Edition: October / December 2016
Off the press
Financial media are no longer able to play the strongly supportive role that the King code had once considered imperative.
As corporate SA prepares to accommodate the fourth incarnation of the King governance code, which this time embraces not only companies but also retirement funds as a specified segmental category, here’s a flashback to the 2002 version:
The adoption of the philosophy of regulation by disclosure pre-supposes the existence of well-trained active financial journalists....The journalists’ profession should encourage ways of ensuring that qualifications are enhanced and programmes implemented to ensure high standards of financial journalism.
Such was the thinking aspirational, or wishful as it turns out, that subsequent Kings haven’t alluded to this pre-supposition. The omission makes it no less relevant but only more glaring, and menacing, for the success of regulation by disclosure.
Pre-supposition means a starting point that’s tacitly assumed. Instead of going the way that the early King considered essential, the pre-supposition has warped in the opposite direction. Since 2002 the core of skilled financial journalists has markedly shrunk. With them has gone the capacity to interrogate the disclosures on which the efficacy of King relies.
This is no place to apportion blame. But it is a place to confront reality. If this pool of “well-trained active financial journalists” is as critical to King as it had identified, than its ongoing evaporation (disproportionate to replenishment) must concern everybody who wants to take King seriously. Solutions, anybody?
And not only King. There’s a plethora of codes, guidances, regulations and laws that require relevant financial disclosures. Without an adequate core of financial journalists to examine them, and publicly discuss them, who’ll be canaries in the mineshaft for the market-conduct authority under the soon-to-be-enacted Financial Sector Regulation Bill? Who’ll be the carriers of whistleblowers’ exasperations?
It’s impossible to “pre-suppose” something whose existence hangs by a thread, and whose prospects for strengthening barely exist. Long tenures of journalists in specialist roles, enabling maturation of their insights and enhancing gravitas of their brands, is eroded by a reweighting towards the employment and training of lesser-paid juniors who constantly flow; unsurprisingly, because the industry’s remuneration levels invite poachers.
Prior to 2002, the internet was in its infancy. Financial media were dominated by well-staffed print titles. Institutional memory mattered. Experience counted. Originality and uniqueness of content were prioritised. Development of trusted contact networks was a prized currency.
This all required investment in editorial which, back then, proprietors had the wherewithal to encourage. Back then, too, a generation of proprietors considered editorial quality to be paramount; broadly speaking, that is. And publications, stuffed with advertisements, could offer comprehensive coverage of reader-relevant topics that today’s thin paginations disallow.
Subsequent to 2002, the landscape has radically changed. Financial media are fragmented across myriad print and electronic channels. Free content proliferates. There’s an inundation of 24-hour information sources, jumping from one highlight to the next, overwhelming selection and digestion.
Originality is obscured by the commoditisation of news across countless platforms, social media included, for quick consumption. Through dotcoms, ready accessibility of globalised titles has sharpened the competitive mix available to a time-constrained business marketplace.
While website viewerships have soared, print circulations have collapsed. Revenues from the former are minimal in comparison with what the latter once comfortably commanded. The lack, even absence, of resource militates against the retention, let alone recruitment, of “well-trained active financial journalists”.
They cost more to train and to keep than many proprietors are willing or able to spend. Better to fill space with agency copy, syndicated material and opinion pieces; endless opinion pieces, because contributors come cheaper than employees.
It’s a tribute to the remaining core of “well-trained active financial journalists” that, given the circumstances, originality and investigation persist to an extent now exceptional. But the core is ageing, vulnerable to voluntary or involuntary culling.
Moreover, the better that financial journalists are trained and skilled the more likely that their editorial duties are deflected into managing, mentoring and rewriting; endless rewriting, for undeveloped competence standards to match desired publication standards.
The milieu, to put it gently, is pressurised. Google, unfortunately, is not entirely synonymous with research. Neither are comments on a press handout necessarily to be construed as value added.
Nothing can compensate for the paucity of newsroom personnel. That probably explains why attendance at company briefings and shareholder meetings, much more helpful in sensing the flavour of information than press releases dutifully regurgitated, is too occasional to stimulate the interrogation and activism that King seeks to advance.
King and its retirement-funds complement, the Code for Responsible Investing in SA, are heavy on “sustainability” disclosures in annual reports. Yet media attention tends to focus primarily on directors’ remuneration. Such other performance criteria as environmental impacts and employment practices rarely get a look-in.
Contrary to the best intentions of King, company reporting in puffery and waffle usually passes without notice. And, like retirement-fund trustees, don’t expect too many financial journalists to absorb balance sheets either. At best, their readership of annual reports is sporadic.
Drafters of the early King were ambitious in their pre-supposition about financial journalists. Drafters of the later King will need to find alternatives for regulation by disclosure to work as they want.
King IV has clear recommendations for improvements in the governance of companies and retirement funds. Less clear is how, confronted by the limitations of financial media, their implementation is to be monitored for public assessment.