Corporate Communication

Summary

The Players

John Malone, chairman of Liberty Media Corporation is often compared to Warren Buffet in mainstream media for his consumption of problematic media companies.  Included in the Liberty Media empire are such companies as Sirius XM Radio Inc., Starz Media Group, QVC home shopping network, Live Nation Entertainment and DirecTV Group.

Barnes & Noble, Inc. is the world’s largest bookseller, a Fortune 500 company and operates a book-centric business encompassing retail stores, internet, publishing, e-books and college bookstores. 

What it Means

Discussion abounds regarding Malone’s motivation and skeptics believe he’s devaluing Barnes & Noble stock despite the fact that shares were as low as $8.45 less than one month prior to the Liberty Media offer. Although his intentions are unclear, should he acquire the company, the debate remains over the future of physical bookstores.  If the Liberty Media sale is accepted, the uncertainty of physical bookstores increases tenfold. 

The Communication

After a thorough perusal of the Barnes & Noble corporate page and social media links it is clear that little is being discussed outside of the Barnes & Noble boardroom.  Twitter, Facebook and the Barnes & Noble YouTube channel remain focused exclusively on the Nook, service issues, customer service inquiries and new releases and author interviews.  There was absolutely no mention or secondary chatter regarding the Liberty Media offer.  While current financial gurus are debating the pros and cons of the Liberty Media offer, Barnes & Noble remains adamant in their corporate communication techniques that everything is fine and business is operating as usual.  Apart from an initial press release and media statement acknowledging receipt of the offer, both parties refuse to respond or offer any insight into future plans. 

“The Company does not intend to comment further regarding this proposal

 or the Company’s evaluation of strategic alternatives…”

-Official Barnes & Noble Press Release, 05/19/2011

Reactions

Barnes & Noble is keeping its cards close and rightly so.  There is little corporate benefit in adding to the discussion when the publishing industry at large is offering so many opinions.  Barnes & Noble alerted investors with a perfunctory press release and is leaving all further conversation to everyone else.  Leading industry sites such as Galley Cat, Publisher’s Lunch and PW Daily offer contrasting views and are prominently featuring the discussion.  This continued coverage shows the investment of readers and the publishing community at large. 

The bottom line is that no one knows what will happen.  In the volatile world of book sales the worst thing Barnes & Noble could do is actively publicize the offer.  Doing so could potentially frighten current customers.  More so than ever, it is imperative that Barnes & Noble show its strength which is exactly what it is doing.  As the last man standing of physical book stores, if Barnes & Noble is purchased traditional readers everywhere will being predicting the timeline of their personal book Armageddon. 

Summary of American Airlines and “Face of Your Base”

            American Airlines (AA) has been catching flack from the media since May 4, for what appears to be the airline’s internal campaign to run a quasi-beauty contest amongst its flight attendants. During the first week of May, the Fort Worth-based airline began a contest called “Face of Your Base,” which appealed to all its flight attendants to vote on a male and female representative from each base who looked the most “superb” modeling the airline’s new uniforms. The winners would then be selected to model the uniforms in the company’s internal newsletters and other marketing materials. According to the airline, the point of the contest, devised by a team of AA flight attendants and field managers, is to promote team camaraderie. “This campaign is about celebrating the hard work and diversity of our flight attendants, while giving them the opportunity to spotlight their peers who live the American brand.” While AA claims many flight attendants have said they are flattered to be nominated for their bases, the company also emphasizes the contest does not require AA flight attendants to participate, as it is their choice. Contest guidelines and rules are not available.

            Despite its good intentions with the introduction of “Face of Your Base,” the airline has incurred the ire of many AA flight attendants, including the flight attendants’ union, the Association of Professional Flight Attendants. Laura Glading, president of the union, stated, “This campaign just transported us back 50 years to the days of girdles, weight checks and single, female-only stewardesses having to quit when they were married, pregnant or reached the ripe old age of 30.” Glading also urged AA flight attendants to boycott AA’s campaign, calling it a “ridiculous, insulting beauty contest.” The union’s main issue with “Face of Your Base” is that it emphasizes physical appearance over job competency—an association with the job role that the union and many flight attendants have worked to dispel over the last three decades. Despite the airline’s position that the contest fosters employee engagement and pride in the airline, the union contends the contest has an adverse affect on flight attendants who may resent the implications of the ‘modeling’ aspect.

