Tag Archives: Commentary
by Liz Hester
One of Dell’s largest shareholders, T. Rowe Price, has decided its investment in the computer maker is worth more than what its founder and private equity backers have offered.
The Wall Street Journal had this story.
“We believe the proposed buyout does not reflect the value of Dell and we do not intend to support the offer as put forward,” said Brian Rogers, Price’s chairman and chief investment officer, in a statement.
Dell said last week it had accepted an offer from Mr. Dell, who is Dell’s founder and chief executive, and private equity firm Silver Lake Partners, to pay $13.65 a share to take the PC maker private. The group said the price represented a 25% premium to Dell’s stock price before news of the potential buyout emerged.
The New York Times reported that another large holder is also gearing up for a fight.
T. Rowe Price said in a statement that it was opposed to the $13.65-a-share takeover bid being offered by the company’s founder, Michael S. Dell, and the investment firm Silver Lake. With a stake of about 4.4 percent, T. Rowe Price is Dell’s third-biggest shareholder.
The second-biggest shareholder, Southeastern Asset Management, meanwhile disclosed in a regulatory filing that it had retained D.F. King, a big proxy solicitation firm, as an adviser. It also confirmed that it held about 8.44 percent of Dell’s shares, trailing only Mr. Dell.
Proxy solicitors like D.F. King play important roles in fights over shareholder votes. They canvass a company’s investor base, providing their clients with estimates of how shareholders are leaning and strategies for winning over allies.
Southeastern has also hired Dennis J. Block of Greenberg Traurig, an experienced mergers and acquisitions lawyer, according to a person briefed on the matter.
The emergence of T. Rowe Price as an opponent of the deal is the latest sign of discontent with the management buyout bid. While Mr. Dell controls about 16 percent of the company’s stock, his offer for the computer maker requires the approval of a majority of independent shareholders.
All the agitation is prompting some investment bankers to speculate on what price investors are looking for, according to a CNET article.
Dell’s plans to go private haven’t pleased all of its shareholders, but investment banking firm Jefferies believes the PC maker could win them over with a sweetened bid.
The firm says it’s likely that Dell CEO and founder Michael Dell and partner Silver Lake, a private equity firm, will raise Dell’s takeout bid by nearly 10 percent to $15 a share to “satisfy agitated shareholders.”
“Our conversations with investors lead us to believe that most want a raised bid, but that they are also cognizant of the lack of competing bidders and of the secular headwinds facing Dell’s PC business,” Jefferies analyst Peter Misek said today in a note to clients.
He estimates that about a fifth of Dell shareholders bought stock recently with an expectation of a bid higher than the current $13.65 a share. But Misek believes anything higher than $17 is unlikely.
“Overall, we expect enough would be satisfied with a $15 bid to get the deal approved,” he said.
Dell doesn’t seem to be budging on the price as of yet. On Monday they outlined the benefits of the deal in a regulatory filing, according to the Associated Press.
Dell is trying to reassure shareholders about its proposed $24.4 billion acquisition by a group led by its founder, saying it considered a number of strategic options before agreeing to the deal.
Dell Inc. laid out the advantages of the transaction in a regulatory filing Monday, three days after a major shareholder ridiculed the buyout as a rotten deal that undervalues the business.
On Friday, Southeastern Asset Management Inc. sent a letter to Dell’s board of directors. Southeastern CEO O. Mason Hawkins threatened to lead a shareholder mutiny unless Dell came up with an alternative acquisition offer.
Hawkins vowed to wield Southeastern’s 8.5 percent stake to thwart the deal currently on the table. Only Michael Dell, the computer company’s founder and CEO, owns more stock with a roughly 14 percent stake.
Round Rock, Texas-based Dell said in its filing that it determined with independent advisers that the cash bid by a group led by Michael Dell was in the best interests of stockholders.
Dell also said the deal allows time for alternate bids do that shareholders will be able to see if there are superior options available.
Let the fight continue between the board and the shareholders. I can’t wait to see the preliminary vote count.
by Liz Hester
President Barack Obama will deliver his fifth State of the Union address on Tuesday night. And yet again, the economy is the over-arching issue to the remarks he’ll make.
