Since soon after the stock market crash of 1929, United States securities law has required publicly-traded companies to evenly distribute to the public any news, good or bad, that may affect its stock price. Once, uniformed messengers armed with letters from companies and synchronized watches sped across Manhattan to the city’s tabloids and broadsheets. At the appointed hour, they would enter to distribute the news into the hands of waiting business editors.
Today, companies disseminate virtually all their news with press releases sent via public relations newswires, which rocket information around the world electronically in seconds. Corporate press releases cover news of increasing or diminishing sales, new or lost accounts, expansion or “downsizing,” hirings or firings, new products or patent suits, takeover bids and shareholder suits. Every release, of course, eventually bears on the bottom line. And they have one sole purpose: supporting the price of a company’s stock.
The public rarely sees a corporate press release. It is “served” instead by the media in its usual “watchdog” capacity, culling the wires for “news,” distilling them down, and distributing information to the public. The markets, which the immutable laws of economic nature tell us are finely-calibrated devices, adjust stock prices accordingly.
Corporate America, it will come as no shock, spins its news, both good and bad. It obfuscates. It strings together neologisms, jargon and euphemisms. It buries its news within its releases. Having thus spun their news, businesses thrust onto the media the responsibility to discover the facts within the release, facts that it was required to disseminate in the first place.
Corporate America wins the spin game by playing to the media’s vaunted cynicism.
Charged with that task, the media completes the spin in a bizarre ritual that turns out in corporate America’s favor. The press unravels the spin by decoding the releases. It understands the jargon; it sees through the obfuscation and legalese; it digs up the buried news. And then, when it has decoded the release and “discovered” the news, the media thinks its task complete. It stops asking questions and moves on to the next piece of news.
And so Corporate America wins the spin game by playing to the media’s vaunted cynicism. Corporations initiate the dissemination of news and they understand—in most cases—how to stop coverage when they want it to be stopped. The media is complicitous, wittingly or not. By seeking out news that is momentarily hidden and halting its investigation there, the media utterly fails in its task of reporting and interpretation. Instead, it serves to mitigate and proscribe bad news, helping to guard against anything that might deflate the thick bubble of faith on which the markets rest.
Founded in 1954, PRNewswire, the nation’s largest disseminator of corporate press releases, has two circuits to serve its 15,000 clients. One circuit reaches approximately 2,000 newsrooms across the country simultaneously. The other, which began operating in 1965, is on a fifteen minute delay, reaching over 100,000 terminals in investment banks and money management firms. The readers on the second circuit include traders, brokers, money managers, mutual and pension funds, insurance companies, and the countless pseudo-professionals on the periphery of the markets. (Investors fall for the press release illusion too, treating releases much like the media. But investors are to be excused for their optimistic bias: they are, after all, interested parties.) PRNewswire’s clients, mostly companies, pay a $100 membership fee and then $450 to send a four hundred word release ($110 for each additional one hundred words) over the main national circuit.
In the early 1960s—when companies were still giving their releases to messengers—David Steinberg, now the vice-chairman of PRNewswire, had a vision of press release wires that could serve as the conduit for legally-required disclosures. Under no illusions, he sees PRNewswire as “an extension of the corporation.”
But the media believes that it is PRNewswire’s master. As soon as a press release comes over a wire, an editor—usually whose exclusive job it is to watch the wire—reads the entire release carefully trying to gauge its “news value.” If it is deemed newsworthy, the editor sends a headline out on the wire (readers would see it scroll up their computer screens) and assigns the release to be re-written. A reporter then takes the release, pares it down to three or four one-sentence paragraphs, rearranges it to bring the important news into the lead, and sends it out to readers. Today, it is possible for the public to read a release only hours later through a database such as Nexis. But most people see only rewrites of releases through newspapers.
Each timeworn method corporations have to hide their news and each individual press release shelling the market at three-a-minute exist in preparation for the inevitable moment a company must release “bad” news. News that disappoints The Street sends the stock price and the value of the company tumbling.
To find news, the editors have to wade through a vast blather of cyber-noise: wholly inconsequential, inane press releases, many of which are merely de-glossed attempts at free advertisement, like this announcement by Alexin Pharmaceutical Corp. Its first line read: “The Board of Directors and Shareholders of Alexin Pharmaceutical Corporation today announced plans to change its company name to Lexin Pharmaceutical Corporation.” The release went on to quote Dr. Jerry B. Hook, president and chief executive officer, babbling: “The name change supports our exciting and aggressive development strategy and will enhance our growth worldwide.”