            Consumers have overwhelmingly reacted in contempt of the union and flight attendants. A sampling of commenter feedback on the stories published by online news outlets reveals the following:

·      Yawn...let's see once again an union is trying to interfere with one of their own member's right to choose...my goodness, give AA some credit to attempt to put forth an appealing face in their marketing. People are attracted to "pretty" people!

·      Here's guessing the FA Rep is fugly and upset she wouldn't have been nominated even 20 years ago as one of AA's or any airlines best looking attendants.

·      I am mostly a pro-union guy but they need to just chill out on this one.

Other than respond to reporter inquiries, AA has not issued statements on its website, Twitter feed or Facebook page in regard to this controversy.

Reaction/Analysis to American Airlines and “Face of Your Base”

Considering this issue was an internal issue that became external once the union voiced its dissent, my reaction to AA is that it did a good job responding to media inquiries, while not furthering the controversy by issuing statements on its website and social media accounts that cater to consumers. The company was smart not to ignore the media and smarter still not to refer to consumer opinion in its official responses. If it had referenced consumer support, it would have done itself a disservice by catering to the lowest common denominator (based on commenter feedback), as well as undermined its position that “Face of Your Base” was for team building—not consumer building. AA’s strategic response helped it gain a good standing with the general public and win the PR battle over the union.

            Other factors that may have contributed to this short-lived media story having worked in AA’s favor are the long-standing animosity between the union and the airline, and the timing for when it broke. According to media speculation, the union may have had an ulterior motive in protesting AA’s contest due to unresolved contract negotiations since 2008. As a way to expedite contract proceedings, the union may have wanted to start a public fight in the hopes of bolstering its public image. If that was the case, it obviously backfired for the union since the general public felt the flight attendants overreacted. Finally, the fact that the story broke less than a week after the royal wedding and three days after Osama Bin Laden’s death probably worked to AA’s benefit, as the media obsession with these two prior stories was fairly strong.

Summary of Taco Bell’s PR Crisis

            Taco Bell has been stuck in a sticky situation over the past few months after Alabama attorneys filed a class action law suit against Taco Bell. Attorneys claimed that Taco Bell’s beef was in reality only 35% beef, and the rest fillers. Media went with the story, and Taco Bell was the brunt of many jokes, and the target of a media firestorm. Taco Bell was quick to correct the facts. Taco Bell maintained that their taco filling is actually 88% beef, 3% water, and various Mexican seasonings, and even leaked their recipe. The company quickly went to social media platforms to spread the truth. They used Facebook, Twitter, and YouTube to promote videos highlighting the CEO of the company explaining the situation, and blasting the people who got their facts wrong. Taco Bell also took out full-pages ads in the New York Times and other prominent newspapers, as well as launching commercials addressing the concern. The commercials used real employees to explain the situation. Eventually the lawsuit was withdrawn, but Taco Bell didn’t stop their campaign. They ramped it up, including taking out ads reading, “So You Tried to Sue Us, and Now You Won’t Even Say Sorry?” Their ad campaign blatantly points fingers at those who falsely accused the company of not using industry standard beef. Taco Bell is currently considering counter suing. The Walker Sands PR blog discusses the situation in-depth (http://www.walkersands.com/Blog/i-pity-taco-bell-execs-right-now/). Taco Bell handled their corporate communications wonderfully.

Reaction of Taco Bell’s PR Response Model

            Taco Bell used a modern approach to take on an issue head-on. They put the CEO/leader of the company on display; they were transparent, honest, and forthcoming. They used a blend of social and traditional media to get their message across. They even poked fun of those who falsely accused them. Throughout the entire ordeal they faced the issue head-on and were extremely open, even providing their secret recipe for the entire world to see. In addition they launched a section of their website designed to address consumer concerns. The way Taco Bell handled the situation with facts, honesty, and new media can be applied by companies similar situations. Weber Shandwick led the PR response.

