Tag Archives: Company coverage
by Liz Hester
Last week, Hostess Brands Inc., the maker of beloved Twinkies snack cakes and the 1950s darling Wonder Bread, said it would close operations and sell assets after being unable to reach an agreement with its union workers.
All looked lost for the iconic Ho-Hos and that an entire generation of children would see the yellow cream-filled cakes only in history books. But all’s not lost. Here are new details from the Wall Street Journal:
Seeking to save more than 18,000 jobs, a bankruptcy judge surprised Hostess Brands Inc. and its warring union Monday by delaying the company’s bid to close its 85-year-old bakery business and sell off its factories, brands and other assets.
Instead, Judge Robert Drain asked both sides to join him Tuesday for a mediation session where he will try to broker a new contract. If Tuesday’s long-shot session fails, then the company will be able to return to court Wednesday to try to move ahead with its plans to close down.
Hostess had asked the U.S. bankruptcy judge for permission to liquidate, arguing that the bakers union’s more than week-long strike had left it unable to produce Twinkies, Ho-Hos, Wonder Bread and other longtime supermarket staples. Hostess said it didn’t have the financial wherewithal to continue operating amid the work stoppage.
“My desire to do this is prompted primarily by the potential loss of over 18,000 jobs,” the judge said during a hearing in federal bankruptcy court in White Plains, N.Y. He also cited his “belief that there is a possibility to resolve this matter notwithstanding the losses that [Hostess has incurred] over the last week or so and the difficulty of reorganizing this company.”
Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union agreed to the confidential mediation proceedings. If they don’t make progress, a hearing on Hostess’s liquidation request will resume Wednesday, the judge said. Meanwhile, the company’s plants remain closed and potential suitors are circling.
And a couple of details from the New York Times:
At the behest of the judge, Hostess Brands and the Bakery, Confectionery, Tobacco Workers and Grain Millers Union, which represents 5,600 Hostess workers, will meet with a mediator on Tuesday to try to narrow their differences toward a labor agreement.
If the mediation succeeds, it could prevent the liquidation of the company and save 18,500 jobs. Otherwise, Hostess is likely to auction off its well-known brands, leaving the fates of those workers in limbo.
In January, Hostess, an 82-year-old company, filed for Chapter 11, just three years after emerging from bankruptcy. At the time, the company said it was unable to pay its debts and needed to make deep cuts in labor costs to survive.
Hostess was able to reach a new contract with the Teamsters, its largest union. But talks between the company and the bakery workers deadlocked, and the union went on strike on Nov. 9. With production slowing and its finances dwindling, the company announced plans on Friday to liquidate.
But shutting down all those plants isn’t going to be cheap. Bloomberg lays out some of the costs of bankruptcy.
Hostess officials “have not demonstrated that the insider bonuses are permissible,” Davis wrote in a court filing. They also “improperly seek to exculpate and indemnify their management from past and future liabilities” and want to “cherry-pick which administrative claims get paid.”
In seeking court permission for its demise, Hostess said it wants to pay as much as $1.75 million in incentive bonuses to 19 senior managers during the liquidation. Hostess is asking the judge to approve its plan to shut 36 bakeries, 242 depots, 216 retail stores, and 311 hybrid depot-store facilities, according to court filings. The company has 58 other leased or owned sites used for storage, warehousing of products or parking.
The process requires “intensive” planning, staffing and funding, the company said. A fire-sale liquidation would damage equipment and result in improper disposal of waste materials.
It’s “not a simple matter of turning off the lights and shutting the doors,” Hostess said in court papers.
The baker estimated that shutting the plants will cost $17.6 million in the next three months. The plants have about $29 million worth of excess product ingredients, Hostess said.
About $6.9 million will be spent to close depots, while $8.8 million will be used to idle retail stores and $8.1 million will go to shutting corporate offices, according to a court filing. Perishable baked goods at retail stores will be sold at going-out-of-business sales, donated to charity or destroyed, Hostess said.
Here’s hoping they have a good mediator since there is much more than just the fate of snack cakes. Investors and the company stand to lose a lot of money, but more importantly the livelihoods of more than 18,000 people depend on it.
by Liz Hester
This week may be the one that breaks the seven-month Chinese initial public offering drought. Chinese social media site YY Inc. is planning to raise as much as $97.5 million, according to the Wall Street Journal.
