Bad news for Rebekah Brooks, but good news for BSkyB’s Jeremy Darroch

July 6, 2011

Jeremy Darroch, chief executive of BSkyB, now looks in an even more powerful position to inherit the News International mantle of power (should he wish to) than when I flagged up his significance to the Murdoch empire in my last Marketing Week column.

Rebekah Brooks, NI’s current chief executive, is terminally damaged goods, in the wake of ‘Millygate’. Not to mention ‘Jessica-and-Hollygate’ and ‘7/7-gate’.

For the moment, of course, it’s Andy Coulson, ex-News of the World editor and David Cameron’s former director of communications, who has been thrown to the lions. Thanks to some NI emails which have mysteriously surfaced just in time, Coulson is now a proven liar. He procured, or authorised procurement of, paid information from the police while he was News of the World editor – something he has previously strenuously denied. And for good reason: it is quite illegal.

It’s an astute, if cynical, sacrifice, and proves the Murdochs are still thinking on their feet. Coulson’s disgrace tarnishes both Cameron (by association – after all, he picked Coulson, despite his dodgy reputation, and then backed him to the hilt in his hour of need) and Knacker of the Yard (assistant commissioner John Yates, once the officer in charge of investigating the phone-hacking scandal at the epicentre of the Murdoch crisis, who is now looking woefully ‘under-informed’ and incompetent, after previously vociferously denying the merest scintilla of police complicity in the matter).

Even so the Coulson gambit is, at best, a delaying tactic. It will make our leading politicians and policemen tread a little more carefully, but it will not prevent them from taking decisive action. Public opinion is now too inflamed for them to do anything else.

Inescapably, the smoking gun is pointing at Brooks, née Wade, and editor of News of the World when – it now emerges – NI’s private investigator of choice Glen Mulcaire was hacking into the phones of Milly Dowler’s distressed relatives. She says she knows nothing about it. Do we believe her, any more than we believed Coulson’s protestations of ignorance? I’ll leave that one hanging in the air.

Ordinarily, implicated NI and former NI executives have been able to take refuge in prevarication, in the sure and certain knowledge that rapidly abating public interest will soon allow them to emerge from their burrows relatively unscathed. This crisis is different.

It has an unprecedented commercial dimension to it. Top advertisers, led by Ford, are boycotting News of the World, and that really will hit the Murdochs where it hurts. Ford is the single biggest advertiser, contributing about £4.5m annually to NoW’s £40m display advertising revenue. Halifax (owned by Lloyds Banking Group) has now joined Ford. Other major advertisers believed to be considering their options are T-Mobile/Orange, Vodafone and nPower. The danger, from the Murdochs’ point of view, is that this commercial contagion spreads to other NI newspapers, such as the Sun – which Brooks also edited. It could easily do so, given a swelling social media campaign goading consumers to boycott advertisers who refuse to align themselves behind Ford. (There’s a useful live update on the brands boycott at Marketing Week.)

All of which may well rapidly result in Brooks becoming surplus to NI requirements.

OK, you say, but what has this got to do with Jeremy Darroch? I’m coming to that. Whatever the backwash from the phone-hacking scandal, it will not prevent culture secretary Jeremy Hunt from giving his blessing to Murdoch-vehicle NewsCorp’s acquisition of the 61% of BSkyB it does not already own. Legally, a challenge to that assent is now well-nigh impossible. Indeed, Hunt and the Government would probably be on the receiving end of a writ it they were obstructive.

Let’s assume for a moment that the deal is done, that the Murdochs have pacified BSkyB shareholders with an eye-watering amount of money and are now the proud possessors of the rest of the organisation. What are the repercussions for NewsCorp and in particular its UK-centric arm, NI, in the wake of a full takeover?

BSkyB is one of the UK’s most powerful companies with, just to give the flavour, a marketing communications budget of £1.2bn a year. It is phenomenally cash rich. One estimate reckons that, once acquired, it would contribute 30% of NewsCorp’s cashflow. Like the Murdochs’ newspapers, it is UK-centric. Unlike the newspapers, it is highly profitable. Unlike the newspapers again, it is still a dynamic growth business, which has made good use of product innovation.

In short, it would be the jewel in NI’s crown. Who better to manage that jewel in the new, enlarged organisation – a man of untarnished reputation who intimately understands subscription TV; or Brooks, with her yesterday’s tabloids background?

Of course, I have no idea whether Darroch would actually be interested in such a proposition. He may well take his money and run. But it’s worth thinking about, isn’t it?

UPDATE 17.30 – 7/7/11: So, The News of the World is no more. The Sunday edition, shorn of advertising, will be the last in the newspaper’s 168-year history. Nothing could more graphically illustrate the gravity of the crisis engulfing NewsCorp than that its chairman and chief executive Rupert Murdoch should take the drastic step of closing his most profitable newspaper and the one – to boot – he started out with back in 1969. The suspicion lingers that a skeleton NoW staff will be retained to flesh out a 7-day version of The Sun. “The Sun on Sunday” has long been rumoured as a cost-cutting project. How typical of Murdoch that he should turn a disaster into a publishing opportunity.

