The plaintiffs satisfied the first element of the hot-news misappropriation test because the plaintiffs spent "hundreds of millions of dollars" annually towards the production of equity research reports, including the employment of highly skilled analysts. The defendant did not dispute that the plaintiffs engaged in costly information gathering. The plaintiffs' reports and recommendations were held to be "clearly time-sensitive" by virtue of the fact that the plaintiffs' clients used the information for their actions in anticipation of stock price movement. Moreover, the time-sensitivity was especially important as the plaintiffs expended resources to be the first to communicate these findings to the client and generate commissions revenue. The defendant did not dispute that the plaintiffs' reports and recommendations were time-sensitive. For the third element concerning free-riding, the court found that the defendant's "core business [was] its free-riding off the sustained, costly efforts by the Firms and other investment institutions to generate equity research that is highly valued by investors." The court defined free-riding as where there is very little investment by the defendant to profit off of "information generated or collected by the plaintiff at great cost." Whereas the defendant did not on its own generate original research for the "Recommendations" it published, and its ability to profit off of the reproductions of the Recommendations relied on both the plaintiffs reputations as well as the plaintiffs' expenditure of resources toward generating expert analysis, the court found that defendant free-rode off of the plaintiffs' work. The court found that the parties were in direct competition in that both were attempting to provide time-sensitive information to clientele, and the defendant's dissemination of that information prior to the plaintiffs being able to satisfy the demand for pre-market hours stock movement reports and trade recommendations. In doing so, the plaintiffs' clientele, already identified as more likely to trade through the source from which they ascertained the news, were less likely to do their trading through the plaintiffs. Additionally, the court noted that the defendant and the plaintiffs both used similar channels of information distribution including access-controlled media, license third-party distributors to disseminate their information to entitled recipients. The court found that this element required the demonstration that the defendant's conduct, and others like the defendant, if allowed to continue, would be "likely substantially to threaten plaintiffs' ability to continue to participate in the market." The court noted that the plaintiffs relied on being the first to report their reports and recommendations to their clients. As such, if other organizations were to preempt the plaintiffs, the knowledge that the plaintiffs had spent money to gather and analyze would be rendered basic.