SeanReadsTheNews

NYT on Food Bribery Case

William Neuman of The New York Times today does a great job of dissecting a food bribery scandal that emerged when a top ingredient buyer for Kraft Foods was caught taking payoffs from a now-defunct tomato processor, SK Foods.  These bribes coupled with falsified testing information allowed tainted food to make it into Kraft products.

The article is interesting from a business perspective and as journalism but for the purposes of this blog what is most interesting is the response from Kraft, which is long and detailed when other companies might have been tempted not to comment.

Renee Zahery, a Kraft spokeswoman, said the company was a victim of SK Foods’ fraud and stressed that there were no health risks in using the moldy paste.

She said that while the company did a variety of tests on the ingredients it used, for mold it relied on the tests by suppliers.

“We do not duplicate those efforts,” Ms. Zahery said in an e-mail exchange. “We take our responsibility for quality seriously and believe the SK Foods situation was an anomaly.”

Another Kraft spokeswoman, Susan Davison, said that in 2007 and 2008, Kraft sent a quality expert to monitor SK Foods’ operations because of other quality concerns, like excessive tomato skins in their products.

Ms. Zahery said that the company tested all its finished products for possible food safety hazards and that no problems were found with products made with SK Foods ingredients.

Kraft's people were up against a wall here and did a good job of giving the company's position, supporting its commitment to safety and getting the message that there were no health risks into their quotes.

One group that might be forced into this mess is the Boy Scouts as Neuman mentioned, really for no reason, that the head of the scheme is an Eagle Scout.  I wonder if he had a bad experience with scouting as a kid.

WSJ on Digital Movie Conversion: Real Fiscal Stimulus

This Wall Street Journal article by Jeffrey McCracken and Lauren A.E. Schuker on theater owners sudden rush to install digital equipment after the debut of Avatar shows how real fiscal stimulus works. Avatar proved to theater owners that the unique experience of seeing a movie in 3D draws record numbers of customers even against mushrooming entertainment options and piracy.

The move to digital projection has been a hot topic of discussion for a decade. Currently in the U.S. there are about 40,000 movies screens and only about 7,600 of them are digital. Converting screens can cost $70,000 apiece.

AMC, Cinemark and Regal will convert most of their theaters from celluloid film reels to digital screens and projectors by the end of 2013. They will likely start in bigger markets such as New York, Los Angeles and Chicago, which have shown a bigger appetite for 3-D films.

The theater owners' joint venture, known as Digital Cinema Implementation Partners, or DCIP, was formed in 2007, but its fund-raising efforts were stymied by the financial crisis that erupted in 2008.

I'm noting this article because it shows how fast the negative effects of the recession go away when there is money to be made from investment and also because it concisely shows how the economic impact of Avatar, much anticipated, is showing real world results.

NY Times Cigar Marketing Case Study

The "case study" format in newspapers is the most PR-friendly story construction possible so I'm excited to notice that The New York Times ran one about social media marketing today.

Jane L. Levere reports on how EPC Cigar Company's CEO Ernesto Perez-Carrillo Jr., chose a social media campaign over traditional advertising to launch the company.

The great thing about "case study" articles is there is no downside - if the format is challenge/solution/lesson, if there is no solution, there is no story so they can't turn negative on you and no matter what problems you admit to, you know you'll get a happy ending that positions your client as a problem solver.

While admitting that absolute numbers of Facebook fans  (700) and Twitter followers (250) were small in the first months of the campaign, the article closes with this kicker:

The 25,000 limited-edition cigars that EPC Cigar has been releasing monthly since December “are selling extremely quickly,” Mr. Perez-Carrillo III said. He projects sales of $1.5 million this year.

There's another PR lesson as well - if the company wasn't willing to disclose those figures, it couldn't erase the small absolute numbers in Twitter and Facebook.  Often emerging companies need to hide their size to protect supplier relationships but in this case, disclosure meant a huge boost in visibility via The New York Times.

Sports Illustrated: Americans Win Despite USOC

Another non-traditional business article, by Selena Roberts of Sports Illustrated who covers the many ways that American athletes had to be entrepreneurial to support their training leading up to the games.

In a bad economy, many relied on their own resourcefulness when their endorsement deals dried up, USOC budgets tightened and Home Depot ended its Olympic jobs program for athletes. It was coupon-clipping time. Curlers rented rocks from Canada to save money; freestyle skier Shannon Bahrke launched a coffee bean company with $1 of every bag to be reinvested in her Olympic training; Noelle Pikus Pace started a winter hat-making business to pay for sleds when speaking engagements ended. "We're down to rice cakes," Pace joked.

