CASE HISTORY AND SAMPLE CLIPS
Reputation Management: Helping SONICblue Manage
Consumer and Investor Perception During a Nasty Lawsuit
OVERVIEW: For the previous year, consumer electronics products company SONICblue had offloaded unprofitable divisions, endured rounds of layoffs and taken write-downs for several acquisitions. The stock price had plunged to an all-time low of $.76 and the company’s viability was in question. Investors were starting to sell off their holdings. On the plus side, a major new product was about to be launched, an event heralded by management as the “turnaround point.”
Then came the big blow. SONICblue was hit with a lawsuit by all the major television networks and most of the large studios: ABC, NBC, SONY/Columbia Pictures, AOL-Time Warner, Disney and Paramount, charging that the new product line violated copyrights. If the Court was successfully lobbied, the lawsuit could stop sale of the company’s new ReplayTV 4000, the flagship product on which SONICblue had been positioning its recovery, and reflect negatively on the company for violating the law.
With an imperiled stock, uncertain future and investors on the phone asking for our response, not to mention press who wanted our reaction to the challenges of the lawsuit, SONICblue and The Bohle Company needed to move fast. We needed to manage and mitigate the potentially disastrous impact the lawsuit could have on the company.
PR OBJECTIVES:
o Help SONICblue convince the world that its product did NOT violate existing law
o Stave off an injunction against the ReplayTV 4000
o Convince investors that the company and its potential for revenue still remained strong
o Drive retail sales of the product, keeping the company afloat
PR STRATEGIES:
o Stimulate doubt about the viability of the suit by saturating the media with information on past court decisions supporting consumers’ fair use rights
o Promote the claims as an attempt by the “Goliath” networks to keep an exciting product away from the consumer
o Seek out consumer advocacy groups and other third-parties who have in the past supported digital rights for consumers to start an outcry against Hollywood’s move to control the living room
TARGET AUDIENCES:
• Wall Street investment community
• Consumers
• Early adopters of technology
• CE retailers
• Court judges
• Legislators being lobbied by the opposition
• Other potential strategic partners
IMPLEMENTATION: Our first step was to gather information to help the lawyers convince the judges we were being wrongly sued. Secondly to convince our target audiences that SONICblue could win the lawsuit and survive. Our research included:
o Past court decisions and legislation supporting SONICblue’s claims that the contested functionality of the product was protected under consumer “fair use” rights
o Coverage of previous consumer rights lawsuits, to determine plaintiff and defendant strategy
o Trade and consumer advocacy groups whose spokespeople we could use for speeches, press references and letters to congressmen, as well as to issue press releases
o Third-party supporters/industry influencers who would comment to reporters
By vigorously and publicly fighting the claims of the suit and driving discussion of consumers’ digital rights, we felt we could rally consumers around the features of the product, putting pressure on the networks to back off and getting the court to allow SONICblue to ship its product on schedule. Our hope was that national visibility in the form of public outcry would clear the company of wrong-doing and stimulate consumer sales so strongly that investors would sustain and even heighten their interest in the company, positively influencing stock price by first quarter, when SONICblue needed to execute an ADR on an earlier outside investment. This was viewed by the CEO as critical because the company would need the cash to remain viable and fund new product development.
Planning: We held several meetings with SONICblue’s lawyers, who agreed to let us follow our aggressive strategy. SONICblue’s internal VP, IR/PR would handle street contact, delivering any good news we could drum up, week by week, while we rallied business and financial editors to report on SONICblue’s response to the claims of the suit. It was important to move fast, because an injunction against SONICblue’s flagship product would have the potential of putting the company out of business.
Key Messages: We got everyone to deliver the key message, use the same talking points and sound bites.
Releases/One-on-One Pitches: We did at least one release and/or new one-on-one pitch each week for writers at the major business/financial publications as well as the enthusiast press.
Consumer Advocacy Outreach: We arranged face-to-face meetings with all the key CE and privacy advocacy groups, including the Consumer Electronics Association, Consumers’ Union, Electronic Frontier Foundation and DiMA, all of which supported us with releases, lobbying and filings.
TV Interviews: We went after CNBC, CNN, CNNfn and Fox News to arrange interviews for SONICblue’s CEO to rebut the claims of the lawsuit. We targeted network affiliates of ABC, NBC, CBS and Fox for product segments on the ReplayTV.
BUDGET: $60,000, plus out-of-pocket expenses, to fight the world!
RESULTS: Over a 12-week period, all the major national business/financial publications did multiple stories, all containing SONICblue’s key messages on the issue. In the next six months, we generated a total of nine Wall Street Journal articles, all containing positive SONICblue messages. The CEO appeared on all the top financial news channels (CNBC, CNN, CNNfn and Fox). Product coverage supported our effort, with over 60 TV news segments running on stations around the world. BusinessWeek and Fortune named the ReplayTV 4000 “Product of the Year.”
Additionally, all of our objectives were achieved:
o Editorials in The Wall Street Journal, BusinessWeek, C/net, USA Today and the San Jose Mercury News supported SONICblue on the issue of consumers’ digital rights
o Faced with these editorials, a barrage of supporting product and news stories and lawyer threats, the plaintiffs ultimately did not file for an injunction, allowing the company to go forward selling the product
o Due in part to better than expected sales of ReplayTV 4000, Q4 revenues blew out street expectations and investor guidance
o SONICblue’s stock price soared from $.76 at the start of our program to $5.12 five months later
o One year later, the company continues to sell ReplayTV 4000 and is approaching profitability
