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What the News Corp. Scandal Can Teach Us About Image


November 7, 2011

[Mark Makela/Corbis]
[Mark Makela/Corbis]

For a short time this past July, it looked as if media mogul Rupert Murdoch would go the way of Ali Abdullah Saleh of Yemen, Hosni Mubarak of Egypt and Moammar Gadhafi of Libya — another dictatorial strong man forced into a shameful exit by a popular uprising.

In my days as a reporter for a Murdoch-owned tabloid, that’s the good-versus-evil slant that I might have put on the story — the jowly, leering tyrant stooped like a vulture over the body of a saintly, murdered 13-year-old girl eagerly trading her blood for profits, an outraged nation mobilizing to demand truth and justice as the sordid details of the scandal spilled forth.

After all, stark contrast sells. Given numerous flavor choices, people are least likely to buy the most vanilla of them. 

Months removed from its summertime peak, the News of the World drama holds leadership lessons for our profession regarding crisis and reputation management.

Realizing value
One would think that by now, every organization in the public eye would understand the value of  airing its dirty laundry as soon as someone uncovers it. 

Murdoch and company would have fared far better if News Corporation had fully expunged the practice of phone hacking several years ago. In 2007, a judge imprisoned a former News of the World correspondent and private investigator on the World payroll for illegally intercepting voice-mail messages.

Instead, News Corp. leaders kept quiet and hoped for the best. Four years later, during a slow Fourth of July news cycle, new allegations surfaced that the World had hacked the phone of a missing, murdered 13-year-old girl, Milly Dowler, in 2002, and possibly those of victims of 9/11.

The cost of these allegations?

In quick succession, News Corp. shuttered its profitable 168-year-old flagship newspaper, shelved a critical pay television acquisition, shed $5 from its stock price, and lost respected editors on both sides of the Atlantic. The chastened CEO apologized before Parliament, and ordered a $5 billion stock buy-back plan in an effort to shore up the company’s valuation.

Facing 35 privacy lawsuits, News Corp. has had to set aside more than $32 million for litigation costs. The authorities had arrested 15 people by Labor Day. Top British police and political officials have had to step down. Ongoing investigations threaten more damage amid lingering questions of who knew what and when.

In a flash, News Corp. joined a long list of businesses blinded by a hubris that allowed its leaders to believe the rules of issues management didn’t apply to them.

Murdoch “paid his penance in humble fashion,” said former Boston Herald political reporter Cosmo Macero, now a public affairs strategist. “But he won't get a second chance. Another similar incident, and he will have to relinquish control to non-family officers.”

Creating reputation
When an enterprise’s only reputation is the reputation of its leader, bad news immediately becomes personalized. And when the leader’s reputation is cold and ruthless, there is little goodwill to use as defensive capital.

Murdoch’s enemies and critics are legion, thanks in large part to his politics and take-no-prisoners style. His enemies immediately seized on the World  scandal with a gleeful sense of revenge.

The tabloid doesn’t have a brand in the United States, but Murdoch does. It wasn’t long before the American media had anchored the nine-year-old hacking claims around the neck of a chief executive they viewed as an evil puppeteer.

“Even before the scandal broke, I really hated the way Murdoch and [Fox News President] Roger Ailes impugned the reputation of an entire profession in order to raise the profile of Fox News,” said former Herald police reporter Dave Weber. “A significant segment of the general public already thinks the media does not tell the truth, thanks in large part to Murdoch’s own Fox News’ constant railing against the ‘mainstream media.’”

Another former Herald colleague, who has gone on to a successful career for top broadsheets, described News Corp. as “a perfect reflection of Murdoch’s values.”

The colleague, who asked to remain anonymous because of media policies at his current employer, said, “Murdoch took the heat personally because smart observers, including the British politicians on both sides who were part of his system until this summer, understand that the whole thing is Rupert-driven. Murdoch is  the message.”

A more strategic, spirited defense would have noted that Murdoch has saved thousands of media jobs in the United States and elsewhere; that his investments have maintained a competitive and vigorous free press; and that his media properties have acted in the public interest to expose countless cases of corruption worldwide throughout the years. In fact, The Wall Street Journal, arguably the world’s best business paper, has flourished under News Corp.’s management.

But there wasn’t a defense of the company because there weren’t any defenders. Murdoch stood alone, and News Corp. paid the price for never building a brand beyond its boss.

Understanding business
Crises play out against the context of expectations. Understanding the dimensions in which you do business is an important success factor in public relations.

Most Americans have only a vague sense of the back-office machinations behind the news and information that they consume each day, but they generally expect a sense of fairness and decency. Even in a culture addicted to fame, gossip and infotainment, the idea of a journalist hacking into the phone records of crime victims and their families goes too far.

Such tactics are far less shocking among the London tabloids that unapologetically wage a vicious daily battle for scoops.

“The people of London, unlike Americans, lap it up with their chips and bitter beer,” said David Guarino, an ex-Herald political reporter who is now a partner at the strategic communications firm Melwood Global. “In the States, the most beloved papers are the traditional, journalistically conservative dailies. In England, the trashier the better.”

None of the Herald colleagues I spoke with ever recall being induced or compelled to cross a moral line.

“In my 28 years at the Herald, I’ve worked for a number of Murdoch editors,” said Herald celebrity columnist Laura Raposa. “[No one] ever asked us to do something like that. We’re still old-school news gatherers — sources, telephones, document-retrieval and leg work.”

It’s improbable that you will see Congress holding the leaders of the New York Times Company or the Washington Post Company accountable for shady reporting or cozy relationships with the powerful.

But in Britain, the Culture, Media and Sport Committee of Parliament requires that News Corp. — a $62 billion media network with a powerful web of holdings in the United States, Europe, Australia, Asia and Latin America — explains its “culture, practices and ethics” and its relationship with “the public, police and politicians.”

Great public relations cannot change bad facts. Once people know all the facts, it will be interesting to see whether a media empire that is so adept at breaking reputations is willing to recast its own.


 

Ed Cafasso Ed Cafasso is a managing director in the Corporate & Financial Practice for Burson-Marsteller and the agency’s Market Leader in Boston. He is a member of PRSA’s Corporate Communications section.



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