Here are a few offering and other details from the story:
The IPO scorecard has been spotty since superstorm Sandy hit the U.S. East Coast late last month. Restoration Hardware Holdings Inc. rose 30% on its Nov. 2 debut, but since then, two companies have halted capital-raising plans and three more postponed offerings. On Friday, Ruckus Wireless Inc. fell in its first day of trading.
Given the market’s shakiness, the an offering of up to $97.5 million from YY, a company that boasts more than 400 million registered users on its online platform, is liable to face keen investor scrutiny.
This year is shaping up to be the slowest for IPOs from Chinese companies since 2008, according to data from Ipreo, a market-intelligence firm. Just two China-based IPOs have hit the U.S. market this year: e-retailer Vipshop Holdings Ltd., in March, and Acquity Group Ltd., a provider of digital marketing and e-commerce services, in April. Four Chinese IPOs have been delayed or withdrawn this year, exceeding the total that have made it to market in the U.S.
IPOs from Chinese firms were commonplace a few years ago. As recently as 2010, some 36 Chinese IPOs were listed in the U.S., representing nearly a quarter of all new offers that year.
The flow dried up after a handful of companies were hit by accounting scandals that curbed investor demand for Chinese listings. The incidents raised corporate-governance questions about Chinese companies and triggered heavy selling in their shares.
The company, which filed to go public in mid-October, offers online games, karaoke, music concert and educational services through its platform, according to Reuters. Here’s a few more tidbits about the firm and sentiment from Reuters:
Only Chinese companies with several quarters of profitability and revenue growth of over 50 percent will be able to grab U.S. investor interest, investors say.
“There’s definitely been a cleansing process and improvement,” said Kevin Pollack, managing at Paragon Capital in New York. “There are tremendous opportunities if you know what red flags to look out for.”
While it’s unlikely that the U.S. market will be flooded with Chinese listings in the near term, bankers, lawyers and investors say, improved sentiment may lead an uptick in deals, particularly among fast-growing technology companies.
“You can sell the sizzle on a company like YY,” said Dennis Galgano, head of international investment banking at Morgan Joseph, who works with Chinese companies. “It’s up the alley of what the market likes in terms of Chinese companies – you see 400 million users and it gets people doing the math in terms of future growth.”
A few Chinese tech companies are also eyeing the recent success of U.S.-based software IPOs like Workday, Palo Alto Networks Inc and ServiceNow Inc as a signal that the market may be receptive to their deals, too.
Other Chinese companies exploring a U.S. listing include online travel site Qunar, online retailer 360buy.com and online shopping site LightInTheBox, according to sources familiar with the companies’ plans.
But many believe that given China’s slower growth prospects that investors may pull back from the region. There’s also continued uncertainty about the level of regulation and transparency that the new government will provide.
It’s also interesting to note that technology companies can be the first to suffer the wrath of the Communist regime. They’re know for trying to control the flow of information, keep people from connecting and in general block unfavorable coverage. Any investor in a tech company, especially a social media platform, will have to make sure they’re comfortable with the level of risk this presents.
Obviously in such a highly populated nation, the firm has a lot of untapped potential, particularly as Chinese people have more disposable income. But many consider the timing problematic since growth is slowing.
Here’s a link to a Forbes contributor interview with YY CEO David Li. He talks about the most successful technology companies being the ones who are able to monetize immediately. Meaning, he’s taking what he can now, instead of waiting to see if he can expand or capture more market share before going public.
Telling, isn’t it?
by Chris Roush
Eric Jackson of Forbes.com writes about how the business news media seem biased toward Facebook and against Yahoo.
Jackson writes, “Yet the mainstream business media – some might say ‘lamestream’ business media — presents these buying patterns related to Facebook as a sign that the ‘smart money’ — in their words, ‘the top hedge fund stock pickers’ — is bullish once again on Facebook.
“The implication is perhaps you, dear reader, should too consider getting long some Facebook shares, if you want to do as the top stock pickers do.
