Brand and crisis management, Murdoch style

By Felix Salmon
July 8, 2011

For a man who’s spent his entire life in the media business and understands it as well as anybody who’s ever lived, Rupert Murdoch is quite astonishingly inept at crisis management.

The News of the World hacking scandal was broken by the Guardian two years ago, and has been getting worse for him ever since; he’s had all the time in the world to do what every crisis-management professional has at the very top of their list: get out in front of the story, take full control of the situation and full responsibility for all mistakes made, and demonstrate in as public and visible a manner as possible that such things can and will never happen again.

Instead, what we’ve seen from Murdoch and his top executives is lies, obfuscation, pushback, bluster, dissembling, and generally the unedifying spectacle of extremely rich and powerful people doing their very best to never be called to account.

Today’s decision to shutter the News of the World in no way means that Murdoch is finally in control of the story. It’s a business decision, mainly: the NotW brand was fatally tarnished, to the point at which it would have been more expensive to keep it going than to shutter it. The advertising dynamics were poisonous and inescapable: there was little upside and significant downside for any brand which continued to advertise in the paper. On top of that, there would probably have been a reader boycott, too. The newspaper business is all about selling readers to advertisers, and the NotW suddenly had many fewer of the former and almost none of the latter. It was toast.

Murdoch’s axe is falling, tragically, on a group of journalists almost entirely unconnected to the scandal which brought down their paper. None of this is their fault, they don’t deserve this at all, and they didn’t get so much as a “sorry” from James Murdoch, in his official statement, who talked only of how unfair the decision “may feel” and how he intended to “communicate next steps in detail and begin appropriate consultations”.

And as if to prove that he still Doesn’t Get It, Murdoch is — for the time being — standing by Rebekah Brooks, the chief executive of News International, a former editor of the News of the World, and someone whose position is clearly untenable.

Murdoch, then, is being sensibly ruthless when it comes to the News of the World brand. Yes, it’s venerable — 168 years old — but it’s also a liability, and there’s literally nothing he could do to resuscitate the newspaper’s reputation. That explains what happened to the NotW journalists: like it or not, brands still matter, a lot, in media. Think how much more likely you are to get any given call returned if you’re working for the New York Times. Murdoch knows from first-hand experience that once a newspaper brand is sullied, it’s sullied for decades: The Sun’s Liverpool circulation never recovered from the boycott following its atrocious coverage of the Hillsborough disaster. In media, one dreadful mistake really can redound for generations.

And while the NotW’s journalists are sadly necessary collateral damage from the closure of the newspaper, Murdoch is being self-defeatingly sentimental when it comes to Brooks in particular and his News International executives in general. In contrast to the seemingly heartless treatment of the frontline hacks, Murdoch is extremely loyal to his most senior executives, and especially to Brooks. And it’s also worth noting that if James Murdoch weren’t Rupert Murdoch’s son and heir apparent, his job would be on the line as well.

The moral of this story, for anybody observing from the outside, is that it’s very, very bad idea for a company to circle the wagons and try to protect its senior executives when they get into trouble. If a handful of senior heads had rolled two years ago, and if News International had volunteered information about how far over the line the NotW had transgressed, then the newspaper would still be a cash cow for Murdoch. Instead, the closing of the NotW, plus the inevitable launch of the Sun on Sunday, is surely going to cost him a significant nine-figure sum.

As for the idea that the Sun on Sunday is just going to be the News of the World under a different name, I’m not sure I buy it. The name of a newspaper is the single most important part of its identity: it can’t simply be changed at will while maintaining its identity, in the way that Rebekah Brooks used to be Rebekah Wade. The Sun on Sunday will perforce be a very different beast from the News of the World, and the staffing will look very different too.

What’s more, insofar as the Sun on Sunday is similar to the News of the World circa 2011, remember that the NotW’s current staff are the innocent victims in this story. If many of them can get their jobs back, that’s a good thing, not a bad thing. Is the NotW in its current incarnation purer than the driven snow? Of course not — and neither are most of the other newspapers in the UK. The NotW was not the only newspaper to hack into telephones. Unless you want to see pretty much every UK tabloid shuttered, the Sun on Sunday rising like a Phoenix is something all newspaper lovers should welcome. Even if they shudder to think that Rebekah Brooks could yet keep her job and be the person in charge of launching it.

