3Qs: News Corp. may still have a price to pay by Matt Collette July 20, 2011 Share Mastodon Facebook LinkedIn Twitter News Corporation, the world’s second largest media conglomerate, and its CEO, media mogul Rupert Murdoch, have been plagued by scandal since it was revealed that journalists at the company’s British tabloid, News of the World, had hacked into voicemail accounts belonging to celebrities, politicians, crime victims and other public figures. Harlan Platt, a finance professor in Northeastern’s College of Business Administration who specializes in crisis response, says a company needs to take immediate and deliberate action if it hopes to survive a major scandal. In the event of a major crisis or scandal, what does a company need to keep in mind in order to weather the storm? The worst thing to do in a business crisis is to hide the evidence or stick your head in the sand. News Corp. appears to have done both since the offending incidents took place. Once the story broke, however, News Corp. has behaved according to form. Offending parties were fired or dismissed; Murdoch delivered a mea culpa speech; and the board of directors issued supporting comments. There’s little more they can do other than to wait and hope that time heals the wounds, but I suggest News Corp. replaces Rebekah Brooks, the former chief executive of News International, with a well-known individual famous for his or her integrity. Why is it important for a corporation to take pro-active steps in its response to a crisis? In the world we live in today, it is very difficult to permanently hide anything — everything comes out. If you don’t believe that, talk to Gary Hart, Bill Clinton, or all sorts of companies that have had problems. First and foremost, a company needs to be careful and spend some time and energy to be certain that it understands precisely what is going wrong. The one thing that it does not want to do is make a revelation and then come back two weeks later with another revelation. You want to put this thing behind you and get on with whatever it is you do.It is important to adopt an aggressive strategy in order to take control of the problem. You want to demonstrate that the barrel is not rotten, but rather there were just some rotten apples in it. Will this crisis eventually fade away for Rupert Murdoch and News Corp? In the case of Murdoch, I don’t think this blows away. This is a problem that is now six years old and it’s one that a continuing succession of managers has brushed aside. In other words, it has had a long time to fester. Now that things have come out, it’s very clear that what News Corp did is quite nasty. Given that assessment, the next thing they need to do is determine who’s going to pay the price. It looks to me that Murdoch is swinging a very broad ax: anybody remotely connected to this travesty is being cut down, probably wisely. The last step is to appeal to the public for forgiveness and understanding. You don’t always get it, but that’s the hope. If that doesn’t work, then Murdoch himself will have to go.