“I loved this line in the piece:
The well-regarded $10 billion endowment of the Massachusetts Institute of Technology also added a position in Facebook of 411,000 shares in the quarter. The school is located just a few miles away from Harvard University, where Facebook CEO Mark Zuckerberg famously dropped out in 2004 to found the company.
“Really? It’s well-regarded by whom? Never you mind. They have $10 billion under management. What’s the size of your IRA? Of course, they must be smart if they manage an endowment. I suppose it’s reasonable to assume these money managers must have rubbed shoulders with Mark Zuckerberg in the Cambridge bars back 10 years ago when he was there. And they must have decided, 10 years hence, I’m going to make a big bet on this kid with my employer’s money.
“So how much did MIT pony up? $7.8 million. That’s million… with a capital ‘M.’ That’s not even 1% of their AUM. That’s 0.078%. If 1% is a dollar. They bet 7.8 cents of $1. Someone call the MIT President: we’ve got some drunken money managers running the alum’s money.
“The most amazing part of the story is that in the last 3 paragraphs of the story they casually mention another tech name that hedge fund managers seem to like: Yahoo (YHOO).
“It so happens that Chase Coleman of Tiger Global — the big spender of all the smart hedge fund managers who bought Facebook – also bought some Yahoo shares last quarter: 25 million shares. That’s about double the sized stake that he put to work in Facebook. Yet, Reuters mentions it as an afterthought.”
Read more here.
by Liz Hester
BP Plc agreed to pay a record $4.5 billion fine and plead guilty to federal charges for its handling of the 2010 oil spill at the Deepwater Horizon rig in the Gulf of Mexico.
Frankly, it’s about time somebody admitted wrongdoing when something catastrophic happens. Eleven people died, and it took three months to cap the well.
From the Wall Street Journal:
Under the agreement, BP said it will plead guilty to 11 felony counts of “seaman’s manslaughter” relating to the deaths aboard the drilling rig, admitting that its workers were negligent when they misinterpreted a key well safety test.
The company also will plead guilty to one felony count of obstruction of Congress stemming from false information it gave about the rate that oil was leaking from the well.
In addition to the settlement Thursday, three former BP employees were charged by a federal grand jury with felonies in the incident, two of them for allegedly failing to carry out a critical safety test properly.
Here’s a bit more detail on the fines, charges and what’s next from the New York Times:
While the settlement dispels one dark cloud that has hovered over BP since the spill, others remain. BP is still subject to other claims, including billions of dollars in federal civil claims and claims for damages to natural resources.
In particular, BP noted that the settlement does not resolve what is potentially the largest penalty related to the spill: fines under the Clean Water Act. The potential fine for the spill under the act is $1,100 to $4,300 a barrel spilled. That means the fine could be as much as $21 billion.
In addition to the 11 felonies related to the men killed in the accident, the company agreed to plead guilty to one misdemeanor violation of the Clean Water Act and one misdemeanor violation of the Migratory Bird Treaty Act.
BP also acknowledged that it had provided inaccurate information to the public early on about the rate at which oil was gushing from the well.
The company agreed to plead guilty to one felony count of obstruction of Congress over its statements on that issue. It also agreed to pay a civil penalty of $525 million to the Securities and Exchange Commission, spread over three years, to resolve the agency’s claims that the company made misleading filings to investors about the flow rate.
It’s nice to see executives being held responsible for actions that ultimately result in the deaths of 11 people and the loss of billions of dollars from decrease fishing, tourism and other industries. These men were negligent, and they’re being held accountable for not properly doing their jobs and then for lying about it. Congratulations, Justice Department.
I’m also glad to see the media covering the story with in-depth pieces, not just summarily writing up the news releases. Coverage from the business media included quotes from oil industry experts and analysts, the World Wildlife Fund and other environmental groups, as well as a statement from BP.
Reuters even talked to the lawyers for one of the oil workers:
The lawyers for Bob Kaluza, the BP well manager aboard the rig who faces manslaughter charges, condemned the case against the four-decade oilfield veteran.
“Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day,” Shaun Clarke and David Gerger said in a statement.