In an article that is parts funny, sad and infuriating, Roberts relates how the U.S. central organizing body wasted resources, lost sponsorships and generally left our athletes in the lurch - and how the athletes just went on with their business, solved problems on their own and are now leading the field in medals at the games.

You read a lot about the decline of American education and how an economy and social structure increasingly dominated by rules and regulations is turning us passive.  I've noticed in my 20 years in public relations that the kids coming into internship programs seem to keep getting smarter, more prepared and harder-working.  And those are just the ones in agency public relations - I can't imagine what the kids with MBAs working for big bucks are like.

Stories like this reinforce my perception that perhaps we look at the negative a bit too often.

WSJ Covers Boom in Audio Drama

One element of The Wall Street Journal that hasn't changed since the purchase by News Corp. is the oddball front page story, a-hed as it is known.  Today's is near and dear to my heart as it is about audio drama.

Barry Newman looks at how technology has led to a resurgence in groups and individuals writing and producing audio drama and how they are evading traditional media to reach their audiences.  Using podcasts to get their information out is a way around gatekeepers quoted in the story, such as this skeptical producer at NPR.

A few of radio drama's old hands still fight for outlets. Yuri Rasovsky still produces his "Hollywood Theater of the Ear"for satellite radio. L.A. Theatre Works, a not-for-profit outfit, records classic stage plays with sound effects and distributes them to public radio. But its head, Susan Loewenberg, won't touch plays written for radio. "The best time to listen to radio drama is 1937," she says.

Because it is mandatory for an article that mentions dramatic radio, it is complete with a performance photo of Orson Welles and his Mercury Theater.

This article is another great piece on how technology enables variety in our economy and the culture it produces.  It also highlights several people, most of whom I know at least in passing, who have found a way to do something they love as a result.

While not traditional, it is a great business story.

Blockbuster Hires Weil Gotshal - Isn't Contemplating Bankruptcy?

I'm including this latest Wall Street Journal story on reorganization at Blockbuster by Mike Spector because it made me laugh.  

In recent days, Blockbuster tapped law firm Weil, Gotshal & Manges and investment bank Rothschild Inc. to look at ways to reduce its roughly $1 billion debt load and explore other strategies, such as acquisitions or partnerships, said people familiar with the matter.

There is only one reason a company in Blockbuster's condition would hire the best bankruptcy law firm on the planet and everyone knows it.  Of course, the communications situation of a pending bankruptcy requires that everyone deny it.

Chief Executive Jim Keyes said the company works with advisers regularly and that management is considering a menu of options including reworking its debt and pursuing merger-and-acquisition opportunities. He declined to elaborate.

"We don't contemplate filing for bankruptcy," he said in an interview.

Of course, if his creditors and other partners managed to infer such an outlandish notion from the hiring and perhaps got a little more accommodating about working with him, well, that's just a happy coincidence, I suppose.

UPDATE: The Filing was today so I'm sending this post out again.

WSJ Features Home Depot Turnaound

Miguel Bustillo of The Wall Street Journal reports on Home Depot's latest post-Nardelli turnaround in today's issue, highlighting how famous companies can turn their internal processes into news when they need coverage.

Communication was also a problem at Home Depot. Mr. Ellison [Marvin, EVP of U.S. Stores] said he was stunned to discover that store managers were drowning in hundreds of emails from headquarters.

So Mr. Ellison says he cut it to one email a week, on Monday, and set up a hotline for managers to complain if the edict is violated.

The reality is that Home Depot's management is too early in the major business initiatives described in the article to know if they will work or not.  Amidst a litany of negative comparisons with Loew's, critical observations from customers and hard data about how slow their core markets are, Home Depot's spokespeople were able to use internal changes such as the new e-mail policy to convey a sense of positive change.

That sort of thing won't make a story for a small company but it is a critical discussion point for PR at big companies looking to make the most of a bad situation.

Fortune Highlight of Disney's Firefighters A Four-Alarm Placement

Here's a fun story for the entertainment section, Beth Kowitt of Fortune profiles the firefighting crew that cleans up after special effects fires in Disney TV and movie productions.

Making sure staged fireballs don't turn into real ones is just part of the job for [Disney Fire Department Captain Jim] Capodieci. His team stands ready whenever a scene from "General Hospital" requires a car to blow up, or crews need to pull off crucial fire stunts in films like "Pirates of the Caribbean."

This massively fun story was a great pitch by Disney's PR department to get positive coverage of the company when it doesn't have a movie debut to promote (and when they just announced massive layoffs at their ABC News unit).

What makes the pitch great is that Kowitt couldn't write the story she wanted - the adventure of fighting fires at Disney - without writing what Disney wanted about the company.

