Episode 180

WordSouth Acquired by Pioneer Utility Resources

July 22, 2020

Episode Summary

Following the news that Oregon-based Pioneer Utility Resources had acquired WordSouth, Pioneer CEO Mike Shepard and WordSouth founder Stephen V. Smith joined the podcast to discuss what this means for the two companies and the industries they serve.

Show Notes

Transcripts have been lightly edited for clarity and readability.

 

Andy Johns: What’s new at WordSouth? Who is Pioneer Utility Resources? And what do these exciting changes mean for the people we serve? That’s what we’ll be talking about on this episode of StoryConnect: The Podcast. I’m your host, Andy Johns with WordSouth. We’ve got a special edition podcast here with some big news to share. My guests are WordSouth’s CEO, Stephen Smith, who you probably know, and Mike Shepard, who is the CEO of Pioneer Utility Resources, who you may not know yet. So, Stephen, why don’t you go ahead and kick us off? What is so special about this special edition podcast?

Stephen Smith: Well, thank you, Andy. It is exciting to be on this new episode of StoryConnect: The Podcast to share some big news with our listeners. We recently announced that WordSouth has been acquired by Pioneer Utility Resources, and we’ll get into who those guys are in a moment. But let’s just say that this is a partnership that we really believe is going to bring some great services, some expanded services, and some wonderful opportunities to the clients that we all serve across this country.

Andy Johns: Excellent. Well, let’s get into it a little bit then. Mike, most of our listeners already know WordSouth. So would you go ahead and introduce Pioneer Utility Resources to our listeners?

Michael Shepard: Happy to, Andy. Thanks for having me on. I’m looking forward to getting to know the audience here. Pioneer is a 65-year-old communications cooperative. We’re based in Hillsboro, Oregon, which is about 30 minutes outside of downtown Portland. I mentioned we are a cooperative. We were formed by the region’s electric cooperatives to help with their communications and, at that time, lineman training needs. We’ve evolved into a pretty full-service communications cooperative for community-owned utilities, primarily electrics. Over the years, our kind of flagship product being magazines, but over time we now have a very significant presence in websites and social media and other areas.

Andy Johns: Excellent. Well, that all sounds pretty familiar, doing magazines, websites, and other communications work for utilities. So that’s definitely something that sounds familiar to our listeners. So we appreciate you; I know you’re busy, so we appreciate you taking the time to be on this episode. So I guess, Stephen, let’s go ahead, if we have any crossover listeners who are coming from Pioneer, do you mind going ahead and introducing WordSouth to them?

Stephen Smith: Absolutely, WordSouth is just a few months away from celebrating twenty-five years in the business. We have a long history of working with rural telecommunications companies, even before they were broadband companies, before broadband was a thing. Working with rural electric cooperatives and helping them to tell their stories to their members and customers through custom publications and, as you said, websites and various channels there. We help them market their services, and then we also help them train their people. And that’s really the root of the three legs of the mission of this company, which certainly has a lot of similarities to what Pioneer offers as well.

Andy Johns: Certainly, I think folks are already noticing a lot of similarities and two similarly aligned companies here. Mike, you told us a little bit about what you do at Pioneer, but why don’t you go ahead and tell us a little bit about what you consider the strengths of Pioneer as an organization.

Michael Shepard: Yeah. Great question. I guess I would tag on to what Stephen said there. The similarities are really obvious between the two organizations, but you know what? What we think we bring to the table that is very complementary in terms of this partnership with WordSouth is we’ve got a very strong sort of administrative backbone after sixty-five years. We’re really strong on the process side. We’re really strong with our magazines and the electric side. And we think we’ve got a very good sense of where things generally need to go digitally. And we’ve got a strong West Coast presence, though our footprint has been expanding pretty rapidly in the last couple of years. So there’s a lot of complementary things here, especially when you start looking at where WordSouth’s client base has been and WordSouth’s particular strength in broadband marketing and helping telcos accomplish their marketing and communications needs.

Andy Johns: Excellent. Stephen, you’ve gotten to know Pioneer pretty well over the course of this discussion. What have you seen that you like about them, or what are some of the things that you’re excited about that Pioneer brings to the table?

