UTS Library

SP Telecommunications Acquires NBN Television

Client: 

SP Telemedia

PR Company: 

Westbrook Financial Communications

Award Category: 

Award Type: 

Call Number: 

2004 E 5

Year: 

2004

Executive Summary: 

On <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />7 April 2004, SP Telecommunications Limited announced it was to acquire NBN Television.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

This was an important announcement because of its wide reaching implications for Australias telecommunications and media markets.

In fact, it was the first example in Australia of what is called convergence, which is the utilisation of digital technology to enhance both businesses in television and telecommunications.

Convergence has been happening in overseas markets but this was the first time here.

So not only was this an important announcement that needed communications advice but underlying the announcement were a number of sensitivities that had to be managed.

Management of key messages for this transaction was to be critical for the events that would follow, namely seeking shareholder approvals from seller and buyer and seeking funds from shareholders and the capital markets to bring the transaction to fruition.

The sensitivities were not around conflicts of interest but to make sure the markets realised the transaction, involving closely connected parties, was operating at arms length and for us to be at the ready if any unusual events took place.

By June, the transaction was settled, with all approvals in place and funds raised, assisted along the way by our communications program.

The main elements of our communications program were to manage the messages and to achieve widespread media coverage for the initial announcement of the transaction, while riding shotgun around issue sensitivities to ensure communications aspects of the transaction went to plan.

Communications around all aspects of the transaction were transparent and provided full disclosure while presenting quite persuasively the merits of the transaction.

We managed several announcements during the transaction, with each achieving widespread media coverage and communication of key messages to the investment community and shareholders.

The ultimate evidence of the value of our communications program was a successfully concluded transaction, with a fully informed market and a higher share price resulting, coupled with a consideration of value lost if our communications advice was not used.

 

Situation Analysis: 

The initial conversation between a group director and financial adviser to the SPT/NBN transaction (Dave) and Ian Westbrook (Westy) of Westbrook Communications provides the situation analysis:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

DAVE  : Ive got a job for you Westy and its gonna need some good communications management, mate

WESTY : Thanks Dave, youve come to the right people

DAVE  : Well, were gonna put SPT and NBN together, mate, because we reckon one plus one will equal three but you can see the sensitivities.  Soul Patts owns all of NBN as well as 54.9 per cent of SPT so were gonna need approval from both lots of shareholders and we dont want any spoilers in the market.

WESTY  : Sure Dave

DAVE  :  We want everyone to see that its straightforward, mate, with both sides getting independent advisers, so that has to be emphasised.  We also want people to understand what convergence is all about

WESTY :  Sure Dave

DAVE  :  When we spun off SPT back in 2000 we wondered then about keeping the businesses separate but it seems we made the right decision since SPT has been so successful

WESTY  :  Thats true and you had good communications advisers then, too

DAVE  :   Mate, we want to get across the idea theyre both good businesses and that when theyre combined theyll be even better and in the right spot to really take advantage of all those advances in digital technology.  The businesses are close anyway but under the one umbrella we want people to understand were really giving them a chance to add more value.  SPT will be re-rated by the market and its size will attract more institutional investors.  Youll know how to say all that

WESTY :  Sure Dave

DAVE  : Now you know Denis is wearing a lot of hats, mate, since he represents both SPT and NBN, so as spokesperson he'll need to make clear the arms length nature of the transaction and that were putting together a bigger future

WESTY  :  Sure Dave, Denis will be good at that and well help with the key messages

DAVE  :  Well youve got the job, mate, so well be expecting it to be up to the usual top standard

WESTY  :  No problem there, Dave

The following table presents the situation analysis in the form of the challenges we faced:


CHALLENGE


OUR INPUT


Overall

An interesting transaction, with sensitivities, involving two companies which do not have a high corporate media profile or a tradition of regular finance media contact


  • Development of news angles
  • Creation of a transaction story
  • Isolating sensitivities and responses

  • SPT

A telecommunications business, covering wholesale and retail markets, but with business descriptions often involving technology jargon


Development of easily understood explanations of the business


NBN

A successful television business but a regional and so out of the mainstream of general familiarity


Development of explanations and selling points


Convergence

An unfamiliar topic requiring persuasive explanation and simplification of technology jargon


  •  Research the topic
  •  Provide simple explanations around potential

Arms length

A transaction involving closely connected companies which needed to be presented as properly and independently going about the process of merging