On May 3, Christopher Soghoian posted an email conversation online. He was livid with Burson-Marsteller’s John Mercurio for not revealing his client in an op-ed pitch. Nine days later, USA Today broke the news that Burson-Marsteller was behind a “whisper campaign to get top-tier media outlets, including USA TODAY, to run news stories and editorials…”. USA Today did not know that the client was Facebook, but it was only hours until that news broke on The Daily Beast.

What is to be questioned in this instance is neither the fact that Facebook made a statement about the matter, nor that Google also commented on the issue, but the reaction and lack of appropriate actions from Burson-Marsteller (also referred to as BM henceforth), a company that is ironically known for their crisis management. Though clearly all three of the major corporations involved (Facebook, Google, and Burson-Marsteller) have reactions that allow for strong analysis and criticism, this particular post will focus on public relations big-wig Burson-Marsteller.

Summary of Burson-Martseller’s Facebook Campaign Blooper

            Before analyzing Burson-Marsteller’s reaction on how the news has been handled, it is important to know the basic background of the story. It appears as though Facebook hired Burson-Marsteller, a top-rated PR agency, to help with a campaign that would help Facebook rise above Google in public privacy and trustworthiness. Burson-Marsteller was to pitch negative stories to newspapers, bloggers and influential journalists and push the invasive aspect of Google’s Gmail product Social Circle. Burson-Marsteller came under fire by multiple publications and bloggers for failing to reveal their client and saying, instead, that  everything they presented was publicly available information. The news was published by USA Today, as stated above, but continues to gain criticism and fuel conversations today. This case, notably dubbed “Googlegate” by bloggers and reporters, showcases the popular issue of online privacy but also brings into light a case of poor public relations ethics.

Reaction to BM’s Facebook Campaign Blooper

            There is a multitude of ways in which this particular event could have (and should have) unraveled differently. First and foremost, Burston-Marsteller almost admits in a statement that it was in the wrong. Part of the statement reads:

“Whatever the rationale, this was not at all standard operating procedure and is against our policies, and the assignment on those terms should have been declined.”

            As a firm recognized for its crisis communication, Burson-Marsteller really dropped the ball on this one. Not only did it generate more negative buzz about its own company but it generated negative buzz for its client, embarrassing both in the process. Additionally, the company’s reaction statement is only five sentences - a bland five sentences at that - and basically says that it can confirm its client was Facebook, because Facebook had already released the news, and that it should have acted differently. It does not take responsibility or blame, nor does it say that it was in the ethical wrong.

            BM’s handling of the situation has only gone from bad to worse in the time since the story first appeared via USA Today. The company has caught slack for its poor social media practices. Wired.com reported that BM deleted negative posts from its own Facebook account as the public heard about and responded to its slip-up. Since that time, a BM representative simply stated, “That was wrong” and the company Tweeted:

@JessicaRMurray Jessica we're sorry about removing your post. Clearly, your comment was fair. Please feel free to repost.

13 May

            Though the gesture was nice, the company still fails on other social media accounts. Its only Twitter postings since the news broke have been about winning awards. The sole related response reads:

BMGlobalNews Burson-Marsteller 

Our firm's statement on our work with Facebook http://bit.ly/kjkJ0L

12 May

            On Facebook, BM has made no updates about the news and has not responded to criticism posted by other Facebook users. Over a dozen wall posts with links to various articles describing “Googlegate” have been posted to the page, yet BM has not said a Facebook-posted word since May 11 (the day before USA Today’s article appeared). One would think that BM would feel inclined to comment on headlines and posts such as:

·         PR Firms, The Lowest Of The Low, Get Another Black Eye

·         Sleazy PR Firm Throws Scummy Facebook Under The Sordid Bus

·         Burson-Marsteller, PR Firm Facebook Hired To Smear Google, Scrubs Negative Posts On Its Page

·         “I suggest for your latest controversy, you hire a PR firm that's actually competent. Censoring posts on your Facebook? Even a person with an ounce of common sense can foresee the backlash that would cause especially considering the relatively small amount of time that has passed since the original scandal. You're just another in a large line of businesses that are ethically challenged.”- Christopher Jason Henkel, Saturday at 5:47 p.m.