Stephen Smith: Well, I think, as Mike touched on there, the stability of a 65-year-old cooperative. Mike has made the comment before that, you know, they are a communications cooperative, and WordSouth is a communications company that acts like a cooperative. And that’s really the heart of what we do. We have a very similar mission. The mission of our clients becomes our mission. So we see ourselves not so much as serving that end client, as much as helping that client take care of the communities where they live and work every day. You know, they have a mission to serve those, and that’s our mission, too. And we work alongside them to accomplish that.

Stephen Smith: Certainly, there’s a great, as I said, a great amount of stability with Pioneer Utility Resources. Partnering with them gives us an opportunity to take some of the things that we bring to market and offer that to a wider area.

Stephen Smith: Pioneer Utility Resources has a tremendous client base, track record, and a record of outstanding service. And that’s the kind of partner that you’re looking for — shared values, shared mission. The cultures are very similar. In terms of what we bring, Mike touched on the rural broadband specialty in particular. We’ve always worked with electric cooperatives, but we are seeing increasingly that the nation — really I think the mindset now is where we were in the 40s and 50s, where we said that we need to make sure that everyone has access to a reliable source of electricity. And I think that’s where we are now when it comes to a reliable broadband network. I think the collective will is there as a nation to say, let’s fix this once and for all. And we bring a lot of experience in that area to the table.

Andy Johns: Excellent. I would say so. Well, Mike, let’s go ahead and talk a little bit about how the acquisition came about. And Stephen, you know, feel free to jump in. But, Mike, how did this all come to be?

Michael Shepard: Well, you know, I almost feel like I could take up the whole podcast answering that question. But in fact, I learned about WordSouth even before I came to Pioneer about four and a half years ago. And I had just heard about your organization. We’re fairly unique institutions in that our business model is around serving community-owned utilities and with communications, you know, I dare say that the two organizations may be the only two of our ilk really out there. So, you know, we had lots to work on during my initial time here, but I had thought about making a connection with Stephen and Michele long before I reached out one day and just said, “Hey, you know, we should get to know each other because we do similar things.” And I don’t necessarily feel like because of geography and because of the somewhat stronger telco strength that WordSouth has and the electric strength that we have, that we represented a whole lot of competition with each other. There were much more similarities that I think caused us to just want to be able to know each other. And then things sort of slowly, slowly went from there. And maybe that’s a good spot to turn it over to Stephen for his perspective and to sort of take it to the finish line on the courtship.

Stephen Smith: Yeah. For a while, we were having conversations — Mike and I — back and forth about just getting to know one another’s companies better. And of course, I had been familiar with, I guess you’d say, their flagship product Ruralite publication that a lot of electric cooperatives participate in. I’ve been familiar with that product for years in just looking out there at the different models of collaborative magazine work among utilities.

Stephen Smith: Of course, we have, like I said earlier, worked with electric cooperatives for years, primarily in Alabama, helping them with their local pages of the Alabama Living magazine. And then several years ago, probably eight years ago now, had launched a collaborative publication for rural telecommunications companies across several states. So I was certainly familiar with the Ruralite model and its legacy there at the company. But as Mike and I continued getting to know one another, over time it became evident there were some significant synergies that I saw the potential for, and I believe Mike did too. As we looked at our product offerings, as we looked at the geographic areas that we both serve with very little overlap, we really started diving into, “hey, what would this look like if we were working together to ultimately serve those end customers?”

Stephen Smith: And those discussions became very fruitful. And then to the point, probably about a year ago, I would say they kicked into a very serious vein where we started looking at what the mechanics of that kind of partnership would look like. You know, these kinds of discussions are long, a slow process, intentional, and very strategic. And you just move along and take your time with it to do it right. And I think Mike and I can both say, and certainly Michele and I, as founders of this company, we feel like we got it right.

Andy Johns: Definitely. It’s an exciting time, I’m sure. For you guys, getting those discussions going. And then it’s been very exciting for our team to find out the news and then to see how everything started to fit together, so I think we’re pretty pumped about it. So one of the similarities, and we’ve talked about quite a few of the similarities, between the two companies, interestingly, you both started off in the newspaper business. It seems like about half of WordSouth’s staff came from the newspaper business. Both companies have huge magazine projects that focus on storytelling. Storytelling just keeps coming up over and over again. Stephen, how have you seen both companies put an emphasis on storytelling, either internally or externally?

