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Wednesday, May 18, 2022

Renamed Market Wire Looks to Nasdaq Deal to Boost Business

Renamed Market Wire Looks to Nasdaq Deal to Boost Business


Staff Reporter

In a bid to gain ground on its larger rivals, Los Angeles-based Internet Wire has signed a deal with the Nasdaq Stock Market to serve as the preferred distributor of news releases for listed companies.

The deal will grant the company, which has since changed its name to Market Wire, access to the 3,600 companies listed on the exchange for pitching its news release and data distribution services.

Nasdaq will receive a warrant it can exercise for a non-majority stake in the company, said Jim McGovern, Market Wire’s president and chief executive. Market Wire will also share revenue with Nasdaq from clients it generates through its relationship with the company.

Market Wire also gains credibility and a marketing push among public companies, where it hopes to concentrate its growth. McGovern declined to say if there was a cash component to the deal.

Nasdaq Stock Market Inc. last week launched Corporate Services Network, an expanded version of a secured Web site for listed companies that contains a variety of market data. Market Wire is linked to the network as a recommended distributor of news releases. It was one of two vendors hired by Nasdaq to kickoff the program. The other, Boston-based Corporate Communications Broadcast Network, focuses on Webcasting services.

Two companies privately-held Business Wire of San Francisco and PR Newswire, a subsidiary of London-based United Business Media control more than 90 percent of the U.S. market for the dissemination of news releases.

Market Wire is among a handful of smaller companies trying to gain market share by offering comparable services at discounted rates.

PR Newswire’s basic rate to distribute an 800-word release nationally runs about $1,200, vs. $875 at Market Wire, according to the company’s Web site.

Cathy Baron Tamraz, president of Business Wire, said the Nasdaq deal gives Market Wire a leg up on other small distributors, though she said the firm still needed to gain credibility.

“It will help their name,” said Baron Tamraz. “I was surprised they chose (Market Wire) because they don’t have the depth of credibility.”

Founded in 1999 as Global Internet News Agency, Market Wire has received more than $20 million from backers that include Sequoia Capital, Osprey Ventures and Blue Chip Venture Co., McGovern said.

The firm was unwittingly involved in a notorious stock market hoax in 2000 when a former employee used the system to send a fake press release purportedly from Emulex Corp. that warned of an earnings restatement. The former employee, Mark Simeon Jakob, later pleaded guilty to securities and wire fraud and in August 2001 was sentenced to 44 months in prison.

Despite that episode, as well as Market Wire being a fraction of the size of its larger competitors, Nasdaq Senior Vice President Edward Kim said the young company offered the best fit for its corporate clients because of its pricing and level of service.

“We have high confidence that they have the most stringent security procedures in the business,” Kim said. “They have distribution comparable to anyone in the business and their prices are better. It’s a better value.”

McGovern said Market Wire decided to change its name in part because it was confusing to potential customers who might think that the company distributed its releases only through its Web site. Like Business Wire and PR Newswire, Market Wire uses a number of distribution methods including satellite transmissions, the Internet and fax machines to reach thousands of journalists and news organizations.

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