Stopping a Hostile Takeover
Charting the future of public relations
Holmes Report
CEO

Stopping a Hostile Takeover

The city of Nashua, NH, the community Pennichuck has served faithfully for 152 years, is attempting to take the company’s assets by eminent domain.

Paul Holmes

Pennichuck Corporation, an investor-owned public water utility and New Hampshire’s oldest continuously operating business, is in a fight for its life. The city of Nashua, NH, the community Pennichuck has served faithfully for 152 years, is attempting to take the company’s assets by eminent domain. The issue began in 2002 when the company announced plans to merge with a larger, out-of-state water services company.

Nashua officials raised fear among city residents that the proposed merger would mean loss of local control to “foreign” investors, and convinced a small but vocal constituency to pass a referendum in January 2003 enabling city leaders to acquire Pennichuck.

After the voter “mandate” effectively scuttled the merger, city officials issued a series of public threats to take the company’s assets by eminent domain. Meanwhile, in March 2003, Pennichuck’s CEO resigned. Preoccupied with the search for a new CEO, the company did little to counter the city’s threats until the fall of 2003, when the company hired a new CEO to mount a strategic defense against the hostile takeover. In November 2003, the new CEO enlisted High Point Communications Group to plan and implement a crisis communications strategy that would reposition the issue among Nashua residents, and put city officials on the defensive.

The challenge facing High Point was to inform and educate average citizens about the very complicated issue of eminent domain and to influence public opinion for the duration of a crisis. High Point has implemented an integrated communications strategy that created enormous public exposure, attracting and sustaining public interest for nearly a year and causing people to take action.

The impact has been immediate, continues to build momentum, and, through constant pressure, has resulted in a major favorable shift in public opinion. This program relied on an effective crisis/issues management strategy that has clearly changed the potential outcome for Pennichuck.

Pennichuck’s main objectives included: educate the community about the financial implications of an eminent domain action by the city relative to the enormous costs in time and resources, potential tax increases, and legal and consulting fees—without certainty of the outcome; position the city as being imprudent, unreasonable and financially ill-prepared to acquire Pennichuck’s assets; educate water consumers on the importance of maintaining established management to oversee the city’s water supply, highlighting the long, successful history of Pennichuck in this regard; reposition Pennichuck within the Nashua community to restore and enhance its image so that the company is seen as a credible, viable and preferred entity to continue managing the city’s water supply; and position and reinforce the strength, experience and track record of the new CEO in leading and directing the growth of the company, and developing thought leadership for the CEO among New Hampshire business and political leaders.

The PR team’s main audience was: the residents, property owners, taxpayers, and water customers in Nashua and 15 regional towns served by Pennichuck, local, regional and state-wide media, Nashua business owners and local, regional and state opinion leaders, including Boards of Selectmen in regional towns.

The eminent domain process is very complicated and the public is largely unfamiliar with it. Furthermore, this is the first time in New Hampshire history that a municipality is using the law to take a utility company. The process is certain to require litigation, numerous hearings before state regulators, millions of dollars in legal and consultant fees, and could last several years.

The High Point plan for Pennichuck calls for an integrated set of communications that will deliver messages geared to the sophistication of each audience segment, and will build and sustain momentum in influencing public opinion for the duration of the crisis.

Through ongoing research surveys, High Point will determine when audiences begin to understand the issue and align their support with the company’s position, and then publicize the results. High Point will also engage the public in communications to demonstrate diminishing support for the city’s position, and keep the pressure on with timely and relevant communications. The chief messenger will be Pennichuck’s CEO, who will make it absolutely clear that the company is resolved to defend itself and shareholders against the city’s hostile takeover attempt.

During the first week of December 2003, High Point directed market research partner RKM Research and Communications to conduct a baseline image survey of 403 Nashua residents with 65 questions, a statistically reliable study with a margin of error of +/- 4.9 percent, which reveals data points that enable High Point to frame up the key messages.