Kaluza faces two kinds of charges related to the workers’ deaths: Involuntary manslaughter, a broad statute covering individuals whose reckless disregard leads directly to loss of life; and seaman’s manslaughter, reserved for those employed on ships whose misconduct results in death.
It’s never easy to see such widespread destruction to the environment, incomes and families. But I am glad to see the Justice Department holding a company accountable for actions. Now if only it can figure out how to make charges stick to the people at the top since they’re the ones setting the culture. And maybe this will deter other executives from cutting corners. We’re all depending on it.
by Liz Hester
So, remember MF Global, the defunct derivatives and commodities broker that filed for bankruptcy? Well, Jon Corzine, the former Goldman Sachs banker and governor of New Jersey, is taking some heat for the loss, which some are saying is long overdue.
Here’s the Washington Post story:
A congressional report that deconstructs the collapse of MF Global concludes that the brokerage firm’s former head, Jon S. Corzine, sank the company by making risky investments and sidelining senior executives who challenged his strategies.
The report, scheduled for release Thursday, details the findings of a year-long investigation by Republican staffers on the House Financial Services oversight subcommittee. But it omits any mention of criminal wrongdoing by Corzine, punting that issue to the prosecutors and regulators who have launched their own probes into the matter.
Instead, it skewers Corzine for his “authoritarian” management style and reckless business strategies, many of which were carried out without the full knowledge of the company’s board of directors — assertions that Corzine’s legal team denied on Wednesday.
Here are the details from the New York Times:
While lawmakers avoided blaming Mr. Corzine directly for the missing customer money, sidestepping whether a crime was committed, they argued that his fixation with taking risk helped topple the firm. The report labeled Mr. Corzine the “de facto chief trader,” an unusual title for a top executive.
“Choices made by Jon Corzine during his tenure as chairman and C.E.O. sealed MF Global’s fate,” Representative Randy Neugebauer, a Republican from Texas who is overseeing the report as chairman of the oversight panel, said in a statement.
In a series of potential missteps, the report said, Mr. Corzine missed warning signs about MF Global’s weak liquidity. Citing “a dereliction of his duty,” the report claimed that he had left customers vulnerable to the invasion of their accounts.
The report further asserts that Mr. Corzine was the architect of a $6.3 billion bet on European debt — a trade so big it spooked the markets and led to a run on the firm. When subordinates challenged Mr. Corzine’s European gamble, according to the report, he imposed an “authoritarian atmosphere” in which he ejected the aides and installed sympathetic executives he knew from his days at Goldman Sachs.
Even as the findings made a case for civil and regulatory action, the report shed little new light on Mr. Corzine’s actions and hardly chipped away at his legal defense. Federal authorities have all but officially removed the darkest cloud looming over Mr. Corzine: the threat of criminal charges.
Even the New York Post weighed in on the scandal:
Among Corzine’s shortcomings as laid out in the report are:
* He created an “authoritarian atmosphere” where “no one could challenge his decisions.”
* He acted as MF’s “de facto chief trader,” allowing him to build a risky European bond portfolio “well in excess of prudent limits.”
* He failed to fully disclose MF’s European bond holdings to federal regulators and the investing public.
In scathing excerpts of a report to be released today, Republican members of the panel also blamed Corzine for a scandalous $1.6 billion shortfall in customer accounts that emerged in the aftermath of the bankruptcy — although they stopped short of saying Corzine should be held criminally liable for the loss.
Instead, the report described the shortfall as the result of MF’s final, chaotic days leading up the bankruptcy.
Employees wrongfully withdrew customer funds because “they did not have an accurate accounting of the amount of customer funds the company held,” the lawmakers found.
Well, that’s great, but they’re still avoiding charging him with any wrongdoing. It seems that we still need regulators with the ability to hold people responsible for their actions and decisions. If you bring down a whole firm costing countless millions in contracts, jobs and lost investments, you should be held accountable. Maybe one day we’ll get there.
The news media are so ephemeral.
I know firsthand, having produced and co-hosted a fresh one-hour radio business newsmagazine each week for the past year plus.
My show, “Business Unconventional,” is broadcast Sunday mornings on 710 KNUS AM in Denver. KNUS, a Salem Communications station, employs a news/talk format that attracts Colorado’s largest audience of listeners with a disposable income of $100,000 a year and above.
