Dynegy's corporate communications staff proves the cosmic warning, "Be careful what you ask for. You just might get it.They wanted brand recognition, and got it, but not the way they hoped. Sucked into Enron's vortex, Dynegy emerged amazingly unscathed, thanks in part to quick-thinking PR.
Until November, "Dynegy
tripped off of very few tongues. The company had launched its first-ever brand awareness campaign just a year earlier.
Then Dynegy tried to buy the failing Enron, and suddenly everyone knew its name.
"Had the merger succeeded, we would have been a gigantic company," laments chief communications officer Deborah Fiorito.
Deregulation of natural gas pipelines in the mid-1980s created supply chain gaps both Dynegy and Enron were founded to fill. CEOs Chuck Watson and Kenneth Lay and their staffs were well acquainted. In fact, M.A. Shute, the former Hill & Knowlton GM who helped prepare Sharon Lay for her interview on NBC's Today, led Dynegy's first PR operation. But it was a David-and-Goliath rivalry from the beginning. Enron resulted from the merger of two largish companies, while Dynegy - originally called US Natural Gas Clearinghouse (NGC) - was a modest marketing partnership for six pipelines.
NGC bought natural gas, stored it until customers needed it, and delivered it where they wanted it. Electrical power came later, but unlike Enron, Dynegy focused on owning generation assets instead of merely buying and selling electricity. In 2000, it merged with Illinova, parent of Illinois Power, more than doubling its staff.
Approximately 80% of Dynegy's revenues come from the generation and sale of "energy commodities.
Trading is an added service that helps customers hedge against volatile prices, Fiorito explains. Most recently, Enron and Dynegy mounted shaky and ailing attempts to trade bandwidth as a commodity through fiberoptic broadband networks. At least Dynegy's investment of less than $1 billion was relatively small, notes Goldman Sachs analyst David Fleischer.
Dynegy starts comms push
The company waited three years after going public in 1995 to form a corporate communications department, which worked with the Enterprise IG branding firm in New York to come up with a new moniker - Dynegy, short for "dynamic energy."
In an interview late last year with Forbes journalist Neil Weinberg, Watson bragged about having a small PR staff. Weinberg interpreted the statement as an attempt to contrast Dynegy's substance with Enron's hype.
IR needs spurred the company's first communications efforts. With the growth of individually managed 401 (k)s, even b-to-b companies like Dynegy needed to pay attention to public image, Fiorito says.
Fiorito reports directly to Watson and oversees advertising and branding as well as traditional PR functions. Her 23-person staff works closely with IR and government affairs, which report to different divisions. She recently hired a regulatory and legislative communications manager to publicly advance positions advocated before regulators and lawmakers.
Dynegy employs no agency of record, but works on projects with Spaeth Communications and Elmore PR. "It's important that an agency doesn't come in and tell us what to do, but to partner with us,
Fiorito says, praising her agencies' teamwork. Sitrick & Co. in LA was hired last year to help monitor California's energy problems. Recognizing the highly emotional and political nature of the West Coast debate, Dynegy stayed out of the hornet's nest as much as possible by communicating with politicians and opinion leaders one-on-one instead of engaging in defensive public dialogue.
Dynegy aimed its 2000 branding campaign at building awareness, not detailing its business. "A lot of our peers have tried to explain what they did before they created an image of what their companies were," says Fiorito.
"Screaming people ads,
as she calls them, compared the adventurous hobbies of energetic young Dynegy staffers to enthusiasm for their work. The theme was repeated in annual reports, staff and community relations materials, and other collateral.
The communications team often stretches advertising exposure with PR.
For example, when Dynegy sponsored a PGA Tour Championship in Houston last year, executives gave up choice pro-am slots to caddy for customers.
The PR team also announced expansion of Dynegy's commitment to a junior golf program before the gathered throng of sports writers, and they selected an inner-city kid to carry the scoreboard for Tiger Woods' foursome. In fact, Watson was secretly shuttling between the green and the negotiating table as the would-be Enron deal was being hatched.
Execs at ChevronTexaco, which owns about a quarter of Dynegy's stock, and others questioned the wisdom of buying Enron from the outset. To allay those doubts, the PR staff set up an aggressive media tour, taking execs to visit business reporters and editorial boards all over Manhattan. They played up the value of Enron's legacy commodities business and stressed that the company would have time to divest non-core units and improve financials during the year it would take for the merger to culminate.
The strategy seemed to work. Stock prices for both companies rose, at least temporarily, and Enron's trading partners returned to the table.
But then Enron filed a federally required report that painted an even grimmer financial picture. Dynegy backed out of the merger deal and had to regroup.
Escaping Enron's shadow
Dynegy execs set out on the year's second road show after Enron filed a lawsuit against its would-be savior. This time, they talked about what Dynegy did and didn't know about Enron's finances, and stressed their confidence in Dynegy's right to the disputed Northern Natural Gas pipeline.
Several journalists picked up on Dynegy's points, including its assertion that Enron's failure was its own and not the industry's.
Media relations was effective particularly in Dynegy's hometown. "Debbie took Chuck Watson right over to the Houston Chronicle, and the result was an editorial unlike anything I have ever seen,
says Merrie Spaeth whose company, Spaeth Communications, does media training, crisis counseling, and internal communications work for Dynegy. "Lay now wants to damage Dynegy, its employees, its stockholders, and, indirectly, the interests of every Houstonian,
the Chronicle proclaimed.
One Texas journalist observes that energy trading companies generally have been skittish since the Enron debacle and are tired of talking about it, but Dynegy's staff remains responsive. "You never got the sense of bullshit from (Chuck Watson) that you might have gotten from other quarters,
another says. From the IR perspective, Fleischer says Dynegy is the only company he follows that sends out blast voicemails from executives when pertinent issues arise.
With name recognition no longer a problem, Dynegy accelerated the second phase of its branding campaign.
Recent ads take a question-and-answer format with execs explaining what the company does.
Although Dynegy still struggles to rid itself of the parenthetical reference that often follows its name in print (the company that tried to buy Enron), Fiorito says media calls about its rival have greatly subsided. "Enron is in our rearview mirror,