Murdoch, the brand under fire

Once it was announced that the News of the World (NoTW) would be shut down, the final issue sold 3.8 million copies, according to a statement from News International, up from an average issue sale of 2.5 million. Notwithstanding the recent developments, the paper was still the unquestioned leader in the Sunday paper market.

Yet, thanks to the voicemail-hacking controversy surrounding the title, NoTW had to be shut down. News of the World was just one title in the News International basket, which includes publications such as The Times, The Sunday Times and The Sun, in the UK.

Public revulsion over the developments, fresh charges of bribes paid to policemen, alleged hacking of phone lines of the families of 9/11 victims and allegations that reporters from _The Times -_also owned by News International - used criminals to gain information about former Prime Minister Gordon Brown’s personal affairs, has seen the fire spread. The problem is no longer a News of the World problem but a News Corporation and Rupert Murdoch problem.

Facebook groups, including this one, are calling for a boycott of all of Murdoch’s products - but that’s not easy. Murdoch’s interests and investments range from daily newspapers and magazines to direct-to-home TV platforms to a bouquet of TV channels to film studios to book publishing to investments in sports. Even in India, it would be difficult to completely boycott Murdoch. To boycott Murdoch in India, you have to boycott all the channels of the STAR Network, boycott all Fox movies and shows produced by Fox (on whichever channels they may run), do without Tata-Sky, stop reading books published by HarperCollins or watching movies produced by 20th Century Fox.

Considering the many brands and businesses that Murdoch has interests and stakes in, a significant public boycott is unlikely to have legs. The businesses based in the UK are certainly seeing a backlash from consumers and politicians from both sides of the divide and a re-evaluation of the bid to increase holdings in BskyB is already under way.

It began as an outcry against one brand -News of the World. The anger has spread on the suspicion that News International CEO Rebekah Brooks and Murdoch’s son James were aware of what the NoTW was up to, engulfing all News International print titles. Within hours, the anger engulfed Rupert Murdoch as well.

First, it was son James who was entangled in the web. As competitive media tried to drag him into the mire last week in the context of 1m payment to football chief Gordon Taylor, James Murdoch replied in a statement: “The company paid out-of-court settlements approved by me. I now know that I did not have a complete picture when I did so. This was wrong and is a matter of serious regret”.

Public ire moved quickly from one (fairly insignificant in the larger picture of News Corp’s revenues) brand to the brand that controls all the brands - Rupert Murdoch.

And Rupert Murdoch sensed that immediately, flying to London on Sunday last, and focussing the ire on himself. More importantly, he took charge, becoming instantly the official spokesman for News Corp on this crisis. The first move was the statement: “Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable. I have made clear that our company must fully and proactively cooperate with the police in all investigations and that is exactly what News International has been doing and will continue to do…”

To shareholders and all stakeholders, including customers of various brands, the company is in a crisis; but Rupert Murdoch is in charge. As the stock took a battering, Murdoch announced a buy-back to stem the tide . “News Corporation today announced that its Board of Directors has approved a stock repurchase programme totalling $5 billion. This programme increases the approximately $1.8 billion remaining under the Company’s current programme to $5 billion. News Corporation is targetting to acquire the $5 billion of Class A common stock and Class B common stock from time to time over the next 12 months.” The drama will continue to play out, and it will be months before we have a clear idea of how bad the damage is.

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The damage could have been a lot worse if Rupert Murdoch hadn’t been in charge. This is not the first time a large and popular brand has transgressed and it will not be the last.

We’ve seen, in India , brands getting into trouble and getting out of it, the most notable being Cadbury and the worms and the second being the Colas and impurities.

Cadbury used Amitabh Bachchan to reassure consumers that the company was concerned and that all was well - and he appeared not as a model but as a spokesperson for Cadbury.

Coca-Cola used a similar route, employing the services of Aamir Khan.

In the two instances above, the transgressions threatened the health and well-being of the consumers - and the brands climbed out of the mess.In the Murdoch instance, NoTW has outraged the consumer by business practices that they have found unacceptable.

Murdoch will surely announce that the management will put in place a system that will ensure there is no repeat of the NoTW mess. Over time, the consumers will ‘forgive’. As in the cases of Cadbury and Coca-Cola, brands with a long relationship with consumers find it a lot easier to gain forgiveness. By shutting down NoTW, Murdoch has ensured that the transgressor brand is eased out of the spotlight.

The consumer side is relatively easy; it is how politicians and governments in his two major markets, the UK and the USA see the developments and take advantage of the developments - that is going to be a long haul.