Recognizing a need to examine the issues facing the small businesses and entrepreneurs who drive our state’s economy, each week my Business Unconventional co-host David Biondo and I feature three or four regional business owners and prominent experts.
Our interviews are insightful – if I do say so myself – permitting guests to showcase their accomplishments, while asking them to share their hard-earned lessons of success (and failure) with listeners. Our audience, we believe, consists mainly of fellow owners, inventors, and self-employed professionals.
The ratings for “Business Unconventional” have been steadily building and month after month we set records for the number of online listeners. Indeed, although a local program, our reach is actually global, thanks to our show’s simultaneous availability as streaming Internet audio; our presence on the Apple iTunes store; and the strategic “private label” repurposing of our content* to reach select groups of small business owners.
Yet most of our guests fail to comprehend that appearing on “Business Unconventional” – at least from a public relations standpoint – is the least potentially productive aspect of the media exposure opportunity that we create.
Indeed, the opportunity to leverage an appearance on our program knocks and knocks and knocks. But most of our guests never take real advantage of it.
Granted, when it comes to influence and reach, “Business Unconventional” is not CNBC or Fox Business, nor is it a front-page story in The Wall Street Journal nor the cover of Bloomberg Businessweek.
But the core lesson here is very much the same for communications strategists representing every size company interacting with any size media outlet: “After” is often much more important than “During.”
The effective lifespan of any media coverage – both broadcast and print – is incredibly brief.
To illustrate my point, let’s do a thought experiment involving “60 Minutes,” which since 1968 has been the premiere television newsmagazine, drawing huge audiences.
It’s quite a coup to be a featured expert on “60 Minutes” — far better, indeed, than to be the target of one of its investigative probes.
So…. Name me five Wall Street analysts or independent Defense Department experts or foreign policy observers or medical researchers or popular culture pundits who have been interviewed in the past couple years on “60 Minutes”? Four? Two? Just one?
The Monday after Business Unconventional airs here in Colorado, many of our featured guests get a few calls from friends, family and colleagues who caught their interviews driving to-and-fro or while working around the house. Our Sunday guests may even hear from a few prospective customers or clients.
By Tuesday, the call count is down to one or two. By Wednesday – zero.
People, even when they do listen to a news broadcast or read a feature story in print or online, are only paying the most casual attention to the “performers” on the “stage.”
Readers and viewers can well remember the general plot line of the news they just consumed hours later – but seldom can recall much detail about the peripheral characters who were featured. Recall worsens measurably with each passing day.
Thus, as experience has taught me well, the genuine benefit of getting positive media coverage is not the instant exposure it provides. Rather, it’s in the “after” market and what opportunities are presented there. These are opportunities that too often are squandered by those who think that just appearing on “60 Minutes,” or on “Business Unconventional,” is visibility enough.
It’s decidedly not.
When “60 Minutes” or “Business Unconventional” broadcast our weekly newsmagazines, we determine the editorial menu. Our hope is that we can present a content buffet that is palatable enough to keep viewers and listeners coming back regularly to learn what else we will cook up.
But we set the agenda.
Far more powerful, from a communications standpoint, is the listener or viewer who is on the hunt for information – about a specific topic, specialty or individual – who in the course of an Internet search happens upon a guest who was featured on “60 Minutes.”:
Looking to hire a company that is an expert on asbestos removal? Hmmmm. Let’s see, on the first page of the organic search engine results you spot eight area companies.
But wait, one of them, ACME Asbestos Removal, was interviewed on “60 Minutes” by Steve Kroft, who called the company’s owner an “expert.”
That is the “after” market – and it is far more powerful and has a much larger impact in producing new customers and leads than the original appearance on “60 Minutes” – or even (if your budget allows) advertising on the CBS mainstay.
Of the 200 or so companies we’ve showcased to date on our local radio news magazine, “Business Unconventional,” I doubt that more than 25 percent of them even mention their radio appearance anywhere on their websites.
What a missed opportunity.
To be fair, many of the companies we feature don’t have the advantage of a full-time public relations employee or the use of a quality outside agency. But believe me, plenty of our guests avail themselves of both resources and still fumble the chance when it comes to leveraging the “after” market.