• It covers Disney's range of entertainment products, mentioning several franchises by name
• The story covers how Disney protects and cares about its employees, often a negative for the company due to ongoing lawsuits from theme park employees about job classifications
• It conveys a sense of excitement and possibility about working for Disney by highlighting how IT and finance employees can transition to more glamorous firefighting or even acting jobs as a result of this department

It takes a media strategist to see the possibility for a story like this just by passing a firetruck parked on the lot on your way to work.  I love it.

NPR's Marketplace on Anthem Rate Rises

Using government as a marketing tool is an established practice in public relations and agencies that do it well can build thriving practices around it.  It's a tool that doesn't make the blog as often as it should because I try to stay away from public policy but today's brief NPR Marketplace segment by Jeremy Hobson has a critical reveal in how the big health companies are playing health care reform.

Dave Shove is a senior health care services analyst at BMO Capital. He says Anthem's error was likely a side effect of its sheer size.

Shove: They insure 35 million people, they're the largest health insurer in the United States. Rate increases are done probably every day. And I doubt at the senior executive level that every rate increase is reviewed.

Well perhaps they will be from now on. Shove says Anthem's PR blunder isn't all bad for the company. The spat with Washington could boost the case for a mandate that all Americans carry insurance. And that is something Anthem wouldn't mind one bit.

Health insurers have spent wisely and well to make sure that health reform leaves them at the center of the system while at the same time using their own unpopularity with voters as a lever to get what they want.

Scott Brown was elected Senator from Massachusetts by promising to be the 41st vote against health care reform.  The health insurance companies held fundraisers for his opponent.  And yet the coverage of the health reform proposal currently entering reconciliation in Congress is routinely depicted as something they don't want.

Dan Shove's quote peels back the mask - of course they want it to be illegal for consumers to not buy their products, and the perception that they don't want it is probably the best PR the proposal has.

Far from being a "blunder," big rate increases from Wellpoint and Anthem right now, when health reform is having its last big push in Congress, are clearly PR in favor of the bill. This is Spin-Jitsu, my term of art for using you own negatives as talking points, done large.

Portfolio & CNN on When Leading Businesses Don't Lead

Paul LaMonica devotes yesterday's CNNMoney Buzz column to Wal-Mart's purchase of Vudu, a technology company that has technology licenses with major TV manufacturers that could help in delivering online video.

This morning, Portfolio's Daniel M. Harrison writes about the problems Google is experiencing with the launch of its Google Buzz product.

Both stories illustrate how reputation can work against a market leader when it tries something new.  Companies that are undisputed leaders of their core businesses like Google and Wal-Mart create an expectation that everything they try will succeed.  The reality is that they don't.  Google makes all of its money from search advertising and Wal-Mart is the world's best brick-and-mortar retailer.

My father the retired security analyst covered Dow Jones & Company when it owned The Wall Street Journal.  He used to say that whenever Dow Jones management tried to do anything except run the WSJ and Barron's, it was time to sell the stock.  He was referring to their purchase of Telerate and launch on the Financial News Network but there were other examples.

LaMonica makes the same observation about Wal-Mart today.

But once again, Wal-Mart (WMT, Fortune 500) may find it's getting into a crowded market too late. Wal-Mart had a movie download service that it launched with the help of Hewlett-Packard three years ago. That was a flop. Before that, Wal-Mart tried and failed to out-Netflix Netflix in the online DVD rental business.

Portfolio's Harrison points to Google just waking up to the fact that not all of their ideas will work.

Within the glass-and-steel tower of its Mountainview, California, headquarters, engineers at Google have grown accustomed to a certain routine after their alma mater goes live with one of its funky new products. Grab a latte, plunk yourself down on a brightly colored beanbag, and casually high-five your colleagues while another knocks out a victory tune on the baby grand piano in the corner.

There has been little music at the Googleplex in the last week, however. Instead, the world’s most loved company has found itself in a rare position: having to vociferously defend and constantly modify its latest product rollout.

Both articles are strategic reading for PR people representing market leaders on how to apply Murphy's Law to whatever you are trying to do.  When you represent a company that is used to winning and are part of a PR team that might be a small appendage of a massive sales, marketing and advertising, it your role to be the person who plays devil's advocate.  You need to break out of viewing the launch as a "we" and experience how it might be to use. 

In the case of Wal-Mart, you would need to play the role of the investor and ask why this plan to take over online retailing is going to work better than the last one.

It's no fun to be the skunk in the garden when everyone else is getting ready to celebrate success - but it is PR's job as the owner of earned media.