I wonder if he’s as tired of the malaise as the rest of us.
Here’s the preview from the Wall Street Journal:
Four times, President Barack Obama has stood in the well of the House of Representatives and delivered a State of the Union address—and four times, economic anxieties have largely overshadowed his efforts to push a broad agenda.
Tuesday night he makes his fifth such address—the State of the Union that will help define his second term. While the economy is improving and the mood in Washington is changing in significant ways, the story line isn’t all that different: A broader Obama agenda is fighting to break out, but the economy still hangs over all else.
To be sure, Mr. Obama has more on his mind: Immigration overhaul, gun control and climate change are the topics most discussed since his re-election. The president will say he plans a trip to the Middle East, putting him in the company of Presidents Reagan, Clinton and Bush, who all tried to crack the code on the Palestinian problem in a second term.
And yet White House officials are signaling that the core of the speech will focus on ways to spur the economy and job creation. Mr. Obama was criticized by Republicans for not making jobs the centerpiece of his second inaugural address last month; it appears he won’t leave himself open to that critique this time.
While he might have been criticized, I was excited to hear the president talk about something besides the economy in his inaugural address. Obviously, it’s extremely important and critical to everyone, especially those who are still unemployed. But there was a part of me that was happy to hear about that climate change, gun control laws and gay rights also had a part of his agenda.
The Financial Times chose to talk about the shift of his campaign organization to working on his domestic policy agenda.
Barack Obama’s state of the union speech has been previewed as a pivot back to the economy by a White House anxious over how the president’s inauguration address last month was portrayed as an unambiguously liberal manifesto.
But whatever the content of the speech, Mr Obama’s message will be carried by more than just words. Months after his re-election, the traditional set piece will be backed by Mr Obama’s formidable campaign machine, which has been resurrected and retooled to keep the millions of volunteers who helped him win last November active.
“He really wants to apply this new revolutionary capacity to communicate to further his agenda,” said Tom Daschle, the former Democratic Senate majority leader and longtime supporter of Mr Obama.
Now called Organising for America, it was launched last month under the leadership of Jim Messina, Mr Obama’s 2012 campaign manager, as a non-profit body with the ability to take in unlimited donations.
Already, OFA has been reviving tactics it used during the campaign, from organising neighbourhood parties where supporters can gather to watch the speech to rousing activists on issues like guns and immigration.
And on-hand to hear the plans first hand will be Ted Nugent, according to the New York Times.
Ted Nugent, the gun-loving, bow-hunting rocker whose staunch defense of Second Amendment rights and inflammatory insults of President Obama have made him a hero with many conservatives, will attend the president’s State of the Union address on Tuesday night.
Mr. Nugent, who is also a National Rifle Association board member, will be a guest of Representative Steve Stockman, a Texas Republican who recently made headlines by threatening to file articles of impeachment against Mr. Obama if the president issued executive orders that strengthened gun control laws.
In a telephone interview from his ranch in Texas on Monday, Mr. Nugent said that he planned to sit in the House of Representatives gallery during the president’s speech and that he would hold a news conference afterward, an event that seemed likely to turn the decorous setting of the State of the Union into a tabloid spectacle.
Well, it might not be a three-ring circus, but it will definitely be entertaining. And hopefully it will be inspiring as well. Goodness knows that after four years, everyone is looking for some better economic news.
Last week on this blog Dean Rotbart made an impassioned plea for PR people to be more responsive to journalist inquiries.
It was a well-written piece, and I fully agree with his points. In thinking about how PR has come to a point where the basics of responding to a journalist inquiry are too often lost my attention was drawn to Dean’s passing comment about using a release for SEO improvement.
The line reads “The release may be designed primarily to bolster the SEO results attained by the issuer, although I assume that most companies that pay to distribute news releases are still hoping to get free media coverage from mainstream news outlets.”
This touches on an important struggle in modern PR, negotiating a company’s relations with media and supporting (or driving) company marketing efforts.
On the surface, the two should not be at odds, and in many ways they are not. An organization comes up with a marketing program and the PR staff develops an approach to media to drive press coverage. It is the foundation of pretty much every global PR firm.