There is no “after” market set of instructions that will fit each company and every circumstance. But this is my 8-Step Guide to reaping the plentiful rewards of the media “after” market.
- If the story is positive (or even neutral), always link to it from your company website.
- If you already get plenty of positive media coverage, establish your own website page dedicated to showcasing the stories about you or stories in which you’ve been quoted.
- If you are seldom, if ever, the subject of positive media coverage – or if the coverage is particularly impressive – showcase it on the homepage of your website. See the “As Featured On Business Unconventional” logo that our program makes available to our guests.
- If you or members of your team have blogs, post a note about the positive media coverage you received. And be certain to provide a link to the news organization’s page featuring your story.
- If the coverage is particularly impressive – either because it is so positive or because it comes from such an authoritative news source – issue a news release about the story.This helps doubly with search engine optimization. Now, in addition to the original story (presumably posted online by the news organization itself), your website and blogs also point to the story, and with a news release, more and more sites will point to it.When a prospective customer searches online for “Asbestos removal Denver,” your company is far more likely to surface high in the organic search results.
- Tweet it. Post it on Facebook. Pin it on Pinterest. Harness all your social networking assets. [If you’re not already using social media sites to market yourself, this is a good reason to begin.]
- Email an alert about your media coverage to all customers and prospects. If you already have a company/product e-newsletter, regularly feature your media coverage in it.
- Wear it proudly. If my company was positively profiled by “60 Minutes,” or even by “Business Unconventional,” I’d take note of it on my business cards. I might even wear a lapel button to all my business meetings featuring the “60 Minutes” logo. (Inevitably, people will ask “why,” allowing me to spread the coverage message person-to-person.)
A vast amount of effort is expended in this country seeking to place guests on broadcast news programs and experts in print and online news outlets. The wisest among us, however, know that our work has only begun the day after we succeed.
* Some Business Unconventional segments are available online as Monday Morning Radio (www.MondayMorningRadio.com), which is produced in cooperation with the non-profit Wizard Academy in Austin, Texas. The Wizard Academy community comprises 45,000-plus business owners, executives and creative consultants.
by Chris Roush
A newly released new guidebook shows reporters how to better cover the business world and ways to spot trends in companies’ financial activities that could lead to more impactful stories.
Daniel Guerra of the Knight Center for Journalism in the Americas at the University of Texas writes, “Written by the International Center for Journalists and the International Finance Corporation’s Global Corporate Governance Forum, the guidebook ‘Who’s Running the Company: A Guide to Reporting on Corporate Governance”’ looks at how reporters can look beyond the financial statements and organizational charts of a company and seek meaningful stories on how companies operate.
“An objective of the guidebook is to help business journalists ‘pay attention to companies’ leadership and ask whether directors and management are making the right decisions, and how their actions connect to their company duties.’
“‘Corporate governance is at the heart of what goes right and wrong in business. Understanding it is vital for good business journalism,’ said John Plender, contributing editor for the Financial Times and member of the Global Corporate Governance Forum.
“Among the tips provided for business journalists are how to better define corporate governance, maximize contacts at a company’s stakeholders meeting, and identify potential irregularities in a company’s paperwork.
“The guidebook also provides insight into state- and family-owned enterprises, the compositions of companies’ board of directors and its relationship with its stakeholders, and how to better write stories on financial events and make them more accessible to readers.”
Read more here.
by Adam Levy
There are numerous public relations lessons that corporate America can glean from the presidential campaign.
There was the role of social media. Don’t alienate a core constituency (or customer base). It’s not all about advertising spending. The list is long.
I want to focus on what I think are the three most important lessons that corporate executives and PR professionals can derive from the campaign. They might seem simple, but the consequences of not adhering to them can be costly.
First, always be prepared. I’m not sure if the president’s performance in the first debate shifted the narrative and momentum toward the challenger — but his less-than-stellar showing clearly didn’t help him out. Was he not prepared? Maybe. Regardless, the lesson is stark: the c-suite needs to be prepared in every public situation — in front of analysts, customers, and the media, televised or print.