Stephen Smith: Well, as I said a moment ago, I was familiar with their Ruralite product. And, you know, that’s the cornerstone of what that magazine is about, telling the stories of people who are living in these service areas. And that is certainly what we do with the electric cooperatives’ local sections that we manage, and also the regional telco magazine that we produce for a lot of broadband companies across several states.

Stephen Smith: You know, people want to read about other people. People want to see not just a list of features of any kind of service. They would rather see how that service or that product is impacting the lives of people who are using that. And I think that’s one of the keys to… We talked a lot about rural broadband access, and access is only part of the story. Adoption is arguably the bigger part of the story or just as important. Let’s get people connected, but let’s help them learn how to use this technology to impact their communities, their families, to make life better for them and the ones they love. I’ve often likened it to when the electric cooperatives started wiring the homes in the countryside and people thought, well, this is great. Now I can have that light bulb in the middle of the room. But there was so much more that could be done with that service. The electric cooperatives took an active role in helping educate people on what that could mean to the farm and to the home. And I think the companies that we serve today have a similar role to play in helping people learn how to adopt the broadband technology to their lives.

Stephen Smith: And really, there’s no better example, I think, than what we’re seeing right now with the challenges that we are facing with the pandemic-related work stoppages and people having to work from home. People having to educate their kids from home — kids connecting with schools and certainly telehealth plays into that. You know, this health crisis has really shown us that rural broadband access is something that we have to fix.

Andy Johns: Excellent. Mike, are there some other ways that you see storytelling play a big role over there at Pioneer?

Michael Shepard: You know, I think Stephen captured it really well in terms of the emerging opportunities around broadband. I guess the two things I would quickly add there is, there’s this old adage — I mean, I’m going to use the “P” word carefully here — but, you know, politics. The old adage is, of course, all politics is local. And what that has always said to me, what I think the analogy is, is good storytelling is local too. That folks can get all they want in terms of national storytelling, national news, and information from broadcast, from radio, from television, from radio, and from the Internet, if they have good connections. But what they increasingly can’t get is local storytelling. Whether we’re telling the stories that are directly related to the utilities we serve, or we’re telling these really interesting local stories about folks and their neighbors — that is a core part of our magazine products — local is the connective tissue there. And we think that’s tremendously important.

Andy Johns: I like that a lot. That’s well put. I think that if you look at everything that’s going on right now with the changes in the industries, the pandemic, all that, it’s probably safe to say that storytelling is more important than ever before, so I appreciate you guys talking about that. Mike, I know that WordSouth is not Pioneer’s first acquisition even of 2020. Would you tell us a little bit about the company that Pioneer purchased in March, and why that’s such a great fit for everybody involved?

Michael Shepard: Yeah, I think it’ll be very similar, Andy, to the conversation we’ve already sort of had about synergies and being stronger together than we were separately. The company that we purchased at the tail end of March is called ARC Media. They are based in Jefferson City, Missouri, and they have, over the last four or five years, really taken the social media world in the electric cooperatives by storm. We provide social media services for the utilities that we work with. WordSouth has some strength there, but we saw a particular sophistication and strengths and also regional synergies in the partnership with ARC Media. They serve about 135 electric co-ops with social media support services, everything from posting of daily updates and social media posts for their members, all the way to 24 hours, 7 days a week monitoring of social media for their customers, depending on what they want. And they’ve got some great strength in some other areas, including a deep understanding of legislative affairs, communications around legislative affairs. So being based in the Midwest and with that particular social media strength, and then layering in what WordSouth represented in terms of storytelling strength, broadband, and telecommunications, and then the Western emphasis and strengths of Pioneer, it was just a really obvious opportunity to take to bring the three together. And frankly, a year ago, we didn’t envision any of this stuff happening. These were things that happened very organically, and we were fortunate enough to be in the financial position to make these things happen and create, what we think, is going to be just a fantastic kind of one-stop shopping service for those community-owned utilities.

