Deals

Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

A prolonged decline of stock in Warren Buffett's Berkshire Hathaway could mean buybacks are on the horizon. Though the billionaire's conglomerate has plenty of cash ($247 billion as at Sept. 30) to fund such activities, it may want to consider selling Business Wire, which distributes corporate news and regulatory filings, while it's still worth something.

Cashing In
A sale of Business Wire would add to the conglomerate's growing money pile
Source: Bloomberg

Business Wire doesn't disclose its earnings, but it could fetch a decent sum if last month's $841 million sale of PR Newswire is anything to go by. That deal saw Cision, backed by Chicago-based private-equity firm GTCR, pay a multiple of 11.2 times the news distributor's adjusted earnings before interest, tax, depreciation and amortization. 

That was a decent result, considering some of the world's biggest companies are relying less and less on such vehicles to disseminate news. JPMorgan Chase & Co., the largest U.S. bank by assets, said Tuesday it plans to report its fourth-quarter and full-year results next week on its own investor relations website. While JPMorgan isn't completely bypassing Business Wire (it'll send a press release that will have a link to the bank's website), it'll also use Twitter, which is free, to notify investors when the numbers are available. 

JPMorgan's decision means it can avoid snafus like one in 2014 that saw its third-quarter financials published more than three hours ahead of schedule because of an error by Shareholder.com, an investor-communications company owned by Nasdaq OMX Group. It also follows earlier moves by Goldman Sachs, Alphabet (formerly Google) and of course, Twitter, to bring the release of earnings and other announcements in-house.

So a decade since Berkshire's 2006 acquisition of Business Wire, Buffett's description of it being a "gem" doesn't quite ring true. As well as a business model that's already being disrupted, it's also vulnerable to hackers.

Last August, Business Wire moved to reassure clients after U.S. authorities arrested hackers working from Ukraine for siphoning more than 150,000 press releases from the likes of PRNewswire, Marketwired, and Business Wire, over a five-year period. In 2014, Business Wire halted direct feeds to high-frequency traders in a move that was designed to protect its reputation, but probably dented its revenue.

Going Long
Berkshire, the serial acquirer, rarely sheds assets
Source: Bloomberg

To be sure, smaller, publicly traded and private, closely held companies that don't have a big social media presence or the desire to take the broadcasting of news into their own hands could require the services of Business Wire and its competitors for years to come. But if the largest corporates move en masse, as current trends suggest, it's hard to see how profits would do anything but slide. (Notably, Marketwired's owner, the private-equity arm of the Ontario Municipal Employees Retirement System, is said to be exploring a sale of the company, according to Reuters.) 

Berkshire could best serve its own shareholders by following suit, and putting Business Wire on the block sooner rather than later.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at gtan129@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net