Clear presentation of the elements of independence and approvals required for finalisation


Multi-role spokesperson

Chief spokesperson involved in both businesses required to put dispassionate but persuasive perspective


  • Preparation of key messages
  • Involvement of two other support spokespersons to speak for the two halves of the transaction

Investor persuasion

The merits of the transaction had to be presented to communicate the idea that the merger of the two businesses would create a bigger future


Explanation of the business value created by the combination of the businesses compared with their separate operation


Preparation for the unknown

Consider market possibilities and responses


Scenario consideration

Research: 

Research we undertook to implement the program included:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

  • background material provided by SP Telecommunications covering:
    • the business and its technology
    • convergence and its benefits
    • Annual Reports of SPT and WH Soul Pattinson, providing background information on seller and buyer
    • meetings with relevant executives regarding aspects of the transaction and sensitivities
    • internet research on convergence
    • media and investment community databases to refine target markets
    • regional media markets for dissemination of news relevant to the business markets of SPT and NBN

Target Policies: 

Principal target markets were the media and investment community with them acting as influencers of shareholders<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Components of the media targets were:

  • telecommunications and media writers nationally
  • <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Sydney business/telecommunications writers able to attend a media briefing
  • Interstate business/telecommunications writers interested in a phone hook-up for the briefing
  • Newcastle Herald, local paper for both NBN and SPT
  • Regional media relevant to the business markets of NBN and SPT

Investment community targets included:

  • specialist industry analysts and company followers of SPT and WHSP
  • the wider investment community nationally, principally stockbrokers

 

Communication Strategy: 

Implementation: 

The strategy we adopted and implemented is explained below:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


ISSUES


STRATEGY


IMPLEMENTATION


Media focus and positioning


  • Focus on the acquirer  ie SPT (this reflects how business editors interpret these transactions)
  •  Aim for a media briefing on the announcement to maximise coverage and time efficiency, compared to one-on-one briefings
  • Arrange timing of media briefing as soon as possible before Easter break to avoid news disappearing into pre-Easter media deadlines
  • Focus on the big picture of value from the transaction, with details of pricing to come later
  • Achieve diplomacy with regional publications with personal attention as appropriate
  • Adopt three person spokesperson role for varying sensitivities, saving spokesperson for seller's owner for next round

  • Develop main news and information focus around SPT the acquirer, with seller of NBN, WHSP making a brief compliance announcement
  • Initiate invitations for media briefing, covering interstate media on phone hook-up
  • Arrange briefing on Wednesday before Easter to achieve desired coverage and let the news sink in over the Easter break
  • Development of a news outline covering main issues and key messages, with details of pricing and funding to come later
  • Arrange personal one-on-one phone hook-up with Newcastle Herald
  • Consider outlines for spokesperson roles



ISSUES


STRATEGY


IMPLEMENTATION


Transaction sensitivities


Devise list of various sensitivities to be considered, eg

  • value from acquisition
  • arm's length nature of transaction
  • multiple roles of primary spokesperson
  • varying stages of transaction to completion
  • avoidance of discussion of price until involvement of independent experts

Incorporate sensitivities into program management plan, covering each of them in initial announcement and media briefing

Assess media reporting to see whether a back-up plan to reinforce understanding of issues might be necessary


Management of the sensitivities in the following ways:

  • -         utilisation of the "one plus one equals three" mantra as a quote and grab in the media briefing
  • make clear the role of independent experts to reinforce arm's length
  • utilise the primary spokesperson as the conveyor of the big picture, with support from an SPT spokesperson and NBN spokesperson to cover business details of the individual companies
  • set out the stages of the transaction in a business-like way to emphasise clarity and the way forward
  • make clear that a price announcement was the next stage

Media analysis showed these sensitivities were managed well


Convergence, technology jargon


Distil descriptions into simple English descriptions in the body of the announcement rather than lengthy backgrounders which lend themselves to adoption of jargon

Incorporate company brochures in media kits for colour amplification


Extensive drafting and distillation of background material to key points in main announcement

Preparation of media kits, with night before distribution to interstate journalists joining hook-up



ISSUES


STRATEGY


IMPLEMENTATION


Media briefing management


Prepare Q&A around key issues to ensure preparation

Prepare grabs for media contact, over the phone and with electronic media

Arrange neutral briefing for announcement but with relevant connection


Distribution of and discussion of briefing package in advance of media briefing

Arrange briefing at offices of ABN Amro Morgans, stockbrokers which would be involved in capital raising for the project as a way of linking them to the transaction


