Afrikaans newspapers have been hard hit by changes to JSE requirements in January that allow listed companies to publish a short version of financial results.
But they are not alone. Business Day, the newspaper of choice for many listed companies, experienced a 40% drop in advertising volume in the first quarter of 2013, editor in chief Peter Bruce told the Mail & Guardian.
This is the result of many companies opting for a cheaper, short-form advert, rather than the one- or two-page advertisements placed in newspapers in the past.
It is estimated that the advertising volume of Afrikaans business publication Sake24 has dropped by as much as 75% since the new rules came into effect.
"Afrikaans newspapers have suffered immensely because of the new rules," said Alban Atkinson, managing director of Integrated Communication Agency, one of the biggest of the companies that places financial results in the media on behalf of clients. "With the new rules allowing companies to publish in only one newspaper, few companies are publishing in Afrikaans newspapers. The impact is being felt at Sake24 and publications like Beeld in terms of retrenchments."
"It is not surprising that Business Day and Sake24 would be affected as they were the newspapers of choice for companies wanting to place results," said Atkinson. "To some extent, [the Star's] Business Report has also been affected."
"Price-sensitive information"
The former JSE rules, which dated back to 1967, required companies to publish any "price-sensitive information" which included financial results in English and one "other than English" language in a daily national newspaper.
The JSE, citing the new multi media environment, now allows companies to publish a short version of their results in one newspaper of that firm's choice.
Moneyweb estimates that income from the publication of JSE-listed company results is about R200-million annually. Nielsen data about 53 randomly selected JSE–listed companies showed they spent R27.5-million from July 2012 to January 2013 on financial reporting advertising.
Analysis conducted in March suggested that 67% of income would be lost to media organisations should all 414 JSE-listed companies opt for the short-form option.
Analysis by Moneyweb and supported by a media-sector expert shows that a media company that would have received about R133 000 for a full-page advertisement would now earn about R40 000.
Bruce said of Business Day, "We are not making budget". He said that in anticipation of the loss, the newspaper had been looking at new ways of "doing financial notices" as a part of its integrated reporting model and this idea was being well received by business. The plan would involve live streaming results alongside print advertising and online coupling of the results with company news to give investors a comprehensive view of the company.
Reduction in advertising
Reduction in advertising spend by companies became noticeable by the middle of last year. It may be coincidental that the JSE made its announcement about the rule change in July 2012.
A senior staff member at BDFM, the business unit of Times Media Group, which includes Business Day, said: "BDFM saw the cutting in the size of adverts and a move to black and white rather than colour, which is obviously more expensive, as well as a noticeable decline in volume."
The staff member said the full impact of reporting changes would become evident only by the end of the year. "With financial results, there tend to be peak periods twice a year rather than a constant flow of advertising, so it will be clear only after the interim and annual results are released."
The losses would be higher than estimations based on standard advertising income because costs were generally inflated for financial statements, the M&G was told.
Nielsen data on advertising concerning financial results is at present only available up to January 2013. As most of the companies publish results in February and March, how much the income of newspapers has been effected will only become clear later in the year.
Moneyweb's analysis found that companies that chose to publish full results were ArcelorMittal, Anglo American, Murray & Roberts, Absa, AECI, Kumba, Woolworths, JD Group, ARM and Massmart. Rainbow Minerals published its full-year results over three pages in both Sake24 and Business Day.
Professor Mervyn King, who chaired the King Committee on Corporate Governance, last year raised concern about reduced accessibility for the man in the street as a result of the new rules.
John Burke, the JSE's director of issuer services, said the full report would be available on the web and where companies did not have websites, they would be required to publish the full document in the media.
Media commentator and research Wadim Schreiner, head of Media Tenor said only 35% of the population has access to the internet, and many of those who do not are pensioners.
He suggested that companies, who have always seen the financial statements as a grudge purchase, find new ways via print media to engage with the public and drive reputation. Schreiner said the financial statements, while providing additional insight into companies, have never been written in a particularly reader friendly manner and companies should make use of new requirements to review how they present their information.