Wadim Schreiner bemoans the fact that listed companies no longer have to advertise their financial results, as it impacts on print media and a free press.
From this month, the Johannesburg Stock Exchange (JSE) no longer requires listed companies to publish full financial results in the press. This is because the demands of the current economic climate require cost-cutting measures by corporates. Instead, companies are now required to publish what Business Day, in a recent editorial, referred to as a “short-form summary of their result”.
And indeed, at first glance, this decision makes sense. The advertising costs saved by the 414 JSE listed companies are certainly hefty.
The JSE has been the first and one of the few stock exchanges to require its clients to go beyond quarterly or annual financial results and now publish integrated reports or One Reports. These reports contain considerably more in-depth information about each company beyond the traditional annual or quarterly reports that focus on reports by the chairman and CEO, financial results and other corporate governance information. These integrated reports, even though based on self-generated information, certainly provide the public and investors with more insight and data for an informed evaluation.
However, the cost of compliance with the One Report is considerable. Dropping the advertising requirement could well offset this impact. So the JSE initiative to take some of the cost burden off the corporates makes good sense. But what about transparency?
Also, those drawing the shortest straw in this new arrangement are the media companies, which have been exceptionally hard hit by this decision, which deprives them of one of the last bastions of advertising revenue. Financial and One Reports are now published online, which one may argue will make these reports accessible to the general public. But, according to the 2011 Census data, 35% of the population in South Africa has some kind of access to the internet. Conversely, 65% do not. The media argues that withdrawing the advertisements will deprive people, and (as Business Day has stated) pensioners in particular, of the ability to assess their investments.
I don’t think so. The financial results published in the media have never been written in a particularly pensioner-friendly way. And those who did understand the information are likely to be part of the 35% who could access the information through the internet in any case. But what anyone with investments will continue to do is to rely on financial journalists to decipher these results.
It is this editorial coverage that drives the reputation and ultimately impacts on companies’ performance. This is because the assessment of the journalists still weighs more on the mind of ‘the people’ than carefully massaged financial results and corporate information.
So, while these advertisements might not have had the desired impact, the withdrawal of significant revenue from media companies, already under strain, may result in retrenchments. With fewer journalists to report, quality is likely to suffer. While it makes commercial sense not to publish financial results in the media, it cuts off the lifeline of the most important channel for corporates to drive reputation and engage with people.
Some of that saved money should still be spent on media engagement, perhaps, though in new and creative ways. While some of us watch the demise of the print media and smile, criticising them for having missed the social media boat, we forget that it has been print media that has upheld the Constitution, human rights and exposed corruption for many decades. I doubt that the internet or social media can say the same.
This story was first published in the January 2013 issue of The Media magazine.