Story evolution


 Sell the big idea to begin with so that this becomes what people are understanding, with the mechanics becoming details

Follow up later with details that explain how the big idea becomes practicality


Announce convergence and the acquisition as the big idea

Next announcement covers pricing, independent reports, capital raising and shareholder approvals


Crisis watch


Monitor media daily for relevant issues that might crop up that may cause concern for the smooth path of the transaction


Alert actioned around a government inquiry around a tender won by SPT in which the consultant to government was a shareholder in SPT

Crisis defused by company contact with government and the issue not being substantial


Finalisation, new name


Link finalisation of the transaction with the new name for the merged group


We highlighted the need for a new name in our initial communications strategy

As a result of the successful acquisition of NBN by SPT, SPT became SP Telemedia

While this information was available in documentation for shareholders, it was not highlighted until we announced finalisation of transaction

Results: 

Among measurable results were:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

  • widespread media coverage, especially in key target media
  •  extensive coverage in the homeland media around <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Newcastle and relevant regions
  • perpetuation of key messages in the media
  • successful implementation of the big picture first, details later strategy
  • successful media briefing by tripartite spokespersons
  • creation of positive market sentiment around the acquisition
  • flow on of this sentiment to achieve shareholder approvals and fully subscribed capital raisings
  • successful completion of the transaction and promulgation of the new name of SP Telemedia
  • a higher share price immediately after the initial announcement, followed by an improved market rating subsequently

Evaluation: 

The table below evaluates outcomes in relation to objectives<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


OBJECTIVE


OUTCOMES


EVALUATION


To present persuasively the business value of the transaction


Successful presentation at the media briefing

Perpetuation of this in media coverage

Reporting of the one plus one equals three idea


A positive external assessment of the transaction as a result of our presentation of the story simply and persuasively


To make clear the transaction was at arms length


Overt public recognition of the closeness of the two companies

Reporting of the appointment of two independent experts by both companies

·       Explanation of the processes to be pursued to seek shareholder approval and market support of the transaction

Reporting of the processes straightforwardly

Ultimate approval and successful finalisation of the transaction

Positive market reaction


Positive media reporting and market reaction were a result of being clear about the process in the initial briefing

It was assisted by the tripartite spokespersons roles

Q&A preparation was critical in this regard


To achieve media coverage as a positive influencer


Positive media coverage all round

Matched by positive market reaction

Shareholder approval influenced by this positive coverage

Fully subscribed capital raisings an outcome of positive sentiment


Straightforward and persuasive presentation of the story gained confidence of the media and the markets

Nothing was hidden and the story of convergence was well accepted from simple explanations



OBJECTIVE


OUTCOMES


EVALUATION


To explain the advantages of convergence


Media releases explained convergence simply and persuasively

This explanation was perpetuated


The topic was not well explained in material provided to us for research but we converted it into easily understood information, concepts and news


To arrange spokesperson roles within sensitivity of primary spokesperson being associated with acquirer and seller


Creation of tripartite spokesperson function

Pimary spokesperson carrying the big picture

Other two spokespersons supporting positions of acquirer and company being acquired


Process worked well with primary spokesperson outlining the bigger ideas with other two spokespersons supporting with anecdotes on individual businesses and how the big idea of convergene would work in practice


To be forewarned as well as forearmed


Two issues arose which we managed:

Pre-transaction coverage in The Newcastle Herald indicating an unlikely direction for the two businesses, resulting in us arranging special one-on-one contact for explaining the transaction personally to the paper

Early warning alert to a government inquiry into a tender won by SPT, with SPT handling this with personal diplomacy


Our media monitoring and interpretation of responses defused what might have been derailing events


To present the transaction as a natural outcome and direction for the two companies


News releases were drafted in a way which presented the news interestingly without overdoing the drama to ensure the transaction was perceived as a natural progression


Straightforwardness of presentation was reflected in media reporting and market interpretation

CONCLUSION

It is not always the case one can see a direct connection between communications management and a successful financial transaction since many factors impinge on a positive outcome.

However, pre-transaction concerns about how the transaction may be interpreted or interrupted by unforeseen events elevated communications to a high level of importance.

Consequently it can be reasonably claimed that management of the communications sensitivities was of the highest significance in achieving a successful business outcome.