There is a bit of schadenfreude detectable in various quarters at the prospect of Business Day being hit with the proposed changes to the publishing of JSE announcements and results.

The rule that requires that JSE-listed companies publish results and price-sensitive information in an English national daily newspaper and in one other in another official language (usually Sake24, the business supplement carried in Media24's Beeld, Die Burger, Volksblad and Rapport) amounts to a subsidisation of the business press, say some, and is at the root of many ills. (According to the proposed changes, a short-form announcement will suffice in a daily newspaper in any official language.)

The rules put in place in 1967 have allowed the market to become over traded, say the critics, and led to a complacency that has lowered the standard of financial journalism. It is also an anachronism in the digital age, pushes up the costs of being listed on the JSE and - here's the rub - how could BDFM, the owners of Business Day, and Media24 not have prepared for this day, scheduled for January 1 next year?

Moneyweb founder Alec Hogg, who has campaigned against this rule for many years, is chief among those applauding the JSE's recent move. Putting the value of these notices at R200-million, Hogg wrote recently (and it's well worth reading the full blog post and listening to the podcast) of the business press's response: "Of course they are squealing like beached whales. But don't be misled. They have been warned time and again. But simply refused to believe their lobbying power would eventually be brushed off."

Of course, Hogg would say this as the online and radio business that he has worked so hard to build is not affected if the rules change. But he also makes the interesting point that "instead of supporting South African financial journalism, it hampered its development. By forcing the available advertising money into a tiny, protected duopoly, only crumbs were left for innovative, emerging businesses like our fledgling Moneyweb and other wanna-be competitors."

On the other hand, BDFM's MD, Mzi Malunga, and Ainsley Moos, editor-in-chief of Sake24, say the notices don't merely pay for the number of pages in their titles but also for the business reporters who write the stories about the results, analysing and explaining them - and that to cut off the revenue provided by the notices will knock transparency in our society.

Peter Bruce, Business Day's editor, has told me previously that "the social usefulness of those notices can't be understated... There a huge constituency of stakeholders who read financial notices who don't have laptops or desk tops... I reckon the notices are as heavily read by the unions as by the business community".

Moos says: "... we cannot debate the decline in advertising income and not debate the quality of journalism we expect. There is a direct correlation between the two. The future of an independent and vibrant financial press is at risk here."

Malunga told Politicsweb this week: "The world is crying out for more transparency; not less. The benefits of transparency compared with the benefits of cost-saving in the short term or even the long-term are not comparable. Since 2008, there has also been the big issue of greed. People - and generally society - have become very suspicious of business. And it's in the interest of business - particular in the corporate sector and with big business - to be transparent but also to be seen to be transparent... Tied to this is the issue of reputation. Many reputation studies show that the more transparent you are as a business, the better the business does."

However, Marc Ashton, editor of Media24's Finweek - which gets more lifestyle brand advertising in its magazine rather than financial results - doesn't hold with the transparency argument.

"When Telkom put out their financial results, for instance, Moneyweb had already had a crack at the story first thing in the morning and Bloomberg put up three versions of the story. Fin24 loaded it up later in the morning. So you're talking about access to a million people within half an hour of the financial results going up.

"If the argument is that it's destroying transparency, then you can also argue that a million people have had the opportunity to look at those results almost immediately... I think online media doesn't get given the credit for the strength, breadth and reach of its audience."

Ashton points out that McKinsey put out a report last year that said by 2020 the participation of individual equity investors globally (as opposed, for instance, to insurance companies or unit trusts) in stockmarkets will have dropped by 20% as of the end of last year.

Ashton says coverage of listed companies in the press is already declining - Finweek itself has moved its focus towards personal finance in recent years - because there are fewer and fewer individuals investing in the stockmarket directly. There are, for instance, only about 150 000 people in South Africa with stockbroking accounts, he says.