Andy Johns: Excellent. I’m looking forward to all of that getting rolling and happening. Stephen, how do you see all three of the companies working together to make things better for the telcos and other utilities that we serve?

Stephen Smith: I think we as a group of companies now are going to be so much more valuable to the industries we serve much beyond the sum of our parts. And I think, because of the strengths and the geographic differences, some of those that Mike spoke to, I think you end up with an umbrella organization here that brings total solutions: strengths in storytelling and content development, strengths in processes and procedures, and the mechanics and the frameworks there to make these things happen. The social media, the stability of a 65-year-old co-operative. There are so many things that when you lay all the cards out on the table, you realize that we are now uniquely positioned among all organizations of any type in this country to bring a comprehensive set of services to rural providers, community-owned providers, be they electric or broadband, or, as we increasingly see, electrics getting into broadband. As these people are serving rural America, they have access to a partner that really today is stronger and more capable with more things to offer than has ever existed before. And we’re very excited about that. You know, following this acquisition, and then the one of ARC Media, PUR is now standing here with this family of companies that literally stretches from coast to coast — and even Alaska and Hawaii — and brings a level of service to the industry that is unmatched.

Andy Johns: I like that. It’s a kind of thing, like you said, that’s never, never happened before, so that’s cool to be right there at that position. So we’ve seen clients, we’ve seen fellow vendors in our industries pursue mergers, acquisitions, other partnerships like this. What advice — and I know how complicated it is to buy and sell a house, so I can’t imagine all of the complexities that went into an arrangement like this — but what advice would you guys have for a company that’s considering some kind of merger or acquisition, or something like that? Stephen, if you don’t mind, going first, but what advice might you have, having been through this process?

Stephen Smith: Well, the first thing that comes to mind, Andy, is growth for growth’s sake is never a good strategy in my book. And I think that when you look at a potential partnership, an acquisition, a merger, and you say, “Hey, if we do this, we’ll suddenly be bigger, and that’s a good thing.” Bigger is only a good thing if it is a good thing. And I think that with companies looking at an M&A or partnership, you have to look at, does it make strategic sense? And in our case, you know, it’s a perfect example, as Mike and I have both have outlined here, the complementary things that we bring to the table across several areas, be it the disciplines, procedures, geography, offerings. Does it make sense from a strategic standpoint, and will we all be better on the other side of this? And you’re right. We have seen utilities partnering, merging. We’ve seen some acquisitions there. As a matter of fact, one of our clients was going through it, going through an acquisition, while we were going through ours and basically closed the same day. So we’re seeing that, and we’re certainly seeing vendors in the industry doing the same thing. And as that continues, when people continue to look for scope and scale, that would be my advice: does it make strategic sense? Because that’s the underlying thing. Will we be able to serve better by doing this?

Andy Johns: Nice. I think that’s well put. Mike, what would you say to that? What advice do you have for folks having been through this a couple of times if they’re looking either to be the acquirer or to be acquired or some kind of merger? What advice do you have for them?

Michael Shepard: Yeah, I think Stephen put it really well, so I won’t repeat what he said. I would just underscore that. But the things I would add is for us, it was not only important for this to make strategic sense, but it was important for these combinations to make cultural sense as well. That, you know, our culture and our family, internal family relationships with our staffs, and our external familial relationships with our consumer and utility partners, who are our owners as a cooperative, are extremely important. We have, in our case, relationships that go back 65 years with these utilities. And we saw in both WordSouth and ARC the opportunity to bring alongside people who had the same values that we did in terms of how they ran the business on a day to day basis with the staff, but also in their approach to their customers’ members out there. And that was just as important as the strategic piece.

Michael Shepard: Particularly since, you know, we’ve been growing rapidly, so has WordSouth, so has ARC. And one of the things that we think is going to be really valuable — you know, we’re having this conversation weeks into the acquisition, so we’ve got lots to learn. We’ll probably be able to answer your question even better six months from now or a year from now. But we saw the ability to bring together really talented managers and staff to run this combined, slowly combining — whatever that looks like at the other end of all this work we have before us — bring great management and staff talent together and that’s nothing but a good thing. And, you know, what’s great about this, is that the principals involved are all staying and remaining involved, which I think also speaks to that cultural and strategic synergy.  You know, Stephen is remaining as part of the top management team and so are Andy Neidert and the other founders of ARC Media as well. So I think that speaks to, not only how we put this together, but the shared goals of the leadership going forward.

