Strategic Risk Decision Making - Phone Hacking Scandal - Essay Example

Phone hacking scandal Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecture Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 12th October, 2012. Introduction The media play a profound role in modern society as a check and balance on other institutions including public and private institutions. However, in their search for information some media houses and journalist engage in unethical news gathering practices. It is an irony and a considerable embarrassment for a company's supposed to be the moral watchdog of society to engage in immoral conduct. When a media company is accused of unethical practice, its image is severely affected leading to decreased audiences and consequently advertising appeal which is the revenue backbone of any media operation. In this century, the News Corporation group based in London has been caught in controversial practices. Some of its reporters have been using improper practices to access confidential and private information. These practices include hacking into phones and bribing police officers to access confidential information while doing investigative stories. Most of the information gathered this way was published in the groups controversial Tabloid “The News of the World” (Kennelly 2011). In 2005, a whistle blower within the Tabloid exposed the Newspaper's involvement in illegal voicemail interception (Kennelly 2011). Later, investigations led to the unearthing of the largest phone hacking scheme by a news organization in history. Eventually, the scandal led to the winding up of the 168 years old tabloid which was at the centre of the scandal. This Report analyzes the crisis response approach the news group adopted in response to the threat posed to its business operation by the hacking crisis. Response strategies used by the News Corporation There were three principal approaches that the News Corporation adopted in their crisis response strategies among them were deny crisis response where someone confronts a group of people or an individual under a claim to have done something wrong (Coombs 2007). In this situation, the person accused of a crime totally refutes the allegations. In a report by Spillius and Blackde (2011) the owner of News Corporation, Mr. Rupert Murdoch, denied the allegations set against him stating that he would not conform to the ‘total lies’ alleged of his media company on phone hacking. Other instances where there has been denial is where Rebecca Brooks, Anderson Coulson and five other journalists of News of the World and the Sun were charged with hacking the voicemails of over 600 people (Spillius and Blackde 2011). Diminish crisis is another strategy used in crisis management. In the strategy, the organization involved denies the accusation, but still look for ways to control the situation (Coombs 2007). In the denial response, there is an excuse of not participating thereby a justification of not been involved in the conflict. Based on the case study, Mr. Murdoch and the News Corporation remuneration committee use the diminish strategy by cutting their bonuses in order to pay up for damages caused to the victims of the phone hacking. To reduce the impact that would have otherwise increased the case, there was a shared responsibility where the company catered for the costs that emerged due to phone hacking amounting to $224 million. Ms Murdoch found it to be necessary to request Ms Brooks behind a closed door meeting to resign being the chief executive officer of the company. With this action, James Murdoch also resigned as the chairman of BskyB so as not to be associated with the hacking scandal. Due to the negative publicity that the News Corporation had it saw many executives resign from their plum positions. Other than Murdoch family members who had key positions other people such as Les Hilton also resigned as Chief executive of the subsidiary company; Dow Jones & Company. Hilton claimed before the parliamentary committee that there was no evidence to show that there was hacking of information on phones. To be in more control of the situation of phone hacking, News Corporation made it their duty to start apologizing for the negative publicity it had (Bradshaw, Salamander and Stacey 2011). The executive Chairman, Mr. Rupert, made an apology on behalf of News of the World terming the mistakes they had made regretful. To caution on these negative affects, On July 16 to 17, News international made apologies through Mr. Rupert. He said he was sorry for the wrongdoings that turned out to be serious. He later published an article entitled ‘Putting right what’s gone wrong'. Rebuilding crisis response is another strategy used in the organization where an individual offer refunds in terms of money or gifts (Coombs 2007). In this case, there is compensation of the damages that have occurred and in most organizations; they take full blame hence responsible for their actions that may have led to damage. In the case study, the Chief Executive Officer of News Corporation used this strategy for resolving conflict on the phone hacking issue. The group lost a lot of revenue by paying compensation for the damages caused by the scandal (Kenneally 2011). In the Daily mail, an article named News of the World phone hacking: the company apologized unreservedly and set up a victim compensation fund. The reporter said that the owners of News of the World admitted having committed phone hacking, which caused an enormous liability to the company. Therefore, the company agreed to offer compensation to the victims that were prey to the hacking incidence (BBC 2012). The courts decided that because of the damage that was caused, the company would pay up for $670m worth of compensation. The Most used directed speaker In response to the crisis, the News Corporation mostly used the rebuild crises response. Its founder, Rupert Murdoch decided that there would be compensation for all the victims who had been affected (The Daily Mail 2011). In all their discussions the head and founder of the organization Mr. Murdoch represented the overall organization in terms of speaking to any committee, defending the organizational leadership and talking to the shareholders on the scandal of phone hacking and losses that would be expected due to payment of damages and compensations to be made. Variation of message