In this day and age Jon Stewart, YouTube or any number of bloggers can elevate even a slight flub to epic proportions. If you’re caught flat-footed, expect it to go viral and deal with the consequences.
Second, be consistent. Flip-flopping runs rampant in political campaigns. Companies need to recognize that they’ll be around longer than a campaign cycle and need to focus on consistency. Key messages are a company’s brand. If you make widgets, you need to reinforce why your widgets are better on a consistent basis. Stress the proof points over and over again. If you sell a service, articulate why your service is superior.
Persistence, sticking to messages, and ensuring consistency is the way to reach your base and build and solidify your brand.
Third, be clear. Not to take sides, but I’ll point out Mitt Romney’s use of “binders full of women” comment during the second debate. That phrase was confusing, became the focus of attention and alienated some voters. The lesson for corporate executives: speak clearly. Choose your words carefully. Don’t speak in jargon – don’t use words that have no meaning.
We like to say at 30 Point that words such as leverage, catalyze, and silo all refer to something else and were interesting when applied to new situations.
Now, they are words used by people who wouldn’t be able to use a lever, fix a catalytic converter, or know how to load grain into a silo.
The love/hate relationship between business journalists and a company’s public relations team is a well documented one.
To heighten this already contentious relationship, companies frequently use their public relations staff as a roadblock to keep business journalists from calling C-suite executives.
Why do companies, particularly publicly traded companies often do this? And is it the best strategy?
One of the most important tasks of a PR professional is to stay on and promote their company’s carefully crafted message and provide positive spin on any news that comes about about the company.
Since this is a key part of their job, PR professionals are accustomed to handling relationships with journalists, carefully preparing in advance for any question that a journalist may fire.
While CEOs are trained to handle questions from reporters to some extent as well, they most likely aren’t as prepared to field questions from reporters on a daily basis and stay perfectly on company message.
Because of this and the other plethora of duties that company executives have, it makes some sense that business journalists are often deferred to the public relations department, rather than being able to directly call executives. This often comes to the frustration of business journalists who would much rather a quote from someone inside of the company rather than spin from either an external PR firm or the internal PR department.
Is it in the company’s best interest?
Whether it is a wise choice for a company to have its PR department field questions from journalists that may be better answered by the CEO is an interesting question. While certain companies have precedents on whether their CEOs will take direct calls from business journalists, to some extent this tone can be set by the chief executive.
If the CEO is amiable toward the media and is media savvy, I don’t think it is wise of a company to prevent journalists from speaking to the executives. In fact, it can even be to the company’s detriment, as the CEO may have the best perspective on a company’s goals and outlook.
Further, a story that contains a quote from a CEO will often get better play in a newspaper or on a website than a story that simply quotes a prepared message from a press release or PR person.
Talking to executives also allows journalists to cultivate a personal relationship with the company, which can help provide fair and accurate coverage — even if this coverage is not always favorable. Giving the CEO a chance to comment in a story that may be negative but fair may appear better to the public than a story where the CEO refuses to comment at all.
Bill Berkley, who has been the CEO of insurance firm W.R. Berkley Corp. since the company’s formation in 1967, is know for providing his blunt and honest opinions to reporters.
Warren Buffett, the CEO of Berkshire Hathaway, has also been known to speak freely with reporters and to utilize media relationships wisely. Buffett even writes his own shareholder newsletter, which is uncommon for CEOs of large companies. He also pens opinion pieces that are published by major news outlets, seeming to understand the importance of a comprehensive communications strategy.
Media savvy CEOs
An executive that doesn’t shy away from the media but instead knows how to leverage news coverage and when to take calls directly from business journalists can have the most success in obtaining the most fair coverage. This is because a reporter is able to obtain the truth from all sides and insert comments from the most important players in a story.
Additionally, as Dan Simon, a Forbes contributor, wrote in his blog earlier in October, “Senior executives who believe in the power of PR often see the greatest results and those who don’t almost always end up with the less positive outcome they predicted from the start.”
Simon goes on to point out that CEOs who believe in the power of public relations often see better results in the media not because of “the power of faith” but because these are the executives who take actions to help boost the company’s public relations.