Among the findings: a desire for local control of the water system underpins much of the support for the city’s effort to acquire Pennichuck; support for municipal ownership erodes precipitously if it would result in a water rate or tax rate increase; support for taking Pennichuck by eminent domain dries up when residents consider the prospect of a protracted legal challenge and hundreds of thousands of dollars in costs, with no certainty of the outcome and the benefits of an experienced management team and avoiding a lengthy legal challenge are powerful arguments against municipal ownership.

The key tactical components of the Pennichuck crisis management plan are to publish a series of Pennichuck 300-500-word public information messages to customers and shareholders in local and regional newspapers and build a “high-road” story that, over time, informs and educates the public about the complex issue of eminent domain, exploits Pennichuck’s strengths and heritage, and exposes the city’s weak financial position and the potential impact on taxpayers, ratepayers and city services.

The effort would also take advantage of the CEO’s media savvy and industry expertise to conduct a proactive media relations campaign that generates news and feature stories in local, regional, and national news and business media; develop and cultivate long-term strategic partnerships by arranging face-to-face meetings of the CEO with local and state-wide political and business leaders, and newspaper publishers and editors; engage Pennichuck employees as ambassadors in the cause by developing materials that equip and empower them to deliver messages to their families and friends in the community.

Fact sheets, company meetings and newsclips help to leverage their voices in the effort, make the Pennichuck Web site “visitor-friendly” and turn it into an effective communications channel by producing streaming video of the CEO delivering key messages, and by having the entire series of advertorials and news releases accessible online and produce a series of 8-12 TV ads for local and regional cable channels, focusing on the city’s misuse of taxpayer money.

Results of the second survey conducted only two weeks after the baseline survey showed dramatic shifts in public opinion: after publication of the first six advertorials, overall support for the city’s position dropped from 53 to 40 percent, with support lowest among voters who had read the advertorials or related news articles, among those who had read 3 or more articles or advertorials, only 26 percent support the city’s position, while 64 percent oppose the city’s effort to purchase Pennichuck.

By June, survey results showed that public opinion is in Pennichuck’s favor. Key findings include: nearly two-thirds of Nashua residents say they would vote against a measure authorizing the city to move forward to take over Pennichuck, nearly three-fourths of the residents say they are opposed to the city’s costly attempt to take Pennichuck, an overwhelming majority approves of Pennichuck’s water services to the city and by a 2-1 margin residents said they want Pennichuck to run their water system.

Within a month of implementing the plan, eight prominent news articles appeared in the Nashua Telegraph and Manchester Union Leader, and Forbes magazine (12/22/03) published a story under the headline “Sell Cheap or Die,” accusing the city of using “strong-arm tactics that would make Vito Corleone proud.”

Related news articles appeared on average once a week over the next eight months, prompting a constant flow of letters to the editors from residents questioning the financial wisdom of the city’s takeover threat. Other press highlights include: The Boston Globe and the Telegraph published long profiles of the new CEO. The state’s flagship television news station, WMUR-TV, broadcasts several news interviews and a business program with the CEO, the Telegraph published four editorials about the issue in two months, one of which starts: “You have to give . . . Pennichuck Corp. credit for an effective public-relations campaign in an effort to sway public opinion against acquisition of the water company . . .”

The number of daily visitors to the Pennichuck Web site multiplies by a factor of 10, from dozens to hundreds, High Point arranged for the new CEO to meet with the New Hampshire Governor, Senate President, Speaker of the House, the president of the NH Business and Industry Association (BIA), the publisher and editor of the Union Leader, the editorial board of the Telegraph and numerous CEOs, BIA newsletter published a lead article titled: “It’s Time for Nashua to Stop Abusing Eminent Domain Law” and local businesspeople and educators voluntarily appeared in four Pennichuck TV ads, expressing their opposition to the city’s actions.

View Style:

Load 3 More
comments powered by Disqus