CLIENT PROFILE: AT&T puts PR on hold, dials up new strategy - AT&T was a PR pioneer in the last century, but has the company lost sight of the ideals of Arthur Page? Sherri Deatherage Green gets on the horn with the evolving telecom and cable giant

The biggest advantage AT&T's PR staff has going for it is the company name - one of the biggest, oldest and most valuable brands in America.

The biggest advantage AT&T's PR staff has going for it is the company name - one of the biggest, oldest and most valuable brands in America.

The biggest advantage AT&T's PR staff has going for it is the company name - one of the biggest, oldest and most valuable brands in America.

The biggest disadvantage may also be that name. 'Big' and 'old' aren't necessarily positive adjectives in today's digital economy, while gargantuan revenues and force of habit keep business journalists' sites trained on Ma Bell.

AT&T blazed PR trails early in the last century. 'Public relations is not only about saying what you're doing, but it's about helping decide what to do,' says PR and employee communications EVP Dick Martin, sitting behind the desk PR legend Arthur Page once used. Today, however, some would argue that technology is calling the shots, while PR lags behind.

Anything too big fosters fear. To counter 'phone cop' paranoia during its monopoly decades, AT&T portrayed itself as fair, benign and friendly.

That image would not serve it well in the post-deregulation melee, when years of regulation-guaranteed profits and corporate heft left AT&T with baggage it couldn't move swiftly.

On New Year's Day 1984, AT&T lost nearly two thirds of its one million employees and three quarters of its assets when the Baby Bells spun off, leaving it to compete for long-distance customers. AT&T now employs fewer than 160,000 people. Before the Bell breakup, AT&T's PR minions numbered in the thousands, estimates corporate media relations director Burke Stinson. The PR staff, now 250 or so strong, shrank by about 30 percent in 1998 and 1999 alone.

Waiting for the phone to ring

In the 1980s the company ran its PR organization like an agency, but too many people gravitated toward administering work instead of doing it themselves. Secure employment under the monopoly framework tended to attract passive, civil service type employees, and Stinson says company leaders encouraged staff throughout AT&T to become more active. 'We did find ourselves with an awful lot of people who would wait for the telephone to ring before taking action,' Stinson recalls.

A 30-year veteran who plans to retire next spring, Stinson says the changing press, as much as deregulation and competition, influenced changes in AT&T's PR practices. PR pros brokered interviews with executives in the early '70s, but the increasing speed of news coverage gradually necessitated quotable spokespeople. Speeches evolved from sophisticated lectures to bullet points, and internal communication became less akin to cheerleading. Government relations shifted some focus from the Federal Communications Commission to Capitol Hill. Openness may be the biggest legacy of regulation, Stinson says. In the old days, FCC filings left AT&T an open book.

AT&T never has employed a PR agency of record. Under regulation, some officials questioned whether the phone company should use funds from rate payers to toot its own horn, John Brooks observed in his book Telephone: The First Hundred Years.

Burson-Marsteller, Edelman, Kekst & Co. and Alan Taylor Communications are currently handling 'very well-defined assignments,' Martin says. Stinson concedes money is a factor but also says using outside help breeds complacency.

'We are emphasizing more and more that AT&T PR people themselves must become more involved in writing copy, meeting the press and analyzing both the public and media mood,' he says.

In October 1997, Michael Armstrong became the first AT&T CEO not promoted up through the company's ranks. A former IBM and Hughes Electronics executive, Armstrong made bold moves. More than a dozen top leaders reportedly left the company after he took over. Under Armstrong, AT&T has acquired IBM Global Network, entered partnerships with British Telecom and bought two large cable companies (TCI and MediaOne) to deliver broadband data connections, cable TV and phone service to consumers.

Armstrong also promoted Martin, a 30-year AT&T employee, to the vacant PR chief slot within a month of taking over. Staff reductions affected the whole company, and Martin says the PR organization adapted by becoming less compartmentalized and making jobs more general.

For the first two years, company observers thought Armstrong could do no wrong, says Atlanta-based telecommunications analyst Jeff Kagan. 'The strategy is just as sound today as it was,' Kagan says. 'It's a long-term strategy in what is rapidly becoming a short-term world.'

But AT&T's stock has slumped significantly. The company lost some key business customers during the transition to Concert, a venture with British Telecom targeting multinational corporations. Long-distance revenue is declining but still subsidizes other ventures. Armstrong's cable strategy isn't paying off as quickly as some would like, and many Dallas customers in its Internet telephony test market have complained of glitches.

The company also took a media browbeating earlier this summer over rates.

The FCC in May announced that AT&T and other long-distance companies would eliminate a dollars 3 fee charged to basic customers. Mark Siegel, chief spokesman for AT&T's consumer services, says the company told regulators all along that a rate adjustment would be a part of the deal. 'I think in hindsight, that latter message probably didn't sink in as well as it should have,' Siegel now admits. Reporters took AT&T to task after realizing the 'adjustment' would increase rates. As a result, the company waited a few weeks before hiking peak-time rates and added cheaper weekend options, Siegel says.

A murky future

Speculation abounds about AT&T's next move. Observers posit several scenarios: the company might try to merge with British Telecom, sell off business segments, issue more tracking stock tied to specific business units or be bought out by former TCI chairman John Malone and other investors.

Amid the hubbub, AT&T keeps mum. Seth Schiesel, a New York Times telecom reporter who follows AT&T closely, thinks the company's policy of not commenting on speculation might be the most responsible approach. 'They are very responsive and sophisticated, in the way they deal with me at least,' Schiesel says.

Internally, the company updates employees through daily e-mail broadcasts and a monthly magazine. Armstrong used a recent 'Message from Mike' column to compare AT&T's current situation to being in the midst of a messy home remodeling project. 'Now is not the time to listen to the nay-sayers or to lose sight of our vision,' he wrote.

Besides the hiring of Martin, observers have noticed few other PR changes since Armstrong took the helm. Kagan thinks, to the company's detriment, communication may have taken a distant backseat to operational issues.

'They've got so much of a focus on the nuts and bolts of the network that they aren't focusing enough on messaging,' he argues. 'They're doing a great job on the reality part, they just aren't doing a good job on the perception part.'



AT&T

PR chief: Dick Martin, EVP of public relations and employee communications

Division leaders: Adele Ambrose, corporate PR; Bill Oliver, US regions and public policy; Michele Tringali, PR operations; Esther Silver-Parker, constituency relations and AT&T Foundation; Edgardo Lertora, Central & Latin American region; Steve Cross, consumer services; Jim Byrnes, business services; Jane O'Donaghue, wireless services; Rob Stoddard, broadband

PR staff: 250 worldwide, about 100 at NY corporate headquarters.



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