Executives who understand and believe in maintaining a relationship with the public and with the media will seek out opportunities to enter conversations about their industry, whether that be speaking at conferences, taking a reporter’s call or blogging and writing opinion pieces.
“Naturally this results in better conversion rates of interviews to coverage and better relationships with key influencers,” Simon wrote.
Thus, the company that will be most successful in promoting its message and maintaining a positive relationship with business journalists will be the ones whose top executives will happily take the calls of journalists, rather than creating a PR roadblock for them.
by Liz Hester
Stifel Financial agreed to buy investment bank KBW, which specialize in advising on financial services mergers, for $575 million in cash and stock. Stifel decided to take the KBW name, indicating it’s a valuable brand.
Here are a few excerpts from the New York Times story:
The combination, announced on Monday, signals what many think could be the beginning of a period of consolidation in the financial services industry. While banks and brokerage firms have recovered since the economic crisis, a number of factors — increased regulatory burdens, pressure on commissions, and persistently low interest rates — have combined to crimp profitability.
Stifel’s acquisition deal echoes the very advice that KBW has been giving its clients — that now is the time to invest in financial services companies. Banks have seen signs of stabilization, including credit trends improving across their loan portfolios. Year-to-date, banks and insurers are outperforming the broader stock market for the first time since 2006.
“You’ve told me a number of times that now is the time to invest in financial services,” Ronald Kruszewski, the chief executive of Stifel, said to KBW’s chief, Thomas B. Michaud, during a call announcing the transaction. Mr. Kruszewski then joked: “It’s probably a little late for me to change my mind.”
The acquisition of KBW, which is based in New York, extends Stifel’s aggressive expansion strategy executed over the last five years. Stifel, based in St. Louis, bought the technology-focused investment bank Thomas Weisel Partners in 2010 and last year made a large investment in Miller Buckfire, a New York firm specializing in restructuring.
Other companies that it has picked up include the fixed income specialists Stone & Youngberg and the New Jersey brokerage firm Ryan Beck & Company.
It’s interesting to note that in a time where many banks are retrenching, looking at different strategies and in general trying to figure out how to make money or reduce staff, Stifel is expanding. The firm is moving into different businesses and areas of risk. Contrast that with firms like UBS that are announcing cutbacks or others that just simply aren’t doing business.
Here’s an interesting fact from the Wall Street Journal:
Small shops such as KBW, with 448 employees, now compete with giants such as Goldman Sachs Group Inc. and Morgan Stanley amid a dearth of deal making. U.S. commercial-bank mergers are on track for their lowest annual total in at least two decades.
KBW, which last year announced a plan to reduce staff by 15%, has posted $36 million in losses since the start of 2011 amid a series of restructuring charges.
Bank investors have been expecting a wave of consolidation since the crisis, but they have been largely frustrated by the slow U.S. economy and low interest rates, which crimp industry profits by compressing the spread banks earn borrowing and lending.
And this from Barron’s is also noteworthy about the transaction:
Stifel derives more than half of its net revenue from its global wealth management group, which earns commission catering to the investment needs of high-net-worth individuals.
The firm has a small commercial bank, which currently accounts for a minimal portion of revenue. Meanwhile, investment-banking activities such as fixed-income underwriting, institutional trading and financial advisory generate the other 40% of Stifel’s business.
On Monday, KBW reported that its third-quarter loss narrowed as total revenue rose, amid a 34% increase in its principal transactions revenue.
Roughly $250 million in excess capital on KBW’s balance sheet is expected to be immediately available to Stifel upon closing. Plus, the deal is expected to increase return on equity by 10% to 16% and would be 5% to 7% accretive to earnings after expected cost savings were achieved.
So Stifel gets a name, top-notch specialized investment bankers and $250 million in capital to put to work. KBW gets to stick around in name and the diversified earnings from both firms should help the business be less cyclical.
As the average person, this seems like an inside-finance type story, but it does matter. Mid-market investment banks make loans to companies that might be too small for the bigger guys. They also tend to be located outside New York, providing diversification in a consolidated industry.
Bankers for bankers might seem redundant, but KBW has built a solid firm that needed cash, something Stifel seems more than ready to provide these days.