Business press releases’ esotericism and calculated lack of clarity carry a tone of seductive nonchalance.
Others are written in a language that simply bears no close grammatical relation to English. Among the incomprehensible is this eager release from Quantum Corp. explaining disk drives: “To be considered multi-media friendly, the drives must provide adequate levels of capacity, throughput, and in some cases, seek times, for the particular multimedia task at hand.” And then there’s this cheering line from Opta Food Ingredients, Inc. about its newly developed synthetic fat: “These products as formulated have zero percent fat, have no trans-fatty acids and possess the most important attributes of fat-containing margarine such as texture, spreadability and mouthfeel.”
The majority of releases have similarly transcendent wordfeel. However foolish they may sound, they sometimes contain news the market considers important. Press releases often mimic newspaper stories, ostensibly to ease the transition to newsprint, but in most ways they are quite different. They are written in business spin, a peculiar form that is the opposite of political spin. While a politician’s handlers take his/her stand on a complicated issue and try to hone it into one or two visceral soundbites, a corporation’s flacks take often simple issues (i.e., we cannot sell Version 5.1 of our ball-bearing software) and weave them into opacity.
Business press releases’ esotericism and calculated lack of clarity carry a tone of seductive nonchalance. They say, at least superficially: oh, don’t bother attempting to understand this simple page of impenetrable jargon, because it’s really nothing, bat-of-the-eyelash. Businesses know that no tack invites invasion more successfully.
The fashioners of press releases use several rhetorical devices to mask news. Used ritualistically in almost every release—but especially those containing bad news—each masking device in fact is a red flag of revelation for the reader to discover. Frequently, releases are in the past tense. In a release from a major department store retailer trying to dispel takeover talk, the first line read:
Carson Pirie Scott & Co. issued the following statement today: “Contrary to the impression conveyed by the interview with Mr. William Dillard Sr. in today’s The Wall Street Journal, the company has not had any contacts or discussions with Mr. Dillard or Dillard’s Department Stores, Inc. regarding the sale of the company or any of its stores.”
The past tense of the word “issued” creates the illusion that what we are reading is already known, that the release is just a reiteration. In fact, the release is the first and only issuance of any company statement on this topic. There are a couple of other interesting devices here. The quotation marks further the illusion by giving the release a false veneer of objectivity, as if it is only quoting another source. The pompous wordiness and solemn tone attempt to put a final sheen of officialdom and legalese. This fools no editor: the rewrite will say, “Carson Pirie Scott & Co. denies having discussions etc.”
The major rhetorical device, so well-known in press release rewrite circles, is to bury the lead. Here, Creative Learning Products Inc. announces, in its first line, that it has:
initiated a program to restructure its operations to focus on the entertainment/gaming industries and to seek financing for both its existing and contemplated operations.
Contemplations aside, the company gets around to revealing seven paragraphs later, the real reason it shelled out for a release:
Unless these actions [the receiving of financing] are successfully implemented within a reasonable time frame, the company will be unable to continue operations as they are currently constituted.
Of course, the “current constitution” it wishes to maintain is its existence.
In the rewrites of releases that will go out on the newswire, reporters (in quote marks; often, newswires pay people to do nothing but rewrite releases all day) should bring the news in the lower paragraphs into the lead. They would drop the company’s lead altogether. An investor or trader will either read the newswire headline or story off the newswire, or, fifteen minutes later, read the release itself, mentally grasping the news.
Knowing that news reporters use quotations exclusively to embellish or emphasize—never to present the key points of a story—corporate press releases often use quotations to tell the vital piece of information. Here in a release from The Shaw Group Inc., the quoted source, here the droning chief financial officer, delivers this news:
“We’re excited about our increased backlog, as well as the high levels of inquiries we’re experiencing and the growth of our foreign operations,” [Bret] Talbot said. “However, preliminary indications are that, as a result of continuing delays and reductions in scope with respect to several projects, our sales and earnings for the third quarter ending May 31, 1994, will be comparable to the results of our second fiscal quarter.”
In an overlong and excruciatingly roundabout fashion, the CFO reveals the “bad” news: profits are not growing significantly enough. The tone changes drastically. The first part of the quotation is pithy and specific. The second part has words and phrases like the tentative “preliminary,” the wordy “reductions in scope with respect to” and the benign “comparable.” It also couples spurious accuracy, “ending May 31, 1994” and “fiscal,” with vagueness, “several projects” and “preliminary.” Shaw’s news fooled no one; the stock fell $4, a 20% drop, on the day the news came out.
