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Ownership Does Not Always Have Its Privileges

A few weeks ago, I was interviewed by a number of media outlets. The stories all involved AT&T’s proposed acquisition of BellSouth, and I was being interviewed in my role as a telecommunications analyst. But before I ever spoke to one reporter about the story, two people spoke to me.

On the day that AT&T announced its $67 billion purchase of BellSouth, two lobbyists called me. One lobbyist works on behalf of large telecommunications companies. The other lobbyist works on behalf of smaller telecommunications companies. Both lobbyists wanted to talk about the same thing – the regulatory implications of the deal.

Two-and-a-half years ago I spoke with these same lobbyists. Back then, they were on the same side of the fence. At issue was the acquisition of Global Crossing, a bankrupt telecom giant, by Singapore Technologies Telemedia (“STT”), a company owned by the government of Singapore. Another company, XO Communications, which was controlled by billionaire corporate raider Carl Icahn, wanted to buy Global Crossing, but the latter’s creditors said that STT was offering a better deal.

Icahn tried to scuttle STT’s deal by arguing that the sale of Global Crossing to a foreign-owned entity posed a threat to national security. The argument was rejected, though not before the media had its way with the story, and Global Crossing was sold to STT. Today, Global Crossing garners few headlines outside of the pages of telecom industry magazines and stock newsletters.

Going back in time further, about seven years ago to be exact, there was a lot of noise being made about Hutchison Whampoa, a Hong Kong-based conglomerate. The company had won contracts to operate the ports at either end of the Panama Canal, which was about to be turned over by the United States to Panama. Hong Kong had reverted to Chinese sovereignty in 1997, and many people in the U.S. intelligence community and on Capitol Hill believed that China would have immense influence over the Canal if Hutchison Whampoa was awarded the ports contract.

The furor eventually died down, and Hutchison Whampoa operates the ports to this day. However, the Panamanian government, more than once, had to explain publicly that no one – not Hutchison Whampoa, not the Chinese government – except the Republic of Panama was going to control of the Panama Canal.

Before the ports issue erupted recently, it’s doubtful that most Americans knew the origin of the companies that already handled operations at many of our ports. It’s also doubtful that most Americans knew that CSX Corp., an American company, sold its port operations to Dubai Ports International, the company at the center of the issue, in December 2004, and that CSX Corp. operated ports, not in America, but in India and Hong Kong, among other nations.

The port – I really don’t want to call it a scandal – issue has been a major public relations blunder for the Bush administration, and I don’t think anyone can argue otherwise. Regardless of the PR implications for the President, the ports issue has shown why it’s important for public relations people to be both proactive and reactive to issues involving, among other things, ownership and national security.
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The issue of who owns what is always a hot topic, especially in this day and age of corporate consolidation. But even at the local level, ownership can have its PR upside and downside.

A new restaurant, for example, may be hot out of the gate because its owner has been successful with other local establishments. Years ago, a rock club in Baltimore appeared overnight and was successful because its owner had the hottest club in Washington, D.C. On the flip side, problems at one business can spill over to another business. In New York City, we’re seeing a sterling example of this due to the murder of a young woman who was last seen at a bar.

The bar’s owners are well known throughout the city, and they’ve had troubles at other bars before. With this latest incident, they’re in the news, and reports suggest that their businesses, not to mention their reputations, are suffering. Meanwhile, activists looking to close the bar associated with the latest incident are beginning to target the family’s other businesses.

PR people are always quick to point out facts such as an owners’ background or other businesses owned by the same company. When controversy arises, PR people on the other side of the issue can also use it to their advantage, as we’ve seen with the ports issue. Putting pressure on the top level of a business can often be much more effective than going to the middle man. A good example of this occurred a few years back when Rush Limbaugh made some questionable remarks on ESPN. Disney, the parent company of ESPN, had to step in to protect its reputation, and the company quickly forced Limbaugh off the air.

When issues such as national security are involved, it’s important that PR people play an active role. There may be nothing wrong with a foreign company being involved in a business that has security implications, but if I was a PR person for, say, an American port operator, I would have been whispering in the ear of every reporter that our “ports are being sold.” It’s the media’s job to research the issue, but what you can do is plant the seed of a story. This time around, it was a small port operator in Florida that got the ball rolling.
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When I covered the Global Crossing sale a few years back, I was amazed to find PR people from small, virtually unknown telecom companies calling me. They were not pitching their own stories but trying to get in a word on a bigger story. One PR person had no problem admitting that his CEO had ordered him to “smear STT” and try to disrupt the process with fear-mongering stories. While unapologetic, an email he sent me back then nicely sums up why what he was doing is important.

“Listen, I’m not saying that we don’t have our own motives for pushing this story,” he wrote me. “But the issue here is bigger.”

“People should know who owns what, and if there’s a question about a company’s involvement in another company that carries sensitive data and could be helping the government conduct wiretaps, don’t you think the public has a right to know there’s a potential security issue here?” he continued. “Most people don’t even realize that there are laws in the U.S. related to foreign ownership of airlines, but more knew after September 11th. If we at least publicize this case, maybe it won’t take people by surprise again.”

Wishful thinking, but maybe after the ports issue, the public, and PR people, have learned their lesson.

This article, written by Ben Silverman, originally appeared in PR Fuel (http://www.ereleases.com/prfuel), a free weekly newsletter from eReleases (http://www.ereleases.com), the online leader in affordable press release distribution. To subscribe to PR Fuel, visit: http://www.ereleases.com/prfuel/subscribe/.

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