Tuesday, July 26, 2011

News Corpse IV: Phases of a crisis

It’s been quiet — relatively quiet, anyway — on the Murdoch scandal beat for the last three-four days. The postmortems from last week and the week before are mostly in and settled; certain people have been cashiered (as expected), and life at Fortress Murdoch has gone into hunkering-down mode. Which probably makes sense.

It makes sense because the Rupert/James Murdoch-News Corp scandal is destined to be one of those wave stories, a tidal news event, a series of revelations, each new one more problematic and incriminating than the one before. We got part of it, that first first wave, in the Select Committee parliamentary hearing last week, when Murdochs father & son were looking rather unprepared for what had already happened. That performance at Portcullis House, workmanlike but uninspiring, can’t augur well for what’s about to take place, what’s already lapping against the shores of the empire.

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Some of the blowback came last week from an unexpected place ... or maybe all too expected. John Bussey’s column last Thursday in the News Corp-owned Wall Street Journal lamented “The Missteps in Managing News Corp’s Hacking Crisis.” In a piece that was a generally mild brushback pitch, Bussey surveyed PR thought leaders on how News Corp had mismanaged the perception battle in the media.

“If you look at it from both sides of the Atlantic, they’ve done everything wrong that one could possibly do wrong,” said Harris Diamond, the CEO of PR firm Weber Shandwick, who told Bussey that News Corp’s predicament is “a failure of Crisis Management 101.”

Andrew Brimmer of crisis management concern Joie Frank told Bussey that “[m]anagement should have responded more thoroughly to the issues raised by the original hacking.”

“What happens to a crisis deferred?” said Brimmer, getting his Langston Hughes on. “It typically explodes into the open at some point.”

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For another specialist in corporate disaster containment, there may be a light at the end of the tunnel that’s not connected to an oncoming train.* Michael Gordon of Group Gordon said he thought News Corp is now finding the strike zone, more recently “handling it correctly … You have to separate the initial bad acts that caused the crisis from how the company handled the crisis once the heat got turned up.”

For any other company, that might be good advice. For News Corp, however, the one proceeds directly from the other. There’s not an inch of daylight between the attitude, the culture that precipitated this situation and the behavior News Corp has shown in handling it. Mostly, it’s the persistence of an arrogance, a divine right of plutocrats; it’s a duplicity, or a suspected duplicity, about the Murdochs’ dealings.

James Murdoch, News Corp’s deputy maximum leader, may be compelled to go before another parliamentary hearing in the days or weeks to come, because he’s suspected by members of Parliament of having been, shall we say, less than forthright when he testified last week.

When you’re accustomed to dealing with businesses, politicians, the media and the public in general as adversaries, if not outright enemies, getting the benefit of the doubt when you need it is a tough thing to do.

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Fortress Murdoch is shoveling money into the great furnace at an insane rate right now. Bussey reports that News Corp “has hired a phalanx of public relations and legal expertise ... to help it navigate the worsening mood of investors, regulators and law enforcement.”

One might think that Team Murdoch might also invest some time online looking at a chart devised a few years back as a way of making graphical sense of the decline of the newspaper business. Team Murdoch should study it, for reasons only slightly different than those for which it was devised.

Blogging on the newspaper industry in March 2010, I wrote:

The American Press Institute held a conference of CEOs from various media concerns in November 2008. The conference had, among things, the mission of discussing survival options and timetables for the newspaper industry in a time of unprecedented challenge, and crisis, for print journalism.

In a summary, ... the Institute entertained the advice of a business turnaround specialist and professor at the Kellogg School of Management at Northwestern University, who determined that companies under such stress “should start [course correction] by plotting their place on a ‘Phases of a Crisis’ chart. The earliest stage is indicated by a company essentially blind to eroding conditions undermining its business. This is followed by acknowledgement but inaction, followed by faulty action in hopes of a quick fix, followed by full-blown crisis and finally dissolution of the enterprise.”

According to the specialist, “[F]ailure to take action at any point on the curve means the enterprise inexorably moves to the next point. As an organization moves down the crisis curve, it will find executing a recovery plan more difficult, and will have less time to do it.”

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What’s striking in this graph is its elegant simplicity and its versatility — as thoroughly adaptable to small businesses as it is to political parties, as applicable to oil superconglomerates as it is to a newspaper industry hurrying to pivot toward the future, as pertinent to an economy on the cusp of crisis as it is to a multinational media empire that’s already there. P4 and gaining speed.

The story that’s always been a global story is about to become a Washington story. The Wall Street Journal recently reported that a Justice Department investigation is slowly getting under way, with subpoenas being prepared. A grand jury may be empaneled. And to one degree or another, the survival mode at the top of the food chain at News Corporation has certainly shifted, from the hopeful description of crisis management to what it really is right now, and has been for some time: crisis containment.

What was true for the Republican Party in March 2010 and for the United States dealings with BP in the wake of the Gulf oil disaster in June 2010 is true for the Murdochs and News Corporation today: “Trying to get a sense of ‘rock bottom’ is hard to do when the rocks that are presumably at the bottom keep moving under your feet.”

The second shift of cash shovelers has just punched the clock at Fortress Murdoch.

The sound of waves against the shore outside may soon be almost deafening.

Image credits: Rupert Murdoch 2011: David Shankbone. Wall Street Journal Online logo: © 2011 WSJ. James Murdoch: Getty Images. Crisis chart: Shein, Kellogg School of Management, Northwestern University.  |  * Thank you, Robert Lowell

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