Mega Mergers Mean Leaner Packaging For PR, Too


The $11 billion merger between Kmart and Sears presents enormous PR challenges, ranging from combining two corporate cultures steeped in tradition to melding the (new) company's approach to media relations. This is not an easy thing to do when you are creating the third-largest retailer worldwide in an apparent bid to eat some of Wal-Mart's lunch. While neither Kmart nor Sears officials would comment on the PR strategy that will eventually take shape, observers say one thing is certain: an internal shakeup between the two communications teams. In similar circumstances, "some of the companies we have worked for, they blew out one group of PR people immediately. The entire PR department of one company was gone," says David Margulies, president of the Margulies Communications Group in Dallas. Whether the PR teams stay or go in this case may be irrelevant, given the diminished status of those departments in recent years, says Ron Culp, who until two years ago headed up PR at Sears. "In 1992, there were more than 100 people in the department, and today there are about 35," says Culp, who now is managing director of Citigate Sard Verbinnen (Chicago). He speculates that Kmart has been through a similar transition. But is that a good idea, PR-wise, when two companies decide to join forces, particularly in a deal with so many moving parts? While such cutbacks--both past and future --may reduce overall costs in the short term, Margulies says Sears and Kmart likely will better serve themselves in the longterm by keeping intact at least some of the PR executives from each entity. "In this case, the internal communications are going to be vital, and I don't think you can afford to lose that in either company" by dismembering the existing PR teams, he says. "But in the external communications, there is more of an imperative to have one voice and one company." The one voice likely will be directed by--if not outright managed--by the Kmart side of the house. That's the view of most observers, who see Kmart Chairman Edward S. Lampert as the driving force behind the deal and the face of the new organization that will eventually emerge. Lampert's presumed ascendancy could put a particularly idiosyncratic spin on the PR strategy. In January 2003 his public profile attracted the attention of kidnappers with an interest in his estimated $800 million personal piggy bank. He got through the kidnapping unharmed, but PR watchers say Kmart's subsequent habit of playing its cards close to the vest may have something to do with Lampert's personal experiences. Getting a handle on Lampert's celebrity, however, is just one PR aspect of a deal that will require, at heart, serious cooperation from both sides. "You have to make sure the two PR groups are interfacing with each other, that they are saying more or less the same thing," says Steve Cody, a crisis management expert and co-founder of Peppercom in New York City. Cody stresses that PR professionals from both retailers will need to compare notes before they can even begin to craft messaging. In a transaction of this scale, "inevitably some key constituent audience group is overlooked. It never fails," he says. "So the first and most import thing in a situation like this is to create a constituent matrix. List all your key constituents for both companies and make sure they are being communicated to appropriately." The foremost message to be issued, both internally and externally, should be one of continuity. "The message you want to send is that it is business as usual while these two operating systems are being made into one," Cody adds. The most delicate period for PR is between the time a deal is announced and when it closes. "Until then there is just a lot of what-if planning going on," Culp says, and the premature release of information can muddy the waters irreparably. "The minute you say you are going to cut five people, it becomes a news story, and yet so much of [the plan] can change as the deal gets closer to closing. So it becomes especially important that all communications and messages be clear and well-vetted before they get out." Paul Battaglia, senior vice president and director of the PR group at Chicago marketing firm Slack Barshinger, adds that in order to stay in the clear, "you can begin to talk about your plans, but only as you begin to roll out those plans. You don't want to paint yourself into a corner with promises you can't fulfill." To strike the balance, you under-promise and over-deliver, says Margulies. In practice, "this means that as we accomplish things, let's talk about them. Let's give specific examples of things we do well. Beyond that, let's just shut up," he says. Keep it tangible. "Give simple examples that show the bigger picture," Margulies says. But keep it quiet. "The media respects somebody who says: I just got here and this is a big job. We'll make sure you don't get beat by another publication, but we will release the information on our own timetable," he adds. PR execs also have to be careful not to overstep, over-promise, talk too much or too early. "There are so many independent sources of information on these two companies," Margulies says. "There will be Web sites, blogs and leaks telling the press every conceivable problem this deal has. So you had better be able to swear on a stack of Bibles that what you say is the truth." Contacts: Paul Battaglia, 312.970.5871, Paul.Battaglia@slackbarshinger.com; Steve Cody, 212.931.6114, scody@peppercom.com; Ron Culp, 312.895.4730, Rculp@sarbverb.com; David Margulies, 214.368.0909, davidm@prexperts.net

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