Sunday, June 29, 2003

 

Company has stepped back from tight-lipped approach with media

By Muhammed El-Hasan
DAILY BREEZE

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For a company whose products end up steaming hot in a coffee mug, Farmer Bros. Co. brewed an icy relationship with the media. Indeed, relationship may be an overstatement.

If a reporter called the Torrance-based coffee roaster and distributor to ask questions, the typical reply from the person on the other end of the line would be a terse statement that the company doesn’t speak with the press. Click.

And so it’s been for years at the publicly traded firm. Until recently.

A barrage of criticism about Farmer Bros. management from dissident investors has led the company to reconsider dealing with the press. Accusations that the firm has been indifferent to shareholders and too secretive have ended up in numerous publications, nearly always without a company response.

“We wonder what company they’re talking about because it’s not a company we know,” Farmer Bros. Chief Financial Officer John E. Simmons said of the media coverage. “It would be nice to get a fair article in the paper for a change.”

But did the company executives’ dismissive attitude to the media hurt their cause?

“We’re not in the business to be fodder for the news media,” Simmons said. “We don’t sell newspapers. We sell coffee.”

Yet, Farmer Bros. has changed its attitude regarding the media. Earlier this year, the company contracted with the Los Angeles office of public relations firm Abernathy MacGregor Group. The company also began posting its financial statements on the news wire.

Farmer Bros. did something else out of character. It agreed to let a reporter from the Daily Breeze tour the business and conduct extensive interviews with company executives and employees.

An hourlong interview with Simmons in the company’s main conference room was mostly cordial, with a few awkward moments as Simmons declined to answer a reporter’s question about his age.

“What does my age have to do with anything?” Simmons responded.

When asked again, he refused although his age is a matter of public record readily available on financial Web sites.

The company also declined to provide mug shots of its top executives.

Other public companies, including El Segundo-based Big 5 Sporting Goods Corp., also eschew the press.

“We’ve been operating as a private company for so long, we’re used to a low profile,” said Robert Jaffe, Big 5 investor relations representative, during a March interview.

Big 5 went public in June of last year.

“They keep a low profile and that’s just part of the corporate culture and the character of the folks,” said John Danhakl, managing partner of Leonard Green & Partners, a Los Angeles investment firm that owns a stake in Big 5. He spoke to the Daily Breeze in March.

Managing public relations is often viewed as the responsibility of a public company’s senior management so “people become more aware of their products and understand the company enough to invest,” said Darin Clay, assistant professor of finance and business economics at USC’s Marshall School of Business. “And the stock goes up, and everyone’s happy.”

There are reasons a public company may not want to deal with reporters, said Sandy Green, assistant professor of management and organization at the Marshall School of Business.

“They don’t have an internal incentive. The press is a hassle,” Green said. “A large company like Cisco Systems wants to speak to the press because they want to have high liquidity.”

If high liquidity, or high share trading volume, isn’t a Farmer Bros. priority, that lowers the incentive to court the press, Green said.

Another possible reason is that a company may be doing something wrong and doesn’t want to be caught, Green said.

News articles on Farmer Bros. don’t help spur sales, Simmons said. The company sells coffee, tea and other items directly to institutional customers such as restaurants and hotels.

“Many companies deal with the media because it helps bring advertising,” Simmons said. “Our advertising is people knocking on a restaurant door, asking, ‘Will you buy our coffee?’ ”

Publish Date:June 29, 2003

© Copyright 2003 Copley Press, Inc.