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Comments
10 comments so far

Shut them all down. Wade should stand up and speak for her self, it would do her some good beacause frankly she’s looking like an arsehole in the present situation. A public enquiry must be made and it should be whiter than white… It couldn’t be worse but of course we the public like a bit of gossip… we’ve funded these rags for decades and now we learn the cost of that. The police are in on the whole scandal too? Shock! Well lets clean those grubby bastards up too.

Posted by gileschimp | Report as abusive

I don’t agree with much of the start of your story. You assume something: that Murdoch and his top people didn’t know or at least weren’t really involved in this stuff. Why believe that? This behavior gave them a competitive advantage. They continued to do it because they didn’t want to give up this advantage. I’d say odds are Murdoch and his top people placed a bet that this would blow over, that really awful stuff wouldn’t come out, and they did this for the age old reason: money. NOTW has big numbers.

Note the Irish edition of NOTW was doing the same thing. This is from the same Paul McMullan in the Hugh Grant clip you link to. This says to me one thing: this was how NOTW operated and that means it chose to operate that way. That implicates Murdoch and all his top people because no entire newspaper enterprise, especially one within the Murdoch brand, would run off on its own like that.

This then is why he shut the paper, not only because it was tainted as a brand but to try to draw a line between it and himself and the other senior people and the rest of his media empire.

Posted by jomiku | Report as abusive

I agree with jomiku’s post. Murdoch tends to be in control of his empire, he encourages the way they operate.

I also strongly disagree that the now unemployed NOTW journalists are the “innocent victims” in the story! What a ridiculous and offensive thing to say in light of the real victims of the CRIMES committed by their paper. Were they involved in these crimes? No. Did they work for a shady joke of a paper known around the world for exploiting people, publishing utter rubbish and lies and infringing on human rights? Hell yes.
They have even come out in support of the senior staff responsible for the mess they’re in. They deserve every bit of it. No self-respecting journalist would have worked for NOTW in the first place.

My sympathy will remain with the victims of these hacks. This is what the UK gets for constantly feeding this reckless tabloid culture. Others take note, it’s time for serious media reforms. Powerful people need oversight and accountability – this includes all forms of media. Don’t let them hide their dodgy activities behind freedom of speech and freedom of the press

Posted by Margot3 | Report as abusive

So nice to see the word ‘redound’ in a blog post.

Posted by ottorock | Report as abusive

people will always want bread and games….
At the end as people will buy this stuff others will make it!

Posted by whocaresnow | Report as abusive

While it might cost him nine figures to relaunch News of the Sun, he could save ten figures on the cost of Sky…

I want to know if Cameron’s links to Rebekah Wade/Coulson/Murdochs etc… take him down too.

Posted by TinyTim1 | Report as abusive

I suspect some of the reason for Murdoch Sr’s loyalty to Brooks is to protect James. If Brooks ends up sacked, then that’s an admission not only of her wrongdoing, but – given James’s role as her direct boss for the last four years of cover-up, obfuscation and outright lying about reports of the hacking scandal – an indicator that James is also either dishonest or not up to the job. Which kills the Murdoch dynasty, with neither Lachlan nor Elisabeth having anything like the required experience to take over from Dad.

Posted by johnband | Report as abusive

Felix, I think you have misread what Murdoch is doing. This is primarily an opportunity for News International to make some very, very large payouts to people who have information that News International would rather not see come to light, and do so in a way that does not look like hush money.

Posted by DrFuManchu | Report as abusive

In a highly conspiratorial world maybe the whole saga has been carefully engineered over a long, long time by a group/cabal who would see real business and media control gains in bringing down Rupert Murdoch and his business empire and picking over the pieces.

Glasses maybe clinking over the weekend in the Far East, Europe, the US and – heaven forbid – some quiet and highly discrete corner of Whitehall. Where lies the truth.

Posted by Krisp | Report as abusive

I wouldn’t mind terribly if this BSkyB obfuscation and flimflammery brought down both Murdoch and Cameron. They’re in cahoots as it is.

Posted by RalfW | Report as abusive
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