Help us continue our quest for top quality
Please bear with me as I depart from the usual commentary on South African economics and politics in this column to make an appeal on behalf of Business Day and the business press in general.
About two years ago, after a long and tortuous debate, the JSE substantially reduced the requirement that companies publicise their corporate actions and full results in two newspapers. A compromise was reached in which the requirement was reduced to one newspaper and a much briefer announcement.
The consequence of this decision was devastating to the business press, but now the JSE has opened discussions on scrapping the requirement entirely. I would, in deepest humility, ask that if you are a reader of Business Day or a listed business that struggles to explain your business or you are an investor who values deeper knowledge about potential investments, you join us in objecting to this change.
Our argument is simple: the requirement is not expensive, it supports transparency and a free press and the new proposal is very poorly timed and thought through and harms not only us, but corporate SA in general and the JSE itself.
This is because research shows that long-term investors make their decisions based not only on the raw data companies produce, but also a broader sense of the management and business style companies pursue.
This is not a statement of speculation; it is a conclusion drawn from academic research. A few years ago Insead professor of finance Joel Peress studied an interesting set of events. He examined the turnover on stock markets during the times of newspaper strikes in various countries. Look it up, the paper — called The Media and the Diffusion of Information in Financial Markets: Evidence from Newspaper Strikes — is on the internet and was published in the Journal of Finance.
Even now, when online information is such a powerful force, he found trading volumes fell 12% on strike days and intraday volatility dropped 7%.
If you think about it, this makes perfect sense. Markets react to news whether in print or digital format because what’s important is the quality of the content, not the delivery mechanism. It’s partly for this reason that the Indian, Brazilian, Chinese, Mexican and Egyptian exchanges still require corporate results to be published in newspapers. The JSE argues that Sens is an adequate distribution mechanism.
Sens is certainly an important tool and has improved the speed of information flow. But the background information, the analysis and the in-depth content are supplied mainly by sell-side analysts and the business press.
When the JSE scrapped the “long-form” publication requirement two years ago, it washed its hands of the consequences because it considered the requirement a kind of unearned benefit to the business press and blithely claimed that newspapers needed to find a new business model.
We think that logic is just wrong. We know about digital transformation very intimately. There is practically no business that has been more disrupted by the digital revolution than newspapers, and we particularly at Tiso Blackstar have been aggressively adapting our business model to react to these challenges. The fruits are beginning to show, but these things take years.
The most frequent comment I get about Business Day today is that it’s physically thin. This is a direct consequence of the JSE’s rule change, which took a huge chunk out of our revenue.
The change also all but destroyed the business press in Afrikaans newspapers and the majority black-read press. And yet it has done nothing to enhance the online business media, which are still struggling just as they did before the rule was changed.
This is a consequence of the disparity between digital revenue per reader and print advertising revenue per reader.
Because print advertising remains an effective mechanism in many ways and because the culture of “everything should be free” on the internet still more or less applies, online advertising yield is much smaller than in print. That will change, but it will take time.
The fact is that producing quality journalism is expensive. But I would invite you to imagine what SA would look like today if it were not for our feisty, questioning, absorbing press. Never in SA’s history as a democracy has the importance of the press been so apparent.
If you support that, please send by no later than this coming Friday a short note to alwynf@jse.co.za, stating briefly your objection to the rule change.
Or if there is any further information you might need on this topic, contact me on cohent@businesslive.co.za.
I WOULD INVITE YOU TO IMAGINE WHAT SA WOULD LOOK LIKE TODAY IF IT WERE NOT FOR OUR FEISTY, QUESTIONING, ABSORBING PRESS