Magazine article New Zealand Management

Public Exposures: How to Manage Media Messages: It's Been Used to Talk Share Prices Up and Been Instrumental in Their Tumble-Media Exposure of Company Doings Is a Two-Edged Sword That Needs Careful Handling. Now, with Disclosure a Must and Public Scrutiny Intense, Managing Media Messages Is Even More Crucial

Magazine article New Zealand Management

Public Exposures: How to Manage Media Messages: It's Been Used to Talk Share Prices Up and Been Instrumental in Their Tumble-Media Exposure of Company Doings Is a Two-Edged Sword That Needs Careful Handling. Now, with Disclosure a Must and Public Scrutiny Intense, Managing Media Messages Is Even More Crucial

Article excerpt

The sort of "new-economy" media hype that was liberally adopted during the dotcom era to ratchet up share prices may be a thing of the past but its legacy lingers in the shape of heightened public scepticism and scrutiny of corporate messages.

That, along with the advent of triple bottom-line reporting, greater compliance responsibilities for directors, and new listing rules that put added emphasis on the communications process, mean that how and when meaningful messages are delivered is even more important. So what's the current management thinking on successfully managing the media--and how has the game changed?

Media scrutiny of big business is more intense for a number of reasons. For starters, more people have an interest in it. The demutualisation or privatisation of such monoliths as AMP, Telstra, Air New Zealand, Tranz Rail, Westpac and more recently Promina (formerly Royal SunAlliance) has seen a dramatic rise in retail share ownership--or "mum and dad" investors.

Recent high-profile collapses haven't helped. These, and revelations of exorbitant CEO payouts that often accompanied them has fuelled an atmosphere of cynicism among shareholders and the public at large, says Adam Cooke, group marketing and communications manager with Baycorp Advantage.

This at a time when the new continuous disclosure regime means we've just entered an era where what companies 'don't' say can also get them into hot water.

"Continuous disclosure and greater powers for regulators provides new parameters within which to work. Retail share ownership has driven a need for a tight, but prolific information flow" says Cooke.

"The media is tenacious and will put any company under scrutiny if there's evidence to support it. Shareholders' right to know what's going on makes a corporate communications strategy vital."

How to get it wrong

Like Australia, our corporate history is littered with communications examples that range from inept or untimely to questionably dishonest.

For example, revelations as to the sorry state of Air New Zealand's balance sheet (pre recapitalisation) only came after its Rights Issue came in fully subscribed. More recently, Tranz Rail only revealed a new bank facility a day after it raised $66 million in a rights issue.

Plenty of academic time has been devoted to trying to prove a link between good communication and share price. Measuring the value of good editorial is something many companies struggle with.

But what the recent communications debacle by New Zealand Exchange (NZX) newcomer Vertex serves to illustrate is that when it comes to creating expectations, discretion is the better part of valour.

The plastics company's share price took a caning after it downgraded its prospectus forecasts on two occasions. Similarly, deliberate efforts to delay the release of vital financial data saw Provenco, formerly the Advantage Group, receive a severe censure by the NZX some time back.

Costs now higher

Examples like these aren't hard to find. But new listing rules that call for continuous disclosure mean the cost of taking a hit-and-miss approach to media handling just went up. As the fish-bowl environment in which many companies now operate becomes more intense, Cooke believes the role media plays in taking key messages out into the market place is more crucial.

He says the continuous disclosure regime is forcing companies to re-think the message they really want to convey within an underlying financial result. Examples like Vertex serve to illustrate the downstream damage that over-zealous PR can do to a company's reputation.

Giving just enough information but not too much is the fine line of balance companies have to tread. Thus far, they're grappling with continuous disclosure with various degrees of success, according to Geoff Senescall, a former NZ Herald journalist who recently joined forces with former Fletcher Challenge media man Barry Akers to run a financial PR firm. …

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