From David Carr's New York Times column today: "Journalists in the gulf are now dealing with a hybrid informational apparatus that does not reflect government's legally mandated bias toward openness and transparency." More:
Reporters complained and asked for more accurate, timely information, and a BP official responded with a memorandum saying that the company was prevented from answering individual questions by disclosure rules governing trade in its stock.
"Given recent volatility in BP share price, I'm told that information related to top kill is now considered stock-market sensitive, which means it has to be managed under disclosure rules for the London and N.Y. stock exchanges," the BP media official said in an e-mail message. "In a nutshell, that means all investors must be provided information on an equal basis. That precludes me from sending you updates as various aspects of the operation unfold."
Really? Should the volatility of a company's stock price determine how public information on an environmental disaster be delivered to the public?
Mr. Carr is wrong: when it comes to publicly traded companies, the government doesn't have a legally mandated bias toward openness or transparency in information flow. It has a bias toward a level playing field, which means that everyone gets the information at the same time, and that, as a result, secrets are kept secret until there is a coordinated release. I agree with Mr. Carr that this is a problem, but his quarrel should be with the SEC and Reg FD, not with BP.
It's another way, similar to the ratings agencies, in which Warren Buffett makes money by selling companies something the government requires them to buy. Here is a bit from the San Francisco Chronicle article on Berkshire Hathaway's purchase of Business Wire for "a few hundred million dollars": "Business Wire makes its money -- about $127 million in revenue last year -- by disseminating news releases, a service in particular demand by publicly traded companies that are required to meet fair disclosure rules."
Got that? If you are a publicly traded company and have some significant news -- anything that might conceivably affect the stock price -- you can't just tell a reporter who asks about it. You have to pay Warren Buffett a fee to distribute the news to everyone.
A lot of people are up in arms about ObamaCare because the government is forcing individuals to buy something from a private company -- health insurance. But the government forces companies to buy things from other private companies all the time, whether it's bond ratings or press release distribution services. The Times business section perks up about it when it interferes with reporting on the oil spill, but it's an area of coverage worth pursuing in its own right.