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Squirming in spotlight, media co's flummoxed by press

After Paramount bought DreamWorks, NBC Universal was unable to explain why it could never close the deal.

Walt Disney Co. CEO Bob Iger nailed down an agreement to buy Pixar, but the cover of Business Week carried the headline “Steve Jobs’ Magic Kingdom.”

Sony’s PR machine was ready to promote the boost in its hardware business at the CES show in Vegas, but problems in the movie and music divisions seem to get all the attention.

The bottom line: Spinmeisters at the major media companies can’t seem to get out of their own way these days.

Under the microscope of the press and shareholders, traditional media is facing the need for ever-more sophisticated methods of PR.

Corporate spokesmen often are forced to fend off an ever-expanding number of press outlets. With online media increasingly covering the media, the demands to respond to charges and counter-charges have never been greater.

“The news cycle is a nanosecond,” says Warner Bros. Entertainment exec VP of communications Susan Fleishman. “That can be difficult.”

But as the media’s demands get louder and faster, corporate culture grows ever slower and more insular. Some congloms can get defensive, retreating with a “no comment” that allows even negative rumors — sometimes from misperceptions, but sometimes deliberately planted by competitors — to flourish.

“No matter how many outlets are out there, one of the basic principles of P.R. still applies: If you don’t tell your story, someone else will,” says Chris Ender, CBS’ senior VP for communications.

The relationship between P.R. and the media is a microcosm of larger issues for corporate America. Shareholders are demanding details on corporate perks and exit packages; they’re looking for “transparency” (the new buzzword in corporate relations), but the executives are becoming more opaque.

Some PR reps are paranoid about the changing landscape. But some argue that, rather than feel besieged, they should take this as an opportunity.

CBS exec VP Gil Schwartz, a corporate PR vet, points out: “Certainly there is a lot more ferment and people crawling all over the subject (of media), but in our business, which is communication, that is a boon. If you have got a great company with a great story, you have more places to tell it.”

Though journalists and shareholders alike can feel stonewalled, it’s easy to have sympathy for the P.R. execs. Aside from rumors (true or false), they have to deal with newspapers, magazines and online outlets that often offer irreverence, and even snark. There’s a premium on “gotcha” journalism. In the minds of some PR reps, how can they get a fair shake?

Another challenge: Execs fear saying something that might violate federal regulations. Securities & Exchange Commission rules limit executives from making “forward-looking statements,” which some PR pros have taken to mean such things as predictions of box office performance. In the past, tubthumping your product was considered showmanship. Now it’s considered risky.

“The general dilemma studios face is that they have a lot of different interests, all of which need to be considered before they decide to enter a debate,” says Allan Mayer, head of the entertainment division at the crisis management PR firm Sitrick & Co. “Whether it is the crisis at the box office or the nature of marketing or the structure of compensation, they’re often restricted from speaking openly and candidly as they’d like to do, for the sake of preserving relationships.”

While their nervousness is understandable, some flacks are partly to blame. One vet says spokesmen are much more risk-averse in speaking to journalists. Instead of “choosing the easy way out” and remaining silent, they should take the time to talk journalists through a story, even on background, to convey a company’s message.

For corporate flacks, the goal is control. They field queries, dole out access and often listen in on interviews. They often request — or require as a condition of an interview — that quotes be read back.

The problem is that by making such demands, they often get in their own way.

Sometimes only the most obvious or blandest quotes pass muster. In print, it can be hard to tell that, say, Howard Stringer is a hoot, Richard Parsons a charmer.

Like or not, this is the era of the cult of personality. You don’t only have to deliver the numbers. You may have to deliver yourself to make your company attractive and to get your message out.

Granted, a lose cannon like Ted Turner mouthing off in the press is every PR maven’s nightmare. But is there nothing in between?

“There’s less of a relationship between the press and executives,” says one former studio P.R. chief. “With more coverage, and more things being covered all over the place, people are less inclined to talk.A turning point in the relationship occurred in 2000, when AOL merged with Time Warner. Before that, Warner Bros. kept things close to the vest — and dictated its own image.

“Traditionally there was a silo mentality, with the film side running independently,” one film exec says. “Now we are all under the same market pressure and we need to develop a really cohesive corporate identity.”