Malunga believes the JSE needs to be more systematic in cutting costs and should look at the broader costs of listing rather than zoning in on the newspaper publishing rule. BDFM, for instance, he says, is willing to look at the cost of the space for the notices.

Most are expecting the JSE to go with the proposed change (comments need to be submitted before June 29) and both Moos and Malunga have been meeting the JSE on this issue.

Ashton believes that the JSE could spend more money on broader financial education to lure in more investors. Because we only have one stockmarket in this country, he says, and no competition, there is very little need to drive new investors. There have been few new stockbrokers entering the market in recent years, Ashton says. The majority are part of banks and they prefer big institutional clients rather than retail clients.

"If transparency is an issue, then I think the JSE can come to the party with far bigger spend on educating new members and educating new investors - not necessarily taking that money away from financial advertising but looking at different ways to educate."

What no one is doing is understating the negative effect on the bottom line. Independent Newspapers' Business Report supplement and the two big business magazine - BDFM's Financial Mail and Media24's Finweek - do not carry many of the notices, but Business Day and Sake24 will definitely take a hit.

We talk a lot in this country about the ruling party's assault on the freedom of the press but this is equally concerning when it comes to Business Day, which is so much more than a business newspaper: it is one of the last few serious daily newspapers left in South Africa.

It is certainly the only one left that pays good money for experienced people -such as Tim Cohen and Dave Marrs and Rehana Rossouw - and also trains many young journalists (Avusa's cadet school grew out of a BDFM training programme).

Its opinion pages are smart and influential, it covers politics and the political economy with intelligence and our media landscape would be much poorer without the bloody-minded, contrary Bruce.

The JSE rule change may be inevitable but it is nothing to celebrate.

The biggest curiosity, of course, is why Business Day and Sake24 haven't found alternative revenue streams or at least hedges against this sword of Damocles that has hung over their heads for years.

These are, after all, the people who write about the need for business to anticipate and move with change. Why do they seem wanting in this department themselves?

The answer is that this is a very difficult source of revenue to substitute.

As Malunga points out, business titles will never get retail advertising; while lifestyle advertising and luxury brands generally prefer more broadly-defined products (although, to this end, Business Day's very high-end Wanted magazine is an incredible success story).

Business Day has steadily increased its cover price over the past decade (now at R12), which has helped some, and it will put a paywall up on its website in July to protect itself from further circulation cull.

Behind this paywall will be the integrated newsroom and website of Business Day and I-Net Bridge, the specialist investment-news service. It has a very good chance of moving towards profit itself if the experience of the likes of the Financial Times is anything to go by.

But Business Day is also a very expensive newspaper to produce. The experienced staff don't come cheap but the biggest cost is distribution - due to the newspaper's high number of subscribers. According to the Audit Bureau of Circulations business and individual subscribers accounted for 22 463 of Business Day's average daily sales of 35,897 (see table below).

Business Day's paid circulation for first quarter of 2011 and 2012:

Source: Audit Bureau of Circulations

What was really needed - and from years back - was a massive charm offensive with the JSE-listed companies to establish direct relationships between Business Day and Sake24 and the companies, to persuade them to keep up the same level of paid-for advertising for results and price-sensitive information.

"It is the companies that are willing to communicate on the front foot as opposed to communicating when they have to that are also the companies that have the best brands," says Malunga. "This should not be sacrificed at the alter of cost-cutting as we will all be poorer in the end, including the companies themselves."

And that is exactly what Malunga, Moos and Bruce will have to sell to the JSE-listed companies going forward.

For more:

‘Media firms lobby JSE on results plan', Business Times, 28 May 2012

‘How newspapers can save themselves', Politicsweb, 24 October 2011

‘Business Day paywall move is the real deal', Bizcommunity, 20 July 2011

This article was published with the assistance of the Friedrich-Naumann-Stiftung für die Freiheit (FNF). The views presented in the article are those of the author and do not necessarily represent the views of FNF.

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