Burson-Martseller is ultimately unsuccessful in its response and corporate communication surrounding the recent events. It is not only discrediting its work and the company, but it also has been slow to comment. Representatives for the company should have crafted a statement that details the company’s role, apologized for its errors, and stated how they will precede in the future (rather than just claiming that the two employees responsible will receive extra ethics training). It also should have responded to Facebook posts and Tweets. Their lack of proper response will most likely harm their business in the future and it discredits their current work. The poor response in this situation was, for lack of better word, a major fail. 

(download)

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Summary of Coca-Cola’s 125^th Birthday Campaign

It was just 125 years ago that John S. Pemberton created the first Coca-Cola in Atlanta, GA.  To celebrate 125 years of Coke, the company has created a year long advertising campaign focusing on 125 days of summer fun that kicked off Saturday, May 7.  The kick-off concert featured several popular artists including Kelly Clarkson, Natasha Bedingfield, and Ne-Yo and was streamed live for the whole world to see.  The company created an entire website devoted to the streaming of the concert and fans posted comments on the streaming video page as well as the Coca-Cola Facebook page. 

http://www.facebook.com/event.php?eid=197793080263004

In addition to the kick-off concert, Coke has created buzz through social media.  Known for having fun and colorful commercials, the company has posted anniversary celebration ads to YouTube.  The success of Coke commercials has prompted others, including Marketing Week, to write entire articles about the history of Coca-Cola ads.  The twitter handle #Coke125 was created to announce Coke evens and news for the 125^th anniversary and Facebook is also used to discuss and announce Coke 125 events.

Coke is giving away prizes for 125 days and free magnets on coke boxes.  Coke employees are also participating in the festivities by volunteering for a day of service.  The company will also have special coke rewards programs, the first is for busy moms and the second is for teens, to tie in Coke with summer fun.  A special Tagline, “125 years of sharing happiness,” will be used for all commercials and advertisements.  In conjunction with the anniversary tagline, Coke will create commemorative glasses and store displays as well as a special 1.25 liter bottle of cola. 

To involve consumers, Coke is using “Retro Poster Maker” to insert customer’s faces into retro Coke ads (or posters that look like Coke ads).  All of the iconic Coke images, commercials, jingles, and bottles are being featured on news blogs, websites, and video blogs.  The 125^th anniversary campaign is an entire integrated marketing campaign that highlights everything that people love about Coke as well as things you never knew about Coke. 

Reaction to Coca-Cola’s 125^th Birthday Campaign

Coke has done a pretty good job so far.  The concert page and Facebook pages reveal that the public really enjoyed the concert and consumers were posting happy birthday messages to coke in several different languages.  Clearly the campaign is reaching a lot of different kind of people and getting them excited. 

Involving employees in a day of service is Coke’s way of demonstrating a commitment to social responsibility.  During the entire 125 day summer push, and the year long campaign employees were only mentioned as having to do with 1 day of the festivities.  I found this to be a bit odd as I am sure they are a part of many more of the campaign activities.  Although I feel that Coke has done a pretty good job of advertising the 125^th anniversary, I still feel that they could have done better.  The issue is very easy to understand when you read the press release from the organization.  It seems as if the campaign for the anniversary has too many moving parts and it is difficult to fit it all into one press release.  The press release is very long and a little complicated, but it still touches on all the aspects of importance; how the customer will be celebrated, how the employees will be celebrated, and how the company will get the word out.

http://www.thecoca-colacompany.com/dynamic/press_center/2011/05/125-years-young.html

If I were changing the campaign I would have announced it earlier and made sure to let campaign information leak out slowly over time.  That way people could get excited about it over a longer period of time and not feel overwhelmed by the entire campaign.  At the same time, when consumers go to the store and they are bombarded with Coke’s 125^th anniversary image and tagline they will definitely take notice.  