However, as PR has grown as an industry and seized on new trends, using its core strength as communicators to become a larger part of an organizations marketing efforts, too many have lost sight of the importance of media relationships. The end result is a larger population of the PR industry with no ability, or interest, in working with the media.
Below are few thoughts on why and how this has come about:
- Too many journalists and news outlets – It has been said so often and in so many ways that it is now downright trite to say the media landscape has evolved through the digital age. The most problematic result of this change is that defining a news source can quickly turn into a lengthy philosophical debate. In this new media environment we begin to see the divide in modern PR. In some aspects, major news organizations remain the only credible voice and are the core focus of managing a company’s relationship with the media. However, a marketing mentality shifts that paradigm. When marketing the company, almost any vehicle will do, and often blogs and other forms of media can more effectively achieve the end goal of brand visibility or consumer engagement. In fact, nothing has impacted PR more than the opportunity for direct consumer engagement.
- New ways to measure performance – Not only do we now have new targets and forums to engage, PR is also being measured in all new ways. PR measurement has been long been elusive and remains a hotly debated topic. What is changing though is that PR people are becoming smarter about connecting their work to the broader marketing measurement mix. Furthermore, there has been an explosion of new ways to measure PR results and many are not even dependent on earned media. As a result, media relationships have become only one aspect of measuring PR.
Put crudely, when an organization puts out a release it may be more focused on driving results with bloggers, producing Facebook traffic or creating a buzz on Twitter. Therefore, when a radio show producer calls and wants an interview the idea of earned media coverage on radio is completely foreign.
There is a lot of exciting new work being done in PR these days as organizations lean more heavily on PR to have a conversation with their consumers. The fundamentals of creating and keeping good media relationships have empowered PR to claim this larger role in organizations. As PR embraces its new role we must be careful not to overlook media relationships as that is what makes PR strong communicators in the first place.
by Chris Roush
Alexia Tsotsis of TechCrunch writes about the problems with tech coverage in Silicon Valley.
Tsotsis writes, “It’s dangerous how embedded we are in what we cover. These founders, these VCs, these employees being laid off, are some of our closest friends and sources. Our community is so tight-knit that you could be writing about a CEO getting fired at 2 p.m. and then sitting next to her at a demo day at 4 p.m. Or you have to ask her to speak at your event. Or she is literally your investor.
“These entanglements have made my ilk squeamish about any forms of coverage that might reference the darker side of business, or anything that skirts the ‘personal’ line. Neither ATD nor TechCrunch referred to a documented harassment incident at Stanford when covering Keith Rabois leaving Square for alleged harassment. While it would have totally made sense to do so from a background perspective, neither publication did it.
“We as an ecosystem need a watchdog with enough independence and daring to call it as it is. Right now the closest thing we’ve got to anyone who writes from a relatively outsider perspective is Dan Lyons, and the biggest problem there is that he’s unnecessarily mean-spirited. This watchdog would need to be a savvy, ballsy type of person, and all of their posts would need to transcend mere gossip.”
Read more here.
by Adam Levy
Hewlett-Packard Co. reacted swiftly to the news that Dell was going private in a $24.4 billion buyout.
“Dell has a very tough road ahead,” the company said in a statement it issued. “Leveraged buyouts tend to leave existing customers an innovation at the curb.”
Now, I know these two companies have a history of sparring in public. But this latest salvo seems so unnecessary. After all, it’s not like HP hasn’t had a few boardroom disasters of its own. Carly Fiorina stepped down in 2005 amid an upheavel. Patricia Dunn was forced out from the board after a disastrous investigation into boardroom leaks that included spying on the phone records of reports and directors. I’m going to stop after mentioning these two – but as anyone who follows HP knows, the list of ignominious decisions, acquisitions and missteps is a long, long one.
Why didn’t HP just decline comment or keep its comments to itself – and let its actions speak for the corporation? You want to pounce on the competition in a moment of perceived weakness? Fine, go out-innovate or outsell Dell.
I can think of several different businesses – one that I covered for many years and one that I worked for – that would never publicly speak of the competition. These businesses were invigorated by the competition. They were keenly aware of all developments. They reacted to any signs of weakness.
