Now that News Corp. has withdrawn its bid to buy U.K.-based multi-channel TV service BSkyB, we can step back a bit and look at its management of the phone hacking scandal so far. Just a bit, though—this story just keeps growing.
News Corp. announced on July 13 that it “no longer intends to make an offer” for BSkyB. "We believed that the proposed acquisition of BSkyB by News Corp. would benefit both companies, but it has become clear that it is too difficult to progress in this climate,” Chase Carey, deputy chairman, president and COO, News Corp., said in a statement. “News Corp. remains a committed long-term shareholder in BSkyB."
In the wake of the initial reports that News Corp.’s News of the World instigated the hacking of a murdered 13-year-old girl’s cell phone in the U.K. in 2002, News Corp. has shut down the newspaper; released a statement from chairman and CEO Rupert Murdoch, saying, “recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable”; and dropped its bid for full ownership of BSkyB.
The company’s reputation has been damaged, obviously, by the illegal hacking of phones itself, and also by its failure to sufficiently push through its own internal investigation after a News of the World phone hacking scandal in 2006.
The response from News Corp. and its CEO has been a series of business decisions which may not have been decisions after all—the company may have had little choice in the case of the NotW shutdown and the dropped bid for BSkyB. What’s been missing is the human response and the sense of accountability from the very top of the organization.
We checked in with some crisis management experts to get their initial take on News Corp.’s and, in particular, Murdoch's, response to the widening phone hacking reports.
“From the outset, News Corp. seriously underestimated the severity of the underlying issue of trust,” says Gary Wells, senior managing director, Dix & Eaton. “The company was slow to respond to the crisis in general but still has not addressed the issue of trust. That is, the company has not explained what really happened at News of the World or what the company has done about the hacking issue at the newspaper."
Wells says the company seems to be wishing only that the phone hacking coverage would just disappear. "That will not happen—Rupert Murdoch is, as they say, good copy—until his company directly deals with the issue and explains what happened and what is being done about it. News Corp. is in shock but had better conquer it soon.”
Jim Lukaszewski, founder of the Lukaszewski Group, says the response from Murdoch himself could be graded on a couple of levels: “'C' for catastrophe—terminating a major business unit, losing a major acquisition deal and his upcoming global humiliation before the British Parliament. And 'A' for arrogance run amok. He's been abandoned by those he intimidated and by his media buddies who salivate most at eating one of their own.”
“Dropping the bid and shutting down News of the World when the story broke internationally were smart moves that I assume are part of a 'live to fight another day' strategy,” says Karen Hinton, president of Hinton Communications. “The scandal is growing, though, and has many tentacles. News Corp. will need a complete re-branding when all is said and done.”
Eric Dezenhall, CEO and president of Dezenhall Resources, says Murdoch has made some good moves in response to the scandal, and that his preference for action over words may serve News Corp. well in the long run.
“Murdoch understands something that most corporations don’t: Public relations has limitations and major crises are resolved by significant operational moves,” Dezenhall says. “By jettisoning News of the World and, potentially, the BSkyB merger, he is going a long way toward cauterizing this serious injury rather than relying on rhetoric and vapid apologies.”
Update: Rupert Murdoch, altering his personal approach to the crisis, visited the family of the murdered girl, Milly Dowler, on July 15, according to the New York Times.