How does the media help or hinder an insolvency outcome?
In a media landscape that is changing by the day, the fine art of managing media relations has never been more challenging.
With the traditional advertising-funded media model under intense pressure from online news, our major news organisations are under duress, driving an exodus of experienced journalists who are being replaced by younger, less experienced reporters.
This is changing the game for insolvency professionals dealing with media interest in formal corporate recovery appointments.
In the new media world, each player is jostling for position to support their own commercial imperatives – for the insolvency firm, to preserve or recover value; for the media, to break the news.
Often, those imperatives are not aligned. That is when insolvency professionals need to have a clear understanding of the media’s objectives, strong relationships with trusted journalists and a well-planned strategy for dealing with the media.
The key to success lies in your ability to deliver something of value to journalists whilst preserving or recovering value for creditors.
The magic formula
The appointment of an insolvency firm to a troubled business is not a new phenomenon in Australia. The corporate landscape of the past 30 or 40 years is littered with some spectacular corporate failures, close-call misses and thousands of under-the-radar closures.
Corporate collapses are big news. People are fascinated to discover what led to a company’s collapse – could it have been avoided? Was there a crime committed? Was it the result of inflated egos? Journalists are looking for the scoop and a harried insolvency professional is likely to be more interested in bedding down the appointment than responding to enquiries from media.
But insolvency professionals need to recognise that the media has an important role to play in their appointment. The media dictates how the market and stakeholders regard the appointment. It shapes perceptions as to what went wrong and who is to blame. Negative media coverage can destroy the value of assets, erode shareholder value, unsettle clients and employees and undermine the position of an administrator.
On the other hand, straightforward, favourable media coverage can placate stakeholders and provide clients and employees with greater confidence and more reasons to maintain their connection with a company. Favourable media coverage can preserve the value of assets and the brand and make a significant contribution to the ultimate survival of a company.
So what is the secret? The reality is, there is no magic formula that guarantees favourable coverage. The media is a blunt instrument that can be influenced, but not controlled. The key to success lies in providing journalists with valuable, timely and newsworthy information that meets their news agenda while delivering reassuring and positive messages to key stakeholders.
Your goal is favourable coverage. This is not about fawning advertorial or concealing difficult truths. Favourable coverage is fair, accurate, reporting. It is about getting the facts right, identifying correctly whether the appointment is a receivership or an administration, and providing key stakeholders (such as the administrator) the opportunity to respond.
Dialogue with the media
An effective media strategy enables an insolvency firm to know who in the media to engage with, on what terms, with what information and, crucially, precisely when. A critical part of this involves engaging in dialogue with the media, which is the key to accurate reporting.
On large-scale appointments, media dialogue needs to be an ongoing conversation where you speak to individual journalists every few days to keep them – and through them your target audience of creditors, employees, clients and the market – informed of critical developments.
There are several ways to do this. The best way is to deliver a fact sheet or press release outlining key details of the development and follow it up with a discussion with the journalist to ensure he or she fully understands the development and its implications.
This is an investment in time to ensure an accurate message is delivered to your key audience. It is not a guarantee the journalist will get the story right, but it greatly reduces the risk of error. It also ensures that they know their story is coming from the source at the heart of the matter, building a reservoir of trust.
The information you deliver to journalists needs to be broken down into the simplest terms. With the media, clarity and brevity is king. This is not a comment on journalistic competence, it simply reflects the fact that Australian insolvency law is relatively complex and because of tight resources, our main media outlets can’t afford specialist reporters in this field.
Insolvency practitioners also need to be aware that they are the best source of factual information about an appointment or a company’s state of affairs. If they are providing accurate information to journalists, they are taking positive steps to guarantee factual reporting. If they are not communicating with the media, they are creating an information vacuum and leaving the accuracy of reporting to chance.
An information vacuum also creates an opportunity for others to fill the space – potentially with misinformation or unhelpful speculation. When it comes to the media, silence is not golden.
Keep in mind that bad news will get reported whether you comment or not. As receiver or administrator you have the power to influence how bad news is reported by providing context. If 700 jobs are to be lost, that information needs to be delivered quickly and clearly with the logic behind the decision spelled out.
The longer you sit on damaging information, the greater the chances of someone else leaking it or speculating about it in the media – taking away your control of the story and potentially placing it in a more damaging light.
In the contest for accurate and favourable coverage, your most valuable asset is your relationship with journalists. These relationships need to be built up over time and based on trust; they don’t emerge overnight.
Journalists relying on you for information need to know that your word is your bond. They also need to understand that from time to time commercial imperatives may restrict your ability to comment – but if you do comment, it can be relied upon as certain fact.
Your relationship with a journalist needs to be viewed as a long-term investment. It is a two-way street, and its value lies in the fact the journalist knows you to be a reliable source and you know the journalist will get the story right.
Your part of the bargain is to deliver clear, timely and valuable information to your journalist contacts. They will be keen on you providing the story to one outlet exclusively, but that is not recommended in a high-profile appointment when you need to be communicating with a broad-spectrum audience.
In return – if the relationship is strong enough – you can expect the journalist to contact you for confirmation or comment on a variety of appointments. Regardless of your ability to comment, the fact the call has been made provides you with the ability to provide value to select, critical stakeholders – say, a secured creditor with a particular sensitivity to negative exposure – with warning of a pending story. The heads-up alone is often enough to prepare people for the shock of an unexpected story on the front page.
The media is a critical tool in modern corporate recovery appointments. It shapes the way insolvency appointments are perceived and can have a dramatic impact on outcomes. Strong relationships with trusted journalists can be your most valuable asset in difficult appointments. Build those relationships over time, providing them with valuable information whenever you can to develop a reservoir of trust. You never know how that act of goodwill will be repaid . . . or when you will need it.
Justin Kirkwood is the MD of communication advisory firm, Kirkwoods.