But, they took the high road and kept mudslinging out of the public record. In fact, neither the business I covered nor the one I worked for ever publicly mentioned the competition’s name. It was always Brand X.
I’m not trying to defend Dell here. Sure, I can see how the LBO might leave the company vulnerable. I don’t blame HP for trying to pounce on Dell, either. They should be pouncing. While Dell’s management is focused on restructuring the company, it’s the perfect opportunity for HP to capture market share by focusing on new products and their customers. I’m just not sure it needed to announce it with a statement; just do it.
If I were a shareholder of HP – one who had seen the company trip up so often – I’d want them to keep their focus on the business, and not on crafting some silly statement. This seems more fitting for a playground spat, not a major corporation. But then again, reviewing the corporate history of HP during the past decade, this is par for its course.
Now we’ll see if the jab can be reinforced with a blow to Dell’s market share or if it’s just empty words.
It’s a ritual I witness at least once every week as I go about lining up guests for the various radio programs that I produce, including “Business Unconventional,” “Monday Morning Radio” and “Radio Chavura.”
A company or organization issues a national news release, hoping to draw attention to itself. The release may be designed primarily to bolster the SEO results attained by the issuer, although I assume that most companies that pay to distribute news releases are still hoping to get free media coverage from mainstream news outlets.
That’s what I offer. Free media coverage in a quality broadcast news program with a dedicated and growing audience.
I never went to PR school, but I’d think that those who bother to issue such releases would be thrilled to hear from a mainstream journalist pursuing a real, positive article – or in my case, a broadcast interview.
Although I don’t keep formal statistics on the results of my outbound calls, I would guess that roughly 50 percent of the time when a release does catch my attention, the “contact” person listed on the paid news release is not available when I call. That is particularly vexing, since I typically phone on the same day, and often within minutes, of when the news release crosses the public relations newswire.
Perhaps some of these folks can explain their absence (if I could ever actually reach them) and the reasoning for being so generally lackadaisical. If you’re going to issue a national news release on a given day, why not actually be at your desk to respond to media inquiries – if you’re lucky enough to receive some?
I would recommend eating at your desk on any day you also issue a news release and rescheduling outside meetings for a different day. When the phone rings – if the phone rings – answer it, for gosh sakes!
I call (opportunity) – but when no one live answers or promptly returns my message, I knock on the next door.
I do, in fact, regularly leave voice messages explaining that I’m calling in response to “your” news release and would be grateful if someone would get back to me.
Many never do.
Perhaps equally irritating – and irrational from my perspective – are those people who I do reach and seem anything but eager to hear from me.
Let me get this straight. Your company pays good, hard-earned money to try and bait a mainstream journalist to bite on your story. I come along and do just that.
Shouldn’t you be a least a tad warm, grateful and accommodating?
Some PR folks are. But many treat my call as an annoyance – often grilling me about the nature of my news programs and then asking me to put what I’ve just said in writing and email it to them.
You knocked at my door. Then, when I answer and invite you in, you want to turn the tables on me and have me sell myself to you?
I probably sound whinny. Which is a shame because that isn’t my intent. I never mind explaining who I am and what I do – especially to a friendly company representative who doesn’t know me or my radio stations (I produce for more than one outlet.)
But really, I’m like most journalists, I simply don’t have time to put everything “in writing” – especially after I’ve just explained it in detail by phone.
Typically, I simply move on. I know – and this is the ace up my sleeve – that there are far more companies who would be delighted to receive the kind of free, third-party, credible exposure that I provide than there are news organizations and journalists breaking down the door of those companies and individuals who resort to news releases to promote themselves.
So here’s my advice. The next time you issue a release, stick around to answer the phone – should it actually ring. And be nice. It’s okay to ask questions, but nix the suspicious tone. And please, please, try to remember. You’re the seller. We are the customers. Treat your customers exceptionally well and we’ll be loyal.
Treat us poorly and there are plenty of other venues where we journalists can browse for our news and features.
by Liz Hester
The Justice Department is expected to file civil charges later this week against Standard & Poor’s. The lawsuit accuses the ratings agency of bad calls on mortgage bonds contributing to the financial crisis.
