of one such story from the Forbes website: “Analysts expect disappointing news from RadioShack (RSH) when it reports its fourth quarter earnings on Tuesday, February 26, 2013. They project a loss of four cents a share after the company booked a profit of 12 cents a year ago.”
I doubt that robots will take over writing the news entirely – unless it’s for consumption by other robots. Nonetheless this development underlines the urgency of financial or business journalism to focus on value addition through research and analysis rather than the superficial business of quickly transferring news from source through the medium of print or broadcasting to the consumer.
Breaking news belongs to broadcasting, and broadcasting has not been damaged as badly by the distractions of disruptive digital technology, but broadcasting’s ability to convey complex information is limited.
While financial journalism is likely to emerge from the technological tsunami that is surging through the media landscape in better shape than other media, it will not emerge unscathed. To be sure, business papers and magazines will miss the obligatory financial advertising that has been the engine room of their publications.
A bigger threat is disintermediation, as consumers of financial news, mainly investors, go straight to source. I rarely look for the news about a company when I am looking for financial and operating information. At the click of a button I can download the annual report, the interim and final results, and even the company’s PowerPoint presentations to analysts. Of course investors lose a lot by not knowing what stocks are being talked about or written about. Investing is not only about fundamental or technical analysis, as British economist JM Keynes pointed out, but trying to establish what stocks will win the “beauty contest”.
Using the web as a source of information has also allowed new competition. I find that I return frequently to Politicsweb as a source of unvarnished political information. Here I can read the statements of political parties, aggregated in one place. I prefer this to interpretations by all but the most experience and insightful of political commentators.
Political reporting in South Africa is too often of the ‘Juju lashes out at Afriforum – Afriforum hits back at Juju’ variety.
If I am looking for company news, a number of online websites have for some time featured direct access to the Stock Exchange News Service, a centralised service through which all companies distribute news that is material to their share price. And investors can, for a small fee, access sites such as Sharedata that provide summarised data on companies to help investors make investment decisions. Fin24, to mention one example, supplies a lot of free data.
Moreover, you don’t need some reporter somewhere to push information your way as long as you have your Rich Site Summary (RSS) feed set up correctly. For example, subscribing to the StatsSA RSS feed means that the latest headline Consumer Price Index figure is a click away.
So where does the end of financial advertising and the threat of disintermediation leave the finance news media? Already, some of the traditional financial news products are feeling the heat. Both the Financial Mail and Finweek (formerly Finance Week), strong brands that they are, now compete in a crowded business-to-business market, with more than 600 titles in South Africa, according to the Omnicom Media Group’s 2012 Media Facts publication.
Business news organisations will have to look elsewhere for rich revenue streams. The Financial Times (FT) seems at a glance to be vulnerable to a slump in luxury goods advertising, judging by the ads for expensive mechanical watches that regularly adorn its pink pages, but it does not depend on legislated ads. The FT is also part of a larger group that provides, for now anyway, a cushion. The FT group in 2011 contributed only 7% of revenue and 8% of profit to the holding company, Pearson PLC.
As it happens, Moneyweb founder Alec Hogg’s efforts at doing his own thing illustrate that a subsidy is not needed for excellent coverage of financial news. Hogg – who is no longer at Moneyweb – almost singlehandedly created the new phenomenon of business radio in South Africa, something that able competitors have latched on to. He did this through a canny but sympathetic interviewing style, a keen sense for issues and events that his audience wanted to know about, and a lively scepticism.
It will no doubt be a blow, but not to business news, as long as there are potential customers; that is, people who are interested in business, economics and finance. Along with disintermediation, fundamental shifts in the financial news landscape should remind us that the primary customer is the reader, listener or viewer, rather than the advertiser.
For journalists, it is an urgent reminder that the difference between success and failure will be the degree to which we can add value. The success of financial publications in South Africa and elsewhere will depend on the skill and intelligence of journalists in interpreting the raw data. This means analysis as well as being on top of news events. That the FT and the Wall Street Journal continue to thrive in a digital world where other newspapers have struggled underlines this.
While I have cancelled my online subscription to the New York Times, I very much cling to my FT and Economist subscriptions. That such subscriptions are often paid for by the company and that the sites have excellent web interfaces helps keep me hooked. I find myself visiting the main local business news sites as well, but Bloomberg News and Reuters are constant competition. It’s a new world to be certain, and one with richer content than ever for the user – and therein lies the journalistic challenge.
Reg Rumney is the director of the Centre for Economics Journalism in Africa based at Rhodes University. He is a journalist with extensive experience in business reporting with a career that has spanned both print and broadcast media.