Summary

Recognized as “one of the industry’s most powerful and savvy businesswomen,” Christina Norman brought nearly two decades of broadcasting experience to her role as the new CEO of OWN (Oprah.com, 2009). Prior to joining OWN in early 2009, Norman was president of MTV, and held a prior position as president of VH1. She received industry-wide praise for diversifying programming, increasing viewership and her outstanding leadership and strategy.  Norman has been named one of the highest-ranking African-American women in the entertainment industry and has been profiled in Advertising Age’s “Media Mavens” issue.  With her credentials, Norman was the obvious choice to build the budding OWN enterprise.  Until she was fired, that is.

In a May 6, 2011 press release titled “Peter Liguori Named Interim CEO of OWN,” the network stated the new appointment reflected “a transition from a launch phase to a more long-term focus on business and creative strategy, development, and execution, following the network’s debut on January 1, 2011” (Oprah.com, 2011).  At its debut, the network delivered double-digit primetime increases over the Discovery Health channel, which OWN replaced, during the same time last year.  Although ratings seem positive, representatives from Discovery admit they are “below our expectations” (reuters.com, 2011).  Today, ratings have decreased from the network’s debut and it now barely outperforms Discovery Health (NY Times, May 2011).

In an e-mail to her staff, Oprah acknowledged Norman’s hard work but said, “Given all that we have to do, the OWN Board felt it was necessary that we have a different kind of leadership in place for the next phase of OWN’s growth” (NY Times, May 2011).

It’s obvious that the management team at OWN attribute the slow growth and low ratings to Norman.  However, some would argue that the cause was a lack of presence by Oprah Winfrey.  Since the launch of OWN, Winfrey has been winding down her talk show. Admittedly not fully engaged, in that same e-mail Winfrey said, “I will soon be able to turn my full energies to working with you all.”  A Jan. 2011 NY Times article supports this theory stating, “Nielsen data showed that about 770,000 people tuned in for the first hour of OWN on New Year’s Day.  Programs that did not feature Ms. Winfrey did not fare quite as well …” (NY Times, Jan. 2011).  The public also has opinions about why the network is crawling.

Reaction to the transition

Huffington Post- Reader Comments

• "The head spot at OWN is a temp job."

NY Times- Reader Comments

• "I'm sorry. Why is this a surprise? We are now at the point of Oprah overload!"
• "Why would this network succeed? Oprah's fans want to see Oprah, not a bunch of other shows that just happen to have her stamp of approval. I wonder if she is regretting leaving her daily talk show."
• "Or maybe the low ratings are because OWN is really bad."
• "Gosh, do you think it is because OWN's shows are lousy?"
• "Location. Location. Location. I don't even know where OWN is on the cable dial. I assume it's somewhere between channel 100 and 700. I don't normally go up that high when I'm looking for something to watch."

  As Norman alluded to in the earlier video, although the network is backed by the Oprah name, it’s still a start up venture that needed more time to flourish.  There was a lot of interest in the network in the months leading up to the launch, however, once many viewers realized it wasn’t always included in a standard cable package, interest dwindled.  Likewise, for those who can access the network, the programming options reportedly don’t appeal to as many viewers as the network expected.

OWN, should own up to its own shortcomings and realize that a change in leadership is not necessarily the fix.  It should also tune in to the opinions of viewers (or would-be viewers) and implement the necessary changes to begin repairing its reputation.  Thus far, none of this has been done.  The network’s only mention of the “transition” was through a brief press release posted on oprah.com.  There were no mentions on the company’s Facebook or Twitter pages.

Without more conversation being stimulated and controlled by the company, its reputation remains at the mercy of viewers who, according to many comments on the above-mentioned sources, are unsupportive of the new network.  Once the talk show has ended, time will tell if the public decides to continue supporting the Oprah brand at all.

