It has been labelled a PR disaster. Terry Maher examines the way Telstra played the media with its record profit and 10,000 job cut announcement last week.
National Party Senator Ron Boswell called Wednesday’s interim results presser in Melbourne “a public relations disaster” which means that Michael Grealy, Telstra’s national manager for media relations (0419 217 343), should take some sort of a bow.
This certainly wasn’t a case of “no news is good news” for the highly stage-managed, smoothly-run press conference, attended by almost a 100 journalists at the Hotel Sofitel, provided enough news to fill the front pages for three days running – or would have if the High Court JJs in the matter of Bond versus The Queen hadn’t, in their considered opinion, let King Rat out of the bag on Thursday.
The Telstra “good news” was a bumper record profit of $2.1 billion for the six months to December 31. The Telstra “bad news” was that telco competition was hurting and that 16,300 extra Telstra employees would have to be put to the sword or outsourced to rectify the problem. But the Telstra “no news” was also a killer. Having been enticed to the event by the prospect of a nudge and wink telstra.com spin-off and float and/or the prospect of a bid for one of PBL, News, Fairfax or the Seven Network, the journalists were left gob-smacked and baying for blood for the no show and tell.
Former rocket scientist Dr Zygmunt Switkowski is sitting pat in the media’s sights wedged somewhere between a rock (the Federal Government’s reluctant 50.1 per cent controlling stake) and a hard place (the 2.1 million shareholders that, expectantly, own the rest). Telstra’s share price climbed 68 cents to $8.53 on Monday in anticipation of some sort of announcement at the half-yearly report. It fell 50 cents on the Wednesday news, 13 cents on Thursday and another 8 cents on Friday to finish the week at $8.
What Michael Grealy presumably knew, and the journalists didn’t know, when they walked into the press conference was that Ziggy had already had a very bad hair day. Subsequent reports have him being kicked in the teeth by the Prime Miniature over the job cuts and rolled by his board over the Internet spin-off. Jennifer Hewett in the SMH on Saturday has Howard in a “furious phone conversation with the CEO of Telstra on Wednesday morning” that was “extremely fucking direct.” Er, yes, we see. Mark Westfield in the Oz on Friday has Ziggy’s Internet assets float “overruled by directors” in a heated board meeting on Wednesday morning in which he was accused of “conducting policy of the run”.
It was left to Geoff Elliott in the Oz on Saturday to really sink the slipper: “The question everyone was asking this week was: ‘Is Ziggy Switkowski up to it?’ This week’s profit result at $2.1 billion with a 30 per cent cut in staff to about 36,000 is a nightmare message to sell. Switkowski made the best he could of a bad situation. The whispering campaign started about his leadership even before the press conference in Melbourne on Wednesday had ended.”
Elliott and Switkowski are by no means mortal enemies. Ziggy has given Geoff some of the best scoops in the telco round and Geoff has dutifully run them up the mast to see if they fly. But raising expectations is the most dangerous form of media manipulation that a CEO can play and Elliott wasn’t going to let Switkowski forget it: “It is chaos. Switkowski, a nuclear physicist, is a believer in chaos theory: simply put, it means expect the unexpected when managing chaos… Despite the lather of excitement in the stock market in the days ahead of the profit announcement, Telstra stuck to its guns…The board bit the bullet and announced swinging job cuts with no “Internet strategy” safety valve. Was the board stupid or was it just backing itself? Less than 24 hours later and in the midst of the horror headlines on the front pages, it sent Switkowski into a vipers’ nest. He had to confront politicians of all hues in Canberra to defend the cuts. There are two possible views on that: either the board wanted to punish Switkowski or they have every confidence in him to sell the message.”
Now we at Crikey Media do not believe for one minute some of the conspiracy theories we heard on Wednesday that Telstra’s political ineptitude in announcing the “bad news” was a deliberate ploy to get the government monkey off its back. If anything, the cause of Telstra’s full privatisation has been irreparably harmed by the plan to axe some 200 country call centres. But new chairman Bob Mansfield is politically astute and plays a good political Zag to the bad political Zig that we saw last week. Mansfield is a clean skin who will now have to work on the Nats, as well as the Democrats and Labor, to bring about the inevitable sell-down. With $50 billion swinging of the deal, you can bet that Howard’s call to Zig on Wednesday was one that would have done Keating proud.
The shock horror jobs loss stuff was BIG on Thursday in the front of the book but the finance journos and commentors were not all that agitated about being duchessed by the Zig and Zag show on the business pages. Christine Lacy from the Fin and Kevin Morrison from the SMH spent some time trying to justify why their predictions of the profit figure were so far out. Lacy was categorically convinced the six month profit figure would be “about $1.93 billion” and Morrison plumbed for “about $1.9 billion,” which was what the analysts were telling them. The margin for error in big calls like Telstra tend to leave you with lots of egg on your face. In Christine’s place it was $170 million worth of egg and in Kevin’s, $200 million. Westfield and a few other wiser heads cleverly went for the round figure of “about $2 billion” which tends to cover a multitude of errors or judgment.
Terry McCrann in the Hun and Tele noted that: “Journalists seem to come from everywhere, to what is otherwise a pretty specialised profit release and press conference,” but that is the nature of the Telstra beast – a blue chip information technology company that is Australia’s largest but one that grew out of the Post Master General’s Department that used to deliver the mail. Telstra (and Australia Post) will always have a political dimension whether the Government owns them or not. Paddy McGuinness once described Telstra as “communism without the tanks”. Unfortunately, none of the journos asked the two magic questions of the day of Zig and Zag: “Did you get a phone call today from the Prime Minister and what did he say?” or “Did the Telstra board knock back the Telstra.com float today and tell you to go away and do more work on it?”
It was an appallingly short question time given the enormity of the subject matter and the number of professional question askers in the audience but Zig and Zag were starting to repeat themselves when Michael Grealy pulled the pin after just 13 questions.
John Durie, the chook from the Fin asked two as did Geoff Elliott from the Oz and Terry Brown from the Hun. A grumpy Durie demanded to know why Zig was flying kites about buying free-to-air networks and Internet floats? Elliott, who had launched most of the kites, wanted to know if Big Kerry had asked too much and the future of the Senator Haradine’s memorial Tasmanian call centre? Terry Brown from the Hun knew exactly what he wanted and just kept asking it again: “How many Victorian jobs will go?”
Other questions came from Charles Slade, the Channel 9 pretty boy who decided he was from PBL for the occasion, Ticky Fullerton, ABC Lateline’s new finance reporter, Veronica Brooks from Dow Jones news wires, Anne Davies, Jennifer Hewett and Kevin Morrison from the SMH. Christine Lacy from the Fin won Michael Grealy’s prize for actually asking a question about the results.