Andy Johns: Definitely. I think that speaks volumes just like you said. The last question I had for you all is to get out the crystal balls for a minute. I know you guys are piecing together a lot of systems and processes, trying to see who does what best and that sort of thing. But if you don’t mind, dust off the crystal balls, let’s look in the future a year, year and a half down the road. Mike I’d like to start with you, but where do you see WordSouth, Pioneer, and ARC in a year, year and a half? And what will it be able to do for the folks that we serve?

Michael Shepard: You know, that’s a really tough question. You know, I would have felt more confident, honestly, answering that question for you, Andy, before COVID-19 became such a prominent part of what’s going on in our country. Economically, that’s going to present some very interesting challenges for us, all our entities, and for the utilities that we work with. In some respects, as Stephen already touched on, we think it has the sort of work from home environment and what may be a new skepticism about sort of closer living that is what you get when you’re in a metro area. It is certainly going to result in this push toward making broadband available to not only rural areas but the folks who are increasingly adapting to work from home as a permanent solution for themselves. And it’s not all rural. We’re all involved in these communities that were formerly rural but now are being subsumed into metro areas. So, you know, the crystal ball is a bit foggy, except that we think with the economic challenges also come potentially great opportunity to provide really efficient services to our members and our soon to be members that they may not be able to afford to add the staff to their organization internally, as opposed to looking for a partner that can really efficiently help them accomplish their communication goals as an electric utility, as a telco, as a subsidiary that may be doing broadband under the umbrella of those kinds of organizations. So I think the future is really, really bright where those opportunities are all going to pop up is why you have an adaptive management team.

Andy Johns: Absolutely. I think for just about anybody looking into the future, the COVID puts a pretty big asterisk on anything. But it does sound like a position to do a lot of good for a lot of people. Stephen, as you look forward, what are you excited about down the road for the future, for all three organizations?

Stephen Smith: I think, Andy, that you’re going to see some short term projects that come along, or opportunities I should say, that appear to be obvious, low hanging fruit, if you will, as we see some areas that we can all get better quickly with in terms of integration, I guess you would say. You know, different products or services that make sense to improve and that we can immediately — well, maybe not immediately, but in the very short term — you know, offer better services across the board. A lot of that question will be answered as we move very methodically and with a lot of intentionality through the integration process that involves taking a real assessment of who does what best, who’s doing things that the others aren’t doing among the three companies, and figuring out the best way to integrate those in order to improve the service that we bring to those that we serve. And that’s an involved process. It will be a continuing process. And I can already tell by working with this executive team that these people share something that has always driven me at WordSouth and our management team here, is that we always want to be better. And we’re always looking for ways to improve the service that we provide, to improve our operation. We’re never shy at WordSouth about making adjustments, be that in software or the way that we structure workflows, or those kinds of things. We’ve always looked for ways to do things better for that end customer. I’m seeing that same philosophy at Pioneer and ARC Media as well. And that really excites me that we’ve got a group here that’s dedicated to building an organization that is going to be much better and much stronger than any of us ever could have been on our own.

Andy Johns: I like that. Well, I know it’s been exciting for you guys to put it together and make the announcement. It’s been exciting for the team here to hear about it. It’s been fun letting clients know the good news, making the phone calls that we have. And so I really appreciate you guys both taking the time to be on this episode and communicate. You know, being a communications company, it makes sense for us to communicate with folks. So this podcast, I think, will help [everyone] hear from you guys about everything that’s gone on. So I appreciate you guys both taking the time.

Andy Johns: He is Mike Shepard, CEO of Pioneer Utility Resources. Thanks again for joining us, Mike.

Michael Shepard: Thank you.

Andy Johns: He is Stephen Smith of WordSouth. Thanks for being on.

Stephen Smith: Absolutely. Thank you, Andy.

Andy Johns: I’m Andy Johns. And until we talk again, keep telling your story.

Subscribe to our podcast

Apple Podcast Google Podcast Spotify Podcast