Here are some of the details from the New York Times:
The Justice Department, along with state prosecutors, plans to file civil charges against Standard & Poor’s Ratings Service, accusing the firm of fraudulently rating mortgage bonds that led to the financial crisis, people briefed on the plan said Monday.
A suit against S.&P. — expected to filed this week — would be the first the government has brought against the credit ratings agencies related to the financial crisis, despite continued questions about the agencies’ conflicts of interest and role in creating a housing bubble.
Several state prosecutors are expected to join the federal suit. The New York State attorney general is conducting a separate investigation, an official in that office said. The official declined to say whether New York State’s action involved other ratings agencies besides Standard & Poor’s.
Up until last week, the Justice Department had been in settlement talks with S.&P., these people said. But the negotiations broke down after the Justice Department said it would seek a settlement in excess of “10 figures,” or at least $1 billion, these people said. Such an amount would wipe out the profits of S.&P.’s parent, the McGraw-Hill Company, for an entire year. McGraw-Hill earned $911 million last year.
The Wall Street Journal has a similar focus at the top of its story, but did place the S&P response to the lawsuit up higher. Here’s what they said:
Standard & Poor’s dismissed the potential Justice Department lawsuit as “entirely without factual or legal merit.”
“A DOJ lawsuit would be entirely without factual or legal merit,” the ratings firm said in a statement. “It would disregard the central facts that S&P reviewed the same subprime mortgage data as the rest of the market—including U.S. government officials who in 2007 publicly stated that problems in the subprime market appeared to be contained—and that every (collateralized debt obligation) that DOJ has cited to us also independently received the same rating from another rating agency.
“S&P deeply regrets that our CDO ratings failed to fully anticipate the rapidly deteriorating conditions in the U.S. mortgage market during that tumultuous time. However, we did take extensive rating actions in 2007—ahead of other ratings agencies—on the residential mortgage-backed securities, which were included in these CDOs. As a result of these actions, more collateral or other protection was required to support AAA ratings on CDOs.”
Many details of the looming enforcement action couldn’t be immediately determined, such as why prosecutors are zeroing in on S&P rather than rivals Moody’s Corp. and Fitch Ratings, a unit of Fimalac SA and Hearst Corp.
Reuters had this bit of content about the situation:
S&P, Moody’s and Fitch have long faced criticism from investors, politicians and regulators for assigning high ratings to thousands of subprime and other mortgage securities that quickly turned sour.
The rating agencies are paid by issuers for ratings, a standard industry practice that has nonetheless raised concern about potential conflicts of interest.
In January 2011, the Financial Crisis Inquiry Commission called the agencies “essential cogs in the wheel of financial destruction” and “key enablers of the financial meltdown.”
McGraw-Hill had acknowledged last July that the Justice Department and SEC were probing potential violations by S&P tied to its ratings of structured products, and that it was in talks to try to avert a lawsuit.
The Journal story was quick to point out its own reporting on the subject. It’s a good explanation of some of the problems.
The Wall Street Journal has reported that former S&P analysts were questioned by U.S. prosecutors in 2010 and 2011 as part of the sweeping probe. Former analysts told the Journal that the investigation focused on whether S&P managers ignored the firm’s own standards when assessing mortgage-backed securities in order to cater to investment banks.
Investment banks paid S&P to issue ratings on mortgage bonds created by the banks and then sold to investors. The “issuer pays” model is standard practice in the credit-rating industry.
Justice Department officials told the former S&P analysts that they weren’t targets of the inquiry, the Journal reported. U.S. officials presented former employees with dozens of S&P emails and documents from as early as 2004, asking for details about the correspondence, the former analysts have said.
The looming enforcement action could force a showdown over the primary defense used by S&P and other rating firms in civil lawsuits filed by mortgage-bond investors who claim they were misled by the firms’ ratings.
It will be interesting to see if the suit will prompt other ratings agencies to settle or if it will recoup anything for the government or investors.
by Liz Hester
The game is now in the history books, but the talk for many on Monday morning won’t be the plays. It will be about the commercials. At $4 million for 30 seconds, the trick is to get your money’s worth.