The AOL Time Warner merger helped usher in a new breed of entertainment and media conglom that made it impossible for the insulated Hollywood studios to simply “let the work speak for itself” when it came to the press.

According to one exec, “Now, shareholders were saying, ‘Screw you. I had shares of Time Warner and now they are worthless.’ All over Hollywood, these companies were becoming highly leveraged, and there was a new level of accountability.

“That was a seminal moment in corporate communications for all of us. It wasn’t just about us telling our good stories anymore. We didn’t get to decide what we wanted to talk about.”

WB once was known for keeping its inner workings close to the vest, and it was verboten to comment on such things as budget figures for movies.

Now it must contend with hundreds of news outlets and bloggers who are increasingly focusing their attention on the “inside baseball” mechanics of the business. (And rival reporters pay attention to them.)

Last fall, when the word was spreading that “Superman Returns” would cost $250 million, and therefore be the most expensive movie ever made, studio officials were pressured to clarify the figure, and at least on background said the movie would cost around $185 million, taking into account Australian tax breaks and other incentives.

The perception that the studio was making an out-of-control production could not come at a worse time for Time Warner, as Carl Icahn wages a battle to split up the company and is on the offensive against wasteful spending.

Corporate spokesman Ed Adler has been forced to defend, on the record, the use of such things as corporate jets. And lately, chairman Parsons has been more visible, promoting the company’s side of things.

“Our story is how our businesses work better together” than split, Adler says. “We’ve been telling our story as people throw charges at the company.”

Aside from dealing with their critics, P.R. chiefs have to contend with rumors. Paramount finds itself in a quest to defuse speculation that Gail Berman is on the way out and Stacey Snider on the way in.

No studio is immune. When, at the 11th hour, Paramount snatched up DreamWorks, it left NBC Universal execs with egg on their face. A deal that had been within their grasp for months had slipped through their fingertips.

Making matters worse, DreamWorks execs were talking.

“Dealing with GE is unpleasant and difficult under any circumstances,” David Geffen told the Los Angeles Times. NBC Universal had no comment.

Coverage of the deal left the perception that the GE unit was undermined by a lumbering corporate monolith without a press strategy. No one from NBC Universal was making the case on the record that the price wasn’t right or that Paramount may be overpaying.

A person familiar with the deal says the silence was intentional. U execs may have been crying in their teacups for losing DreamWorks, but GE brass wasn’t all that concerned about “the sort of hothouse atmosphere that causes the gossip and positioning,” says a person familiar with GE’s thinking.

“GE does deals of this size and more all the time” and doesn’t generally comment unless, and until, they are done, the person said.

“And anyway, we might want to be in business with DreamWorks,” the person said. “There was no strategic benefit to responding.”

It’s much easier for PR reps to tell their story when they are well ahead of it. Believe it or not, it’s still possible to keep a secret in an environment of scrutiny — and be rewarded for it.

Apple and Pixar are notoriously mum on their upcoming products and projects, yet they enjoy tremendous good press.

Disney, meanwhile, is working to overcome the beating it took from the media during the contentious final months of Michael Eisner’s tenure, when PR chief Zenia Mucha brought a new level of bullying and antagonism to the company’s communications strategy. Mucha was even exposed in court for lying to the Los Angeles Times about a dinner party Michael Ovitz had thrown for Tim Allen — a low point for Hollywood-media relations.

Until the official announcement last month, CBS and Warner Bros. managed to keep secret their plans to discontinue their respective weblets in favor of a new network called the CW. What helped is that the four executives involved in the deal all knew each other. There were no leaks. Even corporate P.R. types didn’t know about the merger until a week before the announcement.

The result of all this secrecy? While once CBS was the symbol of stodgy old media, it reinforced the notion that the network is a content company on the move, with a tightly coordinated press strategy.

In an effort to better focus external communications, some Hollywood companies are turning to outside experts. Sony, with a bevy of corporate spokesmen, has hired P.R firm Freud Communications to try to beef up the image of the entertainment division.

Whether more cooks in the kitchen can better simmer the stew remains to be seen.

Gabriel Snyder, Pamela McClintock, Chris Gardner and Nicole LaPorte contributed to this story.

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