Fishburn Hedges

22.07.2011

The events of the past three weeks involving News Corporation, the News of The World and their activities involving phone hacking, have shown how quickly a corporate reputation can be shattered and the resulting commercial implications. But what communications lessons can the corporations learn from the scandal and how News International has handled it.

1. Brands can be fragile

Warren Buffett said: “It takes a lifetime to build a reputation and only 15 minutes to destroy it.” This is a clear example of this. The News of The World was founded in 1843, bought by Rupert Murdoch in 1968 and was the biggest selling newspaper in the UK. Yet as soon as the Milly Dowler story broke, there was general revulsion and the brand became so tarnished it had to be jettisoned.

2. Corporates are highly sensitive to reputational concerns

Though there was a general public revulsion to the Milly Dowler revelations, it is unlikely that this alone would have been enough to cause fundamental and irrevocable damage to the NOTW brand. However corporate advertisers did not want to be associated with an organisation that behaved in such an unethical way. Once one advertiser withdrew, then others either felt compelled or pressurised to follow.

3. Political friends can quickly become enemies

The Murdoch family and their businesses have enjoyed many years of support from senior politicians in the UK because of their perceived influence. However this quickly evaporated and with it any protection this afforded. It could be argued that this was because the relationship was founded on fear rather than any concerted engagement by News International.

That said, the fickleness of politicians has rarely been so clearly demonstrated and is a lesson to organisations who rely on political support to further their business objectives.

4. Lack of clear spokesperson can be damaging

In the early days of this crisis, News International attempted to handle the mounting crisis through a media spokesperson, Simon Greenberg, rather than using a senior executive such as Rebekah Brooks, then still the chief executive and former editor of the NOTW, or James Murdoch, the chairman.

This backfired because the spokesman didn’t have the authority to respond to the difficult questions and his deployment was perceived as a sign that News International didn’t take the matter seriously enough. James Murdoch became involved a few days later, but it was too little, too late, and then Rupert Murdoch flew in to take charge. However, by this time the story was unable to be controlled.

5. Social media spreads reputational damage like a virus

A number of commentators have credited social media for pressurising News International into closing NOTW. This may be overstating the case, but Facebook and Mumsnet provided a quick and easy way for consumers to publically target advertisers and demonstrate their displeasure, contributing to a feeling of pressure building rapidly by the hour.

Twitter was a major factor in spreading rumour (some of it inaccurate), opinions and news, and its heavy usage among the “chattering classes” created the impression that this was all people were talking about. What is clear is that social media has made the impact of reputational problems more acute, and therefore will force corporations into more immediate and decisive action. This will have implications for how corporations are organised going forward.

6. The damage is greater if senior people don’t take responsibility

The near invisibility of Rebekah Brooks during this affair increased the intensity of the demands for her resignation until it was finally inevitable. As former editor of the NOTW and The Sun and then the chief executive of News International, she was the obvious responsible executive. A public explanation and show of contrition may have reduced the reputational damage, her early resignation certainly would have - and might have avoided the need for other resignations.

7. Apologies have an effect

Once Rupert Murdoch appeared to grasp the seriousness of the situation, the publicity machine swung into action. Taking out adverts in the media to apologise started the process of capping the reputational leakage (although some of the detail in the adverts might come back to haunt News Corp), appointed a leading judge to oversee a clear up also helped and appearing in front of the House of Commons select committee on Tuesday was clearly the right thing to do.

Though the performance wasn’t a resounding success, the BBC’s Robert Peston hit the nail on the head when he said: “For the first time in two weeks, the Murdochs ended the day no worse than when they began it.”

8. Select Committees are not the Spanish Inquisition

The MPs were out to get the Murdochs, but by a combination of humility, calmness and – often hard to swallow – evasiveness they avoided the blows. Select committees are getting more and more like US Congressional Committees in their confrontational approach, but the more gentle way things are done in the UK means that, if you keep your cool, you should be able to escape them unscathed.

9. Don’t tell fibs

Part of James Murdoch’s evidence to the Select Committee is now being contradicted by former News of The World executives. It goes without saying that if he is found not to have told the truth it will undo all the hard work News Corp has put into restoring its reputation.

10. A soundbite is worth a thousand words

Yes we all cringed when Rupert Murdoch said “this is the most humble day of my life” but it worked. It would have been the headline but for…

... and finally: you can never legislate for stupidity

The protestor who attacked Rupert Murdoch with a custard pie managed to distract the media from the main story and turn Wendi Murdoch into some sort of hero. If the Murdoch PR team had planted him he couldn’t have done a better job.