This week, CNN Money brought more light onto where AIG is spending some of their $150 billion of bailout money. In addition to their in-house PR department, four public relations groups are on AIG’s payroll. Kekst and Company works on the company’s asset sales, Sard Verbinnen helps the insurer present its earnings, and Hill & Knowlton and Burson-Marsteller lobby in Washington.
While the actual rates the PR groups receive from AIG are not public, it leaves many wondering if this is another unnecessary way of squandering taxpayers’ money.
In another article on PRSay, Mark Weiner (North America CEO of Prime Research) describes the use and effectiveness of public relations in controversies such as this:
“Take for example a Fortune 500 power utility that discovered that it would miss its quarterly earnings forecast. The company’s legal team urged the CEO to remain silent on the issue while the PR team recommended that the CEO get out in front of the issue by being proactive, accessible, and open. Within 24-hours, a content analysis of news coverage tracking six utilities—each of whom had missed earnings—indicated that those companies who avoided discussion of the earnings shortfall saw a steady decline of their news coverage and a similar decline in stock price and market capitalization.”
“In more than one case, the utility companies with poorly defined communication strategies and inaccessible CEOs lost as much as 50 percent of their entire market value in just a matter of weeks. Conversely, those companies whose CEOs were transparent in describing their company’s issues and their plans for remedying the situation saw a only a short-term decline in stock price before a net gain of 12 percent in 12 month’s time.”
I think its clear that the ailing company needs a PR consultant, but are four different teams necessary? While each group has a specific purpose, in the hopes of conserving some resources I would think that a company in such debt could consolidate a little more. What do you, as PR professionals and students think?