Blockbuster Video.  The once booming rental chain has been on financial life support for years.  Not since the Reagan Administration has it been a powerhouse for home entertainment, and truthfully, it may never be again. Blockbuster gave up the ghost late last year when it closed over 900 stores and filed for bankruptcy.  With no hope in sight, the iconic brand was destined to drift off into irrelevancy.  That was until CEO of the Dish Network, Charles Ergen, swept down in his angelic-redemptive glory with gobs of cash, $320 million to be exact, and applied a financial defibrillator to jolt the rental chain back to life.  So, was this a smart move on the Dish Network’s part, or was Blockbuster simply DOA?

Upon announcing the decision, business/financial critics immediately began voicing negative opinions about the acquisition.  Tech News blogger David Zatz tweeted that he and several financial analysts felt that the decision, “did not compute.”  Mike Fleming, a Deadline New York reporter, could not process why Dish would make such a purchase when there are far superior movie rental options out there, stating, “Blockbuster’s brick and mortar strategy was exposed as a dinosaur strategy when the other services began to rise, the behemoth moved too slowly adapt to the times and lost its turf in the process.” 

Almost simultaneously Dish put out a press release to stem concerns about the purchase being risky.  In the document, the CMO laid out Dish’s future intentions with Blockbuster and addressed the opportunities its acquisition provided for the company.  The following is break down of the key talking points of the memo:

·      Blockbuster is a “highly recognizable brand.”  Dish feels the brand familiarity will generate immediate trust and interest in new content offerings.

·      Blockbuster provides Dish with “multiple methods of delivery.”  Its by-mail, streaming, kiosks, and store locations provide a unique opportunity for Dish’s content offerings.

·      The bricks and mortar stores provide “cross marketing opportunities”.   This will give Dish opportunities to sign new subscribers by providing incentives to current Blockbuster member’s and engaging with them in-store.

·      Dish commits to “re-establish Blockbuster’s brand as a leader in video entertainment.” Dish feels there is an opportunity through Blockbuster’s established relationships to cut deals with studios to provide content faster than competitors.

So far, this overtly positive and perhaps a bit naïve messaging approach is working.  Since the press release stocks have remained relatively stable.  However, since this is a recent acquisition it will take time for investors to fully evaluate the risks associated with the purchase.  Ultimately, Dish will need to elaborate more specifically on what’s their strategy involving this colossal purchase. 

Evaluation

Aside from where I stand on the Dish Networks actions, (they are insane), I find myself being even more critical of their communication effort.  This announcement came as a complete surprise to many analysts, in fact, some were completely unawares that Dish was even considering such a purchase.  I think it may have faired the Dish Network well to get the word out earlier and let their stakeholders know that they were mulling over this decision. By doing so they could have better gauged how the market would react and reevaluate how to publicly approach the decision.

Now, assuming that Mr. Ergen and company are completely convinced that the move was brilliant, then they need better convey what was brilliant about it. If they have some brilliant plan, if they have some super-enlightened ingenious approach in harnessing the power of Blockbuster, then put it out there.  Don’t generate a vague, safe, and preposterously naïve press release that states the obvious.  We know it’s a highly recognizable brand, we know it has multiple methods of delivery, etc.  But what does this mean for the Dish Network?  How are you going one-up Netflix? Hulu?  What is Dish going to do with the brand that will bring it back from the grave, with a vengeance?

To be fair, they came closest to doing this when they mentioned the possibility of faster delivery for new movie releases.  That’s a good start Dish, now elaborate.

Maybe I’m jumping the gun, maybe the ground-breaking press release that will answer every concern a stakeholder could conjure up is being put together as we speak.  But if this bit of communication is all they currently have to reassure its publics, its potential investors, then I can understand their concern. 

(The attached video talks about the acquisition, mentions some of the key points in the press release, includes analyst speculation as to possible approaches for Dish, then ends with tidbits from analysts who are skeptical about the deal.)