AT&T and Novartis doing damage control in light of Michael Cohen deals

AT&T and Novartis want to put the toothpaste back into the proverbial

The companies made financial arrangements, through Donald Trump’s longtime
fixer Michael Cohen, to curry favor with the newly installed Trump
administration, one devoid of traditional D.C. lobbying ties.

Now, with Cohen under investigation by special prosecutor Robert Mueller,
the companies are backtracking, removing executives who brokered the deals
and apologizing to employees and customers.

Along the way, they’re delivering positive and negative examples of crisis

A party line

AT&T’s current CEO wrote a note to employees admitting that the deal
with Cohen was a mistake—an internal memo that quickly found its way into
public circulation.

The New York Times wrote

“Our company has been in the headlines for all the wrong reasons these last
few days and our reputation has been damaged,” Mr. Stephenson wrote in a
memo to employees. “There is no other way to say it — AT&T hiring
Michael Cohen as a political consultant was a big mistake.”

Mr. Stephenson’s note followed the revelation that the company had paid Mr.
Cohen $600,000 to advise on the $85.4 billion merger with Time Warner and
other regulatory matters. Mr. Stephenson also said in the memo that the
company’s head of lobbying and external affairs, Bob Quinn, 57, would be

AT&T wanted to develop a relationship with Trump so it could proceed
with its planned $85 billion purchase of Time Warner, a deal opposed by the
Trump administration.

Bloomberg wrote

While it now acknowledges it was a mistake to hire Cohen, AT&T probably
didn’t want to leave any stone unturned as it tried to read the signals
from the new president who had repeatedly attacked Time Warner’s CNN and
said his administration wouldn’t approve the deal.

Stephenson has staked the company’s future on the Time Warner acquisition.
He argues that AT&T needs Time Warner’s media assets, including HBO and
Turner Broadcasting, to help it compete in the age of Netflix and
Amazon—especially as viewers drop costly pay-TV packages for cheaper

AT&T’s statement was released on Twitter:

Some aren’t ready to forgive the telecom company:

A bitter pill

Meanwhile, Novartis employees are angry over the drug giant’s financial
entanglements with Cohen.

[FREE DOWNLOAD: 13 tips for preparing for a crisis]

STAT reported

“Yesterday was not a good day for Novartis,” wrote [CEO] Vasant Narasimhan,
a physician and former McKinsey consultant, who joined the drug maker more
than a decade ago and oversaw global drug development before being promoted
to chief executive this past February.

“Many of you have seen media reports regarding the Novartis relationship
with Essential Consultants in the U.S. and many of you will feel
disappointed and frustrated,” according to the email, which was shared with
STAT by a Novartis employee.

Novartis tried to strike a personal tone in its response to the scandal,
with Narasimhan sharing his own frustration over the agreement.

“We made a mistake entering into this engagement and as a consequence are
being criticized by a world that expects more from us,” he continued.
“Personally, for my family it was also a difficult day as unfounded stories
spread through the U.S. news… I went to sleep frustrated and tired.”

The note is the most forceful response by the company, one of the world’s
largest drug makers, to the overwhelmingly bad publicity about the one-year


that Novartis signed early last year with Michael Cohen and his firm,
Essential Consultants.

Novartis has laid blame on former employees.

The New York Times

Novartis said its former chief executive, Joe Jimenez, hired Essential
Consultants. Like Mr. Stephenson, Norvartis’ current chief executive,
Vasant Narasimhan, also distanced himself from Mr. Cohen, saying this week
that he had no role in the decision to hire Mr. Cohen.

Novartis said it discovered soon after signing the contract that Mr. Cohen
could not provide the services he had promised and allowed the contract to

The company may have some difficulty convincing readers that its financial
ties to Cohen were unfruitful, however; the Trump administration has agreed
not to lower Medicare drug prices, a major concession favoring the Swiss
drug company.

Some have credited Novartis for its candor.

Part of the problem is the sum Novartis spent.

Axios wrote:

STAT reports
that there “weren’t any contracts under which an individual company paid a
single lobbying firm [as much as] $1.2 million in 2017,”
the amount
the Swiss drug maker paid Michael Cohen.

The big picture:
Cohen was expected to help the company navigate through political
challenges as a consultant but was paid more than any lobbyist in D.C.

The takeaways

Here are four lessons for crisis communicators from these apologies:

Don’t forget your own people.

Employee anger, in part, is perpetuating the Novartis crisis.

STAT wrote:

According to one senior employee, speaking on the condition of anonymity,
many who work there “feel disgusted.” This person added: “People are angry
and confused, because it makes all of us look bad.”

When addressing a crisis, don’t overlook a vital contingent of
stakeholders: your employees. They can be important assets in spreading
your message; they also could work against you, if they feel abandoned or

Use internal memos to promote authenticity.

By allowing reporters to cover what the CEO is saying to company insiders,
Novartis and AT&T are preventing reporters from wondering whether they
are being told one story while other stakeholders get another. In today’s
fast-paced online atmosphere, internal statements will find their way to
media outlets anyway. Plan accordingly, and make sure your internal memo
uses honest, direct and jargon-free language.

Admit when you’re wrong.

The Castle Group co-founder and CEO Sandy Lish says: “This is a classic example of
how companies can be swept into larger issues.

“By acknowledging that engaging Michael Cohen was a mistake—and directly
addressing that this news made both of their companies look bad—the CEOs
took an important step toward quelling external and internal outcry. They
must continue to reassure stakeholders, and their own employees, about
their ethics and values as they move forward.”

Don’t make it personal.

If your company has made a mistake, Lish says, executives’ emotions can
send the wrong signal to employees and external stakeholders. (Remember
BP’s chief executive, Tony Hayward?)

She says:

One thing that struck a wrong chord from the Novartis CEO’s employee
letter: “Personally, for my family it was also a difficult day as unfounded
stories spread through the U.S. news… I went to sleep frustrated and
tired.” This is irrelevant in a communication designed for employees—it’s
not about how this affects him personally. It can be hard to control
emotion when crises are raging, but I would have removed that.

What do you think of the companies’ apologies, PR Daily readers?

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