Businessweek did a piece on how some advertisers are trying to generate Super Bowl buzz without paying for it. Here’s an excerpt:
One creative way of getting an ad out on the cheap: Run a quirky, low-budget spot in a small market and watch it go viral. (Old Milwaukee beer pioneered this trick last year with an ad, featuring comedian Will Ferrell, that ran during a local ad block in North Platte, Neb.) According to Adweek, Old Spice (PG) will run a Super Bowl ad, in which wolves crash a party and hawks interrupt a poker game, exclusively in Juneau, Alaska. (The spot is already online.) The deodorant company says it chose Alaska because the state has the highest wolf population in the country. Because of the rise of small market ads like these, CBS said local ad sales at network-owned stations have hit a new record this year, with some markets charging up to $1 million per ad.
Many advertisers are turning to the web to try and generate buzz for their commercials. Here’s a story from Bloomberg:
The stakes are high for the championship football game’s advertising sponsors, who spent as much as $133,333 a second for a half-minute of airtime, a record sum marketers say is justified by the expected repeat viewings and buzz on the Web. Internet companies are taking on the role of referee, measuring viewers’ votes, searches and sentiments in an attempt to declare a winner among the Super Bowl sponsors.
The game, played in New Orleans and aired on CBS Corp. (CBS)’s network, is drawing major marketers like Coca-Cola Co. and Volkswagen AG (VOW) as well as lesser-known brands like Wonderful Pistachios and Gildan Activewear. BlackBerry (RIMM), struggling to rehabilitate its faltering brand, is advertising for the first time in the Super Bowl, promoting the long-awaited Z10 smartphone ahead of its U.S. release in March.
Many advertisers started streaming their Super Bowl spots ahead of the game to draw a bigger audience, both online and on television. Ads released before the Super Bowl typically generate more than 9.1 million online views on average, compared with 1.3 million for those appearing on the Web the day of the game, according to Lucas Watson, vice president of advertising at YouTube, owned by Google Inc. (GOOG)
And then there are the ads we’re still talking about. Mashable put together this list of the 10 best Super Bowl ads of all time. Coming in at number 1:
Who could forget the iconic Coke ad when Mean Joe Green tossed his jersey to a fan who gave him a coke to the Star Wars-themed Volkswagen ad from 2011 that quickly became a viral sensation?
It remains to be seen whether any ads from this year’s big game will rank among these classics, but there are already some promising contenders, including Hyundai’s playful 60-second spot featuring The Flaming Lips, Audi’s prom ad and Samsung’s commercial with Seth Rogen and Paul Rudd.
Then there are the companies that asked consumers to create their spots. This is from the Wall Street Journal
Rather than relying solely on traditional ad creators, many marketers have asked consumers to play a part in creating or choosing this year’s big-game commercials.
German car maker Audi posted three versions of its ad on YouTube and let consumers select which ending should air, while Ford Motor‘s Lincoln brand started a Twitter campaign that asked people to tweet their most memorable road-trip stories. It then had late-night talk-show host Jimmy Fallon select five of the tweets, which were used to create its spot.
Coca-Cola also let consumers vote on how its big game ad ends, while rival PepsiCo include hundreds of consumer-submitted photos in one of its commercials. About 100,000 photos were submitted as part of a contest Pepsi conducted.
When dozens of ads fight for attention, getting consumers involved “is an extremely efficient way to amplify your marketing,” said Paul Chibe, Anheuser-Busch’s U.S. marketing chief. The brewer is asking the public to name the baby Clydesdale that appears in its Super Bowl ad by sending their picks via Twitter and Facebook.
But it still remains to be seen if the ads actual change consumer-buying patterns. They definitely raise brand awareness, but will it translate into more sales? That’s what the coverage of the ads needed to focus on.
by Chris Roush
Jamesetta Walker of the Virginia-Pilot will begin writing a business of life column that will appear in the paper’s Sunday business section.
Walker writes, “Some would say I’m a cheapskate. I’d prefer the terms pragmatic and resourceful. But more on that in tomorrow’s Business section.
“First, a little about me.
