Will Rupert Murdoch really jettison James as NewsCorp’s heir?

October 19, 2011

It’s possible that Rupert Murdoch allowed himself the ghost of a smile on hearing that Michael Wolff – one of his most vociferous and tiresome tormentors – had been defenestrated from his fastness at AdWeek.

We might like to think of AdWeek as a trade magazine covering the US advertising, media and marketing scene. But for the past year it has been hijacked by Wolff’s anti-Murdoch agenda and shamelessly exploited by the former editorial director as a scandal-sheet covering every last detail of the so-called “Murdochcalypse”.

Murdoch will have been a good deal less pleased by what he read in the New York Times yesterday. Wolff is a gadfly, but the NYT is a seriously influential enemy which has taken it upon itself to drive a wedge between Murdoch and his presumed heir, younger son James.

It is not so much the content of the article as its timing that is so troubling. Murdoch and his brood are just days away from NewCorp’s annual general meeting that could theoretically see them unseated as directors. The last thing they need is another stinkbomb.

As it happens, the NYT article fails to come up with anything stunningly original. Provocatively titled ‘In Rift Between Murdochs, Heir Becomes Less Apparent‘ , it dwells on tensions – real and possibly imagined – between the two men in the hope of creating so much further bad blood that Murdoch père will eventually perform an Abrahamic sacrifice of his son’s career prospects in order to save his own skin.

Certainly Murdoch senior has been performing a skilful dance of the seven veils to protect his reputation. First he closed News of the World, and abandoned his cherished bid for BSkyB.  When that didn’t work, he sacrificed his faithful retainers Les Hinton and Rebekah Brooks. The tide of effluent still failing to ebb, he contributed millions, individually and corporately, to the Milly Dowler Fund.

For a while, the NewsCorp share price appeared to bounce back. Then came the hammer blow: a major shareholders’ revolt, partly sustained by new evidence of malpractice in the NewsCorp empire, this time at The Wall Street Journal.

Something like 25% of investors are expected to vote against the re-election of the Murdoch board on Friday. In almost any other public company that would mean curtains. But not at NewsCorp, where – unluckily for the institutional rebels – nearly 40% of the voting shares are owned by the Murdoch family.

So not much is really going to happen in the short term. Except some searing humiliation, fanned by the NYT. The worse it is, the poorer James Murdoch’s chances of eventual survival.

And that’s before his return for further grilling by the House of Commons media select committee, over the porkie pies and half-truths uttered during his last appearance.


BP brand plunges from Deepwater to Ground Zero

May 11, 2010

I’m beginning to feel sorry for Andrew Gowers. Having had an exemplary career at the Financial Times, he had the misfortune to become its editor. In the wake of a complex and expensive libel case, he was ‘let go’  by senior management in 2005. With contacts like his, why worry though? A glittering future in PR beckoned.

And so it proved when he became head of communications at blue-chip investment bank Lehman Brothers London. How was he to know that, in two  short years, he would be at the epicentre of the global financial meltdown? Never mind, pick yourself up, dust yourself down and move on to…BP. Weeks later, the Gulf of Mexico explodes into uncontrollable life.

Avoiding reference to Jonah, I’ll confine myself to the observation that, for a man with Gowers’ peerless experience of crisis management, he seems to have been pretty slow on the uptake. Yes, he’s been indefatigable on the airwaves, mainly pointing out that it’s not all BP’s fault. Which it isn’t: try the Swiss-based company which leased the rig to BP, and the US maintenance outfit which passed the defective shut-down valve as fit for purpose. Also, BP is only a two-third investor in the oil well. But no one wants to hear about that; certainly not President Barack Obama and the American people.

What Gowers, and his colleagues, conspicuously failed to do was mobilise their chief executive fast enough. The oil rig explosion took place on April 20. BP may not have known the leak’s rate of flow, but it certainly knew this was a very serious industrial accident indeed. Yet it was not until three days later that the company released its first statement from group ceo Tony Hayward and, as far as I can make out, not until May 3 that Hayward himself made a broadcast public statement.

Did it really take that long to determine this oil spill is quite possibly the worst man-made ecological disaster to date? Not in the minds of journalists who – like nature – abhor a vacuum, and fill it with speculation. And not – crucially for any crisis management specialists these days – in the social media space, where any half-way decent speculative theory gets magnified a gigafold. Does Gowers or BP viscerally understand this? I suspect not. Until very recently, if you had looked up “BP Oil” on Google you would have found hundreds of references to the incident – on blogs, Twitter, YouTube and the rest, but almost none seeded by BP itself. Does BP imagine its investors take no notice of all this? £19bn knocked off the share price suggests otherwise: they will get their information wherever they can.

Credit where credit is due, Hayward is now cleverly framing the disaster as a common threat, with BP in the front line of resistance. His language has an appealing Churchillian ring to it. But the initiative may already be lost.

Of course, from a corporate standpoint, BP’s caution is entirely understandable. Make light of the disaster while it is still unfolding and it projects an uncaring image which will do endless damage to the brand later. Rash admissions, on the other hand, will expose it to years of litigation, with its toll on management focus and corporate profits. No one knows this better than Hayward, who has spent three years cleaning up the company’s reputation and settling claims after the March 2005 explosion at  BP’s Texas City refinery, which killed 15 workers and injured about 170. Corporate negligence ill fits the image of a company that has struggled hard to position itself as environmentally friendly with a cuddly logo and a $4bn alternative “Beyond Petroleum” energy initiative.

And yet all that misses the point. The speed of mass communications these days no longer permits – if ever it did –boardrooms to dictate the pace of events. Another fine example of crisis mismanagement, admittedly on an infinitesimally smaller scale, reinforces the point. Johnson & Johnson is rightly considered a model in consumer marketing circles for the way it dealt with the 1982 Tylenol scare, in which seven people died after some pain-killer capsules were laced with cyanide. But now it has come a cropper, after the US Food and Drug Administration warned that some of its proprietary over-the-counter medicines for children (including Tylenol) had too much active ingredient in them, and thus failed to reach the acceptable public safety benchmark.

Although there is no evidence of anyone being harmed, and J&J acted promptly and efficiently in organising a voluntary recall, it failed to explain itself to anxious parents, who have become increasingly restive. They quickly availed themselves of Twitter, Facebook and various parenting blogs to express their frustration at not being able to get a straight answer out of the company about what was going on. This is only the latest of a number of poorly explained recalls, which could have catastrophic knock-on effects for the company’s reputation. As one parent, quoted in the New York Times, put it: “Another recall for baby Tylenol. Well no more baby Tylenol, back to generic brand.”

Although J&J can scarcely blame the forces of nature for its self-inflicted disaster there are, nevertheless, parallels with the BP situation. In both cases, the companies seem obsessed with procedures and asserting internal control, which conveys the unfortunate impression that cover-up rather than communication is the ultimate agenda.

As I commented in my blog post on the Maclaren baby pushchair crisis last autumn, a bunker mentality is the default company reaction in these situations, and it’s actually disastrous. True, some crises are worse than they seem; acting upon them could aggravate their severity, whereas left alone they may quietly subside. But can you really afford to take that risk? Suppose this is the big one, the corporate reputation-wrecker?

Whatever you do, don’t hide behind PR flunkies and hope it will go away. Get the chief executive out there early, personally engaging with the media. Maclaren didn’t do that, with disastrous results for sales in its main market, the USA. BP and Toyota eventually did, but I bet they wish they had wheeled them out earlier.


%d bloggers like this: