Press release

What Is a Press Release?

A press release is an official statement issued by a company, organization, or individual to the media and the public. As a core component of corporate communication, its primary purpose is to announce something newsworthy, such as a product launch, a financial milestone, a leadership change, or a response to a significant event. Press releases serve as a foundational tool for public relations by providing structured, factual information designed to attract media attention and generate favorable coverage. The information contained within a press release often influences subsequent company news and public perception.

History and Origin

The modern press release is widely attributed to Ivy Lee, a pioneer in the field of public relations, in 1906. Following a devastating train accident involving the Pennsylvania Railroad, one of Lee's clients, he persuaded the company to issue an official statement to journalists, offering a transparent and accurate account of the incident. This groundbreaking approach marked a significant shift from previous strategies of concealment and became a foundational practice for managing public perception during crises. On October 30, 1906, The New York Times notably published Lee's statement virtually verbatim, demonstrating the effectiveness of this new form of corporate communication.⁵ This event set a precedent for organizations to proactively disseminate information to the media, fostering a more open dialogue between companies and the public.

Key Takeaways

A press release is a formal, written communication issued by an organization to inform the media about a newsworthy event or development.
They are a crucial tool in public relations and investor relations, aiming to generate media coverage and shape public perception.
Content typically includes announcements of products, services, financial results, partnerships, or responses to significant events.
For publicly traded companies, press releases are often used to disclose material information to ensure fair and broad dissemination to investors.
Adherence to legal and regulatory guidelines, such as those from the Securities and Exchange Commission (SEC), is critical for public companies.

Interpreting the Press Release

Interpreting a press release requires an understanding of its dual nature: both as an informative document and as a strategic communication tool. While a press release aims to convey factual information, it is also crafted to present the issuing entity in a positive light or to control a narrative. Readers, including investors, journalists, and the public, should focus on the objective data, such as specific figures in an earnings report or the details of a new partnership. It is important to assess whether the information is quantifiable and verifiable, and how it aligns with other publicly available data, such as financial statements or regulatory filings. Understanding the context and potential motivations behind the release is key to a balanced interpretation.

Hypothetical Example

Consider a hypothetical technology startup, "InnovateTech," which has developed a revolutionary new battery technology. To announce its first significant funding round and a major partnership, InnovateTech issues a press release. The release details that the company has secured $50 million in Series A funding from "VentureGrowth Capital" and entered into a strategic collaboration with "Global Devices Inc." to integrate its battery into future products.

The press release would include:

Headline: InnovateTech Secures $50M in Funding, Partners with Global Devices Inc. for Next-Gen Battery Integration
Dateline: SAN FRANCISCO – August 5, 2025
Introduction: A concise summary of the funding and partnership.
Body Paragraphs: Further details on the technology, the investors, the strategic importance of the partnership, and the expected timeline for product integration. It might include a quote from InnovateTech's CEO emphasizing the potential impact on the market.
Boilerplate: A brief "About InnovateTech" section.
Contact Information: Media inquiries contact.

This press release would aim to generate positive media coverage, attract further investment interest, and enhance InnovateTech’s credibility in the stock market (should it go public later).

Practical Applications

Press releases are integral to modern business and finance, serving various practical applications:

Corporate Disclosure: Publicly traded companies frequently issue press releases to disseminate information about quarterly earnings, mergers and acquisitions, significant legal developments, or other events that could impact shareholder value. This is critical for regulatory compliance, particularly concerning fair disclosure rules. The SEC's Regulation FD, for instance, mandates that when companies disclose material nonpublic information, they must do so broadly and non-exclusively, often through a press release or Form 8-K filing.
⁴ Product Launches: Companies use press releases to announce new products or services, highlighting features, availability, and target markets to generate media buzz and consumer interest. For example, Thomson Reuters recently issued a press release announcing the launch of new AI solutions aimed at transforming corporate workflows for legal and tax professionals.
³ Crisis Management: In times of crisis, a press release can be a vital tool for controlling the narrative, providing accurate information, and demonstrating a company’s response and accountability.
Investor Relations: Beyond mandated disclosures, press releases keep investors informed about key operational achievements, strategic shifts, or changes in corporate governance that might not warrant an immediate regulatory filing but are relevant to the investment community.
Initial Public Offerings (IPOs): Companies undergoing an initial public offering use press releases to announce their intent to go public, the pricing of shares, and the commencement of trading, marking a significant milestone in their journey to achieve a market capitalization.

Limitations and Criticisms

While press releases are an indispensable tool, they come with limitations and face criticism. One primary concern is the potential for opportunistic disclosure and impression management. Companies may selectively highlight positive information or downplay negative aspects in their press release headlines and content to influence perception. This ²selective framing, while not illegal if factual, can lead to a less-than-complete picture of a company's situation for the average reader.

Furthermore, a press release, despite its official nature, can expose a public company to liability under securities laws if it contains any material misstatement or creates a misleading impression when viewed alongside other publicly available information. Offic¹ers and directors involved in the preparation or quoted in such releases can also face individual liability. Ensuring accuracy and completeness, especially regarding disclosure requirements for financial reporting, is therefore paramount. The information must be carefully vetted to avoid legal repercussions and maintain credibility with investors and the public.

Press release vs. Company announcement

While a press release is a specific type of company announcement, the terms are not interchangeable. A "company announcement" is a broader category that encompasses any communication from a company to its stakeholders. This could include internal memos, social media posts, blog updates, investor calls, or even informal statements. A press release, however, is a formal, structured document specifically prepared for media distribution with the explicit goal of generating news coverage. It adheres to a standardized format, includes specific elements like a dateline and boilerplate, and is typically distributed through wire services or directly to journalists. The key distinction lies in the formality, intended audience (media as intermediaries), and explicit purpose of generating broader public news.

FAQs

What makes a press release newsworthy?

A press release is newsworthy if it announces significant, timely, and relevant information that would genuinely interest a broad audience or a specific industry. Examples include major financial results, a groundbreaking product launch, a significant merger or acquisition, a major leadership change, or a substantial community initiative. It should offer concrete facts rather than promotional language.

Do all companies issue press releases?

No, not all companies issue press releases regularly. While large, publicly traded corporations often use them frequently for investor relations and mandatory disclosures, smaller private companies might opt for other forms of communication or issue press releases only for very significant milestones.

How does a press release reach the public?

A press release typically reaches the public through media outlets. Companies distribute them to journalists, news agencies, and sometimes directly to the public via their websites or news wire services. If a journalist deems the content sufficiently newsworthy, they will write a story based on the information, which then gets published in newspapers, online news sites, or broadcast on TV/radio.

Is a press release legally binding?

A press release itself is not a legal contract, but the information it contains, especially for public companies subject to financial reporting regulations, can have legal implications. Material misstatements or omissions in a press release can lead to legal action under securities laws, as companies have a responsibility to provide accurate and non-misleading information to investors.