“This is my 33rd year being an ultimate Teena Marie fan, 25th year out of high school, 20th professional year as a journalist, 20th year driving the same car (which, for some reason, makes me feel like I’ve been to The Mountaintop), 14th year of marriage (to the same man!), 13th year as a parent (help me, please), bazillionth year loving nearly all things purple and umpteenth year trying to make my kid sister feel guilty for throwing away my pompoms and dollhouse when I left for college.
“I’m not a hoarder, but for darn sure I’m a sentimentalist. And I like to tell stories as much as I like to listen to them.
“Along the way, life and its waves keep me laughing, ranting, praying, crying and cheering.
“Does it do the same for you? If so, let’s talk.
“In this column, I hope to paint a picture of the community’s human tapestry, musing on everything from unsung heroes and family life to the remarkable, the ridiculous, the complex and the quirky.”
Read more here.
Editor’s note: Here is the latest missive from Frankie Flack, our anonymous New York-based PR executive.
In July of last year Jeremy Peters of The New York Times penned a piece titled “Latest Word on the Trail? I Take It Back” that struck like a sudden earthquake in the journalism and public relations field.
Peters deftly put on paper the all-too-common recipe for making news in our modern era and major media organizations quickly changed their tastes. Specifically, Peters laid out how “quote approval,” the process in which PR can review quotes prior to publication, had become so pervasive it was just an accepted reality of doing business. The AP, New York Times, National Journal and others all put out statements clarifying the appropriate use of this practice.
As someone who frequently requests quote approval and knows many others who do the same, I can say firsthand the impact was immediate, but perhaps not dramatic. A few times I was told “I just can’t do that anymore,” and even more frequently I was asked “is it really necessary?”
Six months later I can say those concerns have largely passed.
There are undoubtedly many sides to this debate, but in my opinion quote approval is a necessary evil of business journalism. I am sure that this practice is overused and in some cases outright abused, but in many ways it offers critical benefits.
I want to be specific about business journalism here not only because it is what I know, but also because I believe quote approval is used differently versus other topics, especially politics. Most of all, business does not require media for survival while good press is the lifeblood of politics. This creates sharply different motivations for how sources view and try to use the press.
Quote approval is beneficial almost entirely because business, particularly finance, often requires a sophisticated understanding of complex topics. Furthermore, this language is almost intentionally confusing. Gillian Tett of The Financial Times has theorized, I believe correctly, that the complex language of finance is purposefully exclusionary. Using quote approval allows both the journalist and PR person to ensure that quotes are captured accurately.
Certainly reporters and editors who know the space can argue against this, but unfortunately the wall of financial language can even block the most experienced. In fact, just this week, an editor at a trade newsletter was working on a story and interviewed a client of mine about a technical trading product. It was clear she knew this space well, far better than me. However, during follow-up we found out a critical concept on how the product works was misunderstood.
Arguably more importantly, quote approval is a necessary evil now because it is the only way to get good sources to talk. There is no question, lawyers, bankers, fund managers and other key sources have become accustomed to the practice. Jack Shafer probably made this point best in his column for Reuters in which he looked at the mismatch of resources. Too many journalists chasing too few sources. As someone who has represented major players and marginal ones, I can say that the lesser known source does not enjoy the same privileges.
The reason this happens is mostly because these sources are generally wary of the press and feel more comfortable speaking openly if they feel like they have a safety net. For example, lawyers are trained to be precise with their language to an unmatched degree. The idea of words hitting paper without proper review would keep them up at night. Furthermore, as mentioned above, business does not require media coverage, so the incentives are skewed in any media/source relationship. To be blunt, good sources typically have far less to gain from a reporter then the reporter does from the source.
These are two key reasons why quote approval needs to exist in business journalism, but it does not provide blanket approval. I believe that quote approval exists for accuracy and should not be allowed when the core intent of the quote is altered after the fact.
PR people need to be able to manage their clients expectations both in setting ground-rules and when editing a quote. I often tell clients that they can check the quote for facts but are not allowed to wordsmith.
As mentioned above, the reason quote approval works in business journalism is largely for accuracy.
Journalists should also be clear about the rules and not be afraid to enforce them. Don’t give us the space to abuse the practice, because I guarantee the line will only continue to be pushed.