Perhaps, once, a copy editor somewhere missed the news buried in such an aside. Now, since almost every CEO’s comment into his/her fist carries the significant news of a release, putting it in an aside is merely like the bow great enemies take to each other before the final duel in a Saturday afternoon Kung Fu movie.
These techniques flatter reporters by allowing them to think they have cut through the boring chaff and already well-known context to uncover the real truth of the matter. At the same time the obfuscatory prose in a release serves to lengthen the moment of reading it ever so slightly, pre-empting any prolonged attention. After deciphering the release the reporter feels he has done his job and that all the questions are answered. The appropriate reaction is to forget about the company … until the next release.
If reporters got a release that did not dissemble, with a short, clear, and alarming lead (the ideal for a news story), flurries of questions and wild speculations would addle their poor minds. And as any casual viewer of Hard Copy and its clones knows, few reporters are capable of resisting acting on their wildest speculations.
The barrage forces the press to hyper-absorb a release, frantically going from one to the next, willingly conceding a full grasp of the details.
In addition to these rhetorical devices, the fashioners of press releases use other physical ploys to hide their news, seeking to overwhelm reporters with data and exploit the deficit-ridden attention span of the media and Wall Street. The strategy takes two forms: first, the sheer number of releases. This is where the inane ones serve their function, as constant, predictable body blows. Editors must weed through them all, punch drunk. Secondly, there is overload of information within an individual release. Public relations trade magazines suggest using this technique, arguing that the generous surfeit of information gives readers everything their hearts desire. The number of releases and the glut of information within them help create the illusion that matters of consequence—defined extremely broadly as anything that can affect the stock price—are happening constantly. It helps convince journalists that all the answers to their questions lie at their fingertips.
At the same time, it creates an anxiety that the next release scrolling up the screen will contain other news that is equally important. The barrage forces the press to hyper-absorb a release, frantically going from one to the next, willingly conceding a full grasp of the details. A newswire editor is thinking: get a headline out! get another headline out! The press is satisfied knowing the semiconductor company is losing its major customer, but not concerned with why. After all, sales in its bowling pin division are taking off.
Journalists may have few difficulties deciphering press releases, but corporate America’s mission of concealment is still accomplished. This one small act of decoding substitutes, in the minds of journalists, for their larger task of investigation and interpretation. Corporate America plays successfully to the media’s vanity, offering up a purloined letter and then gasping as it is discovered.
The media’s acquiescence to these techniques reveals its intoxicated short-sightedness. As it busies itself bringing up the seventh paragraph into the lead, the press fails to ask fundamental questions about the structure of the flow of information and the profundity of its content. It prides itself on being able to discover what a company is saying in a one-page release, without ever wondering what is going on outside that page. What is at stake, of course, is everybody’s pension.
Because journalists are satisfied with simply decoding the press release illusion, all business news still originates from business. The press becomes a reactive force, only finding out about truly devastating corruption long after the damage has already been done. A company or an entire institution, like the nation’s Savings and Loans, has to collapse of its own arrogant weight for the press to notice it. Then they merely tour the battlefield, describe the carnage, and add a solemn tsk-tsk.
As the technological advances of the Information Age make direct access to corporate disseminations possible, the press risks being shut out completely.
According to myth, markets are level playing fields and all players have access to the same information at the same time. But the curious dance of press release dissemination explodes this sorry truism. The information to which the public has access is sorely impoverished. The carefully controlled flow and coding of information renders the markets highly manipulated and insular. Though petty corruption like insider trading is rampant, its significance in rendering the market an alienating atmosphere for small investors is minimal compared to the disenfranchising power of not knowing the shared language and mores. The media sustains the myth to protect its position as Chief Interpreter.
The press’ unquestioned complicity is ominous. In ceding the creation of news to the corporations involved and reading releases over and over again with the same reactive tactics, the press simultaneously expresses a superficial cynicism about the honesty of Corporate America and an abiding, uncritical faith in the righteousness of the markets.
But even this puny check on corporate power is in danger of disappearing. As the technological advances of the Information Age make direct access to corporate disseminations possible, the press risks being shut out completely. With releases going immediately into databases, the public may begin simply reading corporate release in lieu of the already self-marginalized press release re-write. Companies are already catching on, envisioning a future where the press—regarded as a tiresome, troublemaking middleman—no longer gets to translate. Corporate America will finally get to tap directly into that waiting public vein, shoot its info in, and the watch the stock market go up, up and away.