strategy between speakers and through Time When the crisis initially broke out in 2005, the News group bitterly denied the allegations of phone hacking or any unprofessional news gathering practices (Hutchinson 2011). Andy Coulson the Tabloids world editor continued denying the allegations until the culmination of the case against two of the Tabloids workers in 2007 (ABC News 2012). The two workers were pleaded guilty for the charge of phone hacking but did not reveal whether their superiors had authorized the phone taps. In a partial admission of liability, Andy Coulson resigned from the Tabloid, but still maintained he did not know about the dirty practices used by his staff (ABC News 2012). Two years later, the News International group through its Chairman, Les Hinton continued employing the deny strategy maintaining that hacking was not an organizational policy but rather the act of a few rogue reporters (Hutchinson 2011). By January 2011, the News International group had partially accepted liability for spying and settled some cases out of court. However, the Tabloid continued to maintain that hacking was not widespread enough and that the executives did not have knowledge of the hacks (ABC News 2012). In April 2011, through its lawyer, Michael Silverleaf QC, the group offered what it called an “unreserved apology” and offered to compensate those it had invaded their privacy (The Daily Mail 2011). In further efforts to diminish the crisis, Rebecca Brooks, the groups CEO promised to take action if accusations against the group were proved in Milly Dowler hacking case (BBC News 2011c). Rebecca expressed her shock of that news of the world could have been involved in the hacking claim. Thus, Rebecca continued to use the deny strategy alleging that the accusation against the group were unreasonable (BBC News 2011c). As the crisis worsened the proprietor of the News Group, Rupert Murdorch, flew to London to handle it July 2011. On July 7 2011, in an address to the Tabloids staff the Mr. James Mudorch, News Corps Deputy chief operating officer announced the Newspaper would be pulled out of publication on 10th July 2012 (Spillius and Blackde 2011). Addressing reporters the proprietor described the accusations against the News Corp group as total lies. He said he would be as transparent as possible before the parliamentary hearing. Days later, the News International placed full page ads on its own and rival newspapers signed by Rupert Mudorch (Spillius and Blackde 2011). The proprietor also personally apologized to Milly Dowler a victim of hacking. In contrast to the earlier denials that there was no widespread hacking, on July 19th 2012, in testimony to the parliamentary committee, Rupert Murdoch accepted that News of the World was guilty of hacking (Peston 2011). He maintained that top executives were not aware of the immoral practices of their workers. In September 2011, the James Murdoch refused to take up a 6 million bonus offered in his annual salary (BBC News 2011c). In a rebuilding strategy, the younger Murdoch said he felt it was wrong to take the bonus in light of the News of the World hacking scandal. The Handling of phone hacking scandal through a situational crisis Communication Perspective According to Coombs (2007) Situational crisis Communication theory an organization that is facing a man-made crisis must follow a number of principles. Adherence to these principles substantially enhances the chances of an organization to recover from the crisis. In this section, we compare the crisis response strategies News Corporation adopted against what the theory says an organization must do in times of crisis. Coombs (2007) asserts that Organization in crisis must select the right crisis response strategy based on the magnitude and effects of the crisis. The deny strategy of responding to crisis is most suited in a situation where crisis is based on the magnitude and how negligible it is. In contrast, News corporation applied the deny strategy until much later in the crisis when they partially acknowledge wrongdoing. Later, the News Corp adopted a diminish crisis that would have been most appropriate from the beginning (Coombs 2007). Each of the directed speakers reminded the public that the News of the world in the past had been involved in fighting pedophiles. The company successive executives including informed the public of their inability to control the crisis. Both, Andy Coulson and Rebecca Brooks claimed they were not aware of the unethical practices. However, the strategy was ineffective as they continued combining it with the denial strategy (Coombs 2007). Finally, the corporation also embarked on rebuilding on its image when they issued unreserved apologies. Secondly, the James Murdoch refusal of the 6 million bonuses will go a long way in recovery of the company’s image. Conclusion To conclude on the above essay, the News Corporation scandal did not have negative effects only in the United Kingdom but it also affected the groups operation in other countries. Using the SCCT theory in dealing with the crises, it is justified that by compensation and apologizing for the deeds of the company, News Corporation would not have been closed down. Following the allegations made and the much compensation the company incurred to pay for the victims, the British government would have given a second chance for its continuation. Recommendations To avoid such a situation from rising again, it is recommended that a media company should practice integrity and sincererity in relaying information. In hiring their reporters, a company should seek for professionals who will be independent in their news structure and in any situation; they should be responsible for any statement that may have a negative impact on specific individuals. Murdoch’s company was finally closed due to hacking of private information which suffered great financial loss on behalf of the reporters. It is recommended that the reporters should be liable for what they give to the public and any compensation that should be borne, should be on the part of the reporter and not the company. It is also recommended that before giving out any information to the public, there should be a department specifically put to read through the articles for any situation that there may be hacking of information. 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