UPDATE 7/7/11: Determination not to be the last advertiser at the News of the World has now reached frenzied proportions, as Vauxhall, Virgin Holidays, O2 (£1m), Boots (£800,000) and  Sainsbury’s stampede to the exit with Ford, nPower and Lloyds Banking Group. Morrisons next, I suspect. Will anyone be buying the paper anyway? Newsagents expect a boycott on Sunday.


J&J, Hollywood and Toni & Guy – JWT hides its hat-trick win under a bushel

December 1, 2010

JWT has racked up a hat-trick of significant ad account wins on the sly recently – perhaps it’s time for that achievement to be more widely known.

One of them is the global Toni & Guy business. ‘Global’ might sound a tad hyperbolic, in view of T&G’s origins as a trendy London hair salon in the Swinging Sixties. But, hey, it’s a worldwide franchise now, big enough to sell its hair product business to Unilever for a cool $411m two years ago. Which is what we’re talking about here.

Then there’s the Kraft Euro haul. Kraft-owned Hollywood is France’s biggest chewing-gum brand. It’s a little-known fact that the French are the biggest consumers, per capita, of gum in the world – Americans excepted. Like the Coca-Cola habit, the French acquired it fairly recently, after rubbing shoulders with ‘visiting’ GIs during the Second World War.

Besides leading the chewing gum market in France, Hollywood is exported throughout Europe, to Africa, China, Madagascar, South America and Canada. Its factories are located in France and Denmark. Ironically, Kraft first acquired the Hollywood brand in 1961, but later sold it to Cadbury in 2000. It’s fair to say  the high-margin Trident gum business, to which Hollywood is aligned, was one of Cadbury’s principal attractions as a bid target. Interestingly, Kraft has just opened a new SwF14m research and development centre at Eysins near Geneva, dedicated to gum and ‘candy’. And maybe just in the nick of time, because trouble is brewing for the $23bn industry, in Europe at least. The anti-social gumminess of the discarded product is causing serious concern – serious enough for the Spanish government to decree that manufacturers change the formula. Unfortunately, the new unsticky stuff is no less controversial: it contains all sorts of chemical nasties such as co-polymer acetate – more commonly associated with glues and emulsion paints.

Last, and most enigmatically, JWT seems to have scooped a very large chunk of Johnson & Johnson’s Western Europe consumer business – worth up to £300m my sources tell me. Enigmatically, because earlier this year Omnicom roster agencies BBDO and DDB were making all the running with J&J business wins. If rumour is to be believed, the JWT windfall will be dire news for J&J’s other roster agency, Lowe – it now retains little more than the femcare creative business in London. Scarcely a consoling thought for Lowe London’s new management buy-in team from DLKW, which itself has just lost the core £25m Halifax account.


Banking brands go into the red

May 27, 2009

images¡Qué sorpresa! Spanish bank Santander is scrapping the Abbey, Bradford & Bingley and Alliance & Leicester brands. A&L will be the last to go, at the end of 2010, when Santander covers over the last rebellious traces of orange and blue with its comforting corporate red and ‘Mr Whippy’ logo.

The root-and-branch £12m rebrand seems to have come as a bit of a surprise to director of brand and communication Keith Moor  – who earlier this year made the mistake of pouring cold water on the idea – but it should not surprise the rest of us. (Does the UK right hand really know what la mano izquierda is doing back in Spain, by the way?)

Despite the fact that Abbey, B&B and A&L have a long, and largely honorable, legacy, they are in extra time as brands.

Santander already owned Abbey and had earlier put a stop to a fluffy, and largely purposeless, corporate revamp of the brand.

B&B and A&L were booty hauled out of the credit crunch. The very fact that they nearly went bust before acquisition also sealed their future as brands. In a world where credit is tight, there is less room for marketing to manoeuvre. There will be no easy money on the wholesale market for the foreseeable future to facilitate product differentiation; and every reason for bringing expensive, badly run organisations under a more efficient, and austere, banking umbrella.

Which is why Santander is having such a good recession. It managed not to overstretch itself during the seven fat years, and now it’s getting its pay-off during the seven lean ones. “Customers trust us as a global brand and they feel very safe about their savings,” says Antonio Horta-Osorio, chief executive of Santander’s UK operations. Exactly.

More intriguing is where this brand-culling activity leaves Lloyds Banking Group. As former chairman Sir Victor Blank can testify, the grand strategic union between Lloyds and HBOS is not all it appeared at the time it was consumated, there being a number of bottomless black holes in HBOS’ balance sheet. Lloyds, too, will be looking for prudent savings and we have already witnessed one of them in its decision to put Clerical Medical on the critical list. Intelligent Finance, the internet arm, could well follow. And – who knows? – Halifax itself may not be safe. There are no sacred cows these days, now that the bull market of all bull markets is over.


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