How Harmful Is News of the World Scandal for News Corp Reputation?

We are experiencing a massive media coverage of the phone hacking scandal by News of the World practices. In an unprecedented decision, Rupert Murdoch has decided to close the 168 years old British newspaper.

News of the World was part of News Corporation media group. News Corporation includes Fox News.

In this post we present some results concerning media coverage of the crisis and its impact on News Corporation.

First graph shows a raw information of how serious is the ongoing crisis for News Corp. The figure shows the evolution of worldwide media attention received by the group since the last 4 years. We monitor at MRI Universidad de Navarra media impact of all Dow Stoxx 600 America and Europe since 2007.

Our results show that News Corp is reaching a value 500, while precedent historical peaks attained merely a value of 190 points. Global media attention is directed not only to News of the World as source of the scandal, but also to its consequences to the group, News Corporation.

We show below some additional data concerning the geographical source of news about the scandal.

We apply the media reputation analysis using brand diamond vector analysis, like in many precedent posts.

First we show how media coverage about News of the World increase the association of the newpaper to vecto “Scandal”. We compare situation with news up to July 8 2011 and since mid June 2011, against situation five days after, by July 12.

By July 8, the association to “Scandal” is strong, as main phone hacking scandal were already in the media. Five days later it is increased, mainly in the vector components scandalous, embarrassing, mistake, harm and corruption. News of the World affaire is viewed by international media as a pure scandal issue. Corruption concerns start to emerge also from the news coverage.

The impact of Milly Dowler and London bombigs cases

Of course, the association of News of the World to “Scandal” is due to specific revelations of shocking cases of unduly phone hacking. We show in the following figures how media has portrayed news about some cases that have been considered outraging by many people.

We have selected the cases of Milly Dowler’s phone hacking. She was a 13 years old girls kidnapped. Apparently, while the police investigations were still open, journalists from MoW hacked Milly’s phone. This movement made the police think that Milly was still alive, while in fact she was already killed, and created investigation obstacles. The other case refers to phone hacking to relatives of people killed by June 7 terrorist London bombings.

We find that in both cases the association to “Scandal” is stronger than for all news about News of the World. These shocking cases pushes higher the relationship of NoW with components embarrassing, worrying, mistake, harm and corruption.

Looking at vector “Tragedy” we find that the shocking cases increase NoW relationship with “Tragedy” components catastrophic, horrible (for Milly’s case), failure and worst.

Another case that has received wide media attention if the phone hacking of relatives of British soldiers killed in Afghanistan. We compare it to the media coverage given to news about London bombings.

We find that as for “Scandal”, the degree of association is lower when referring to the killed in afghanistan relatives: according to our results, the use of the Milly Dowler and London bombings cases are viewed by far more shocking than revelation about hacking Afghanistan soldiers’ relatives phones. News profile concerning vector “Tragedy” (not showed here) is roughly similar.

First two cases were highly damaging for News of the World worldwide reputation.

Reputation of News of the World has been completely battered by recent revelations. It does not only affect bad reputation, but it also tend to tarnish previous association to positive brand vectors. As a way to show the impact of the reputation crisis, we compare current News of the World media reputation versus the combined reputation of New York Times and Washington Post, for some selected brand vectors. We can consider NYTimes and WPost as benchmark references in the media sector.

As it could be expected, News of the World is reaching poorer marks in all comparisons when referring to vectors “Acclaimed”, “Respected, Coherent” and “Talented, Smart”.

As we have mentioned in precedent posts, the fact that the results provided using MRI Universidad de Navarra show results in line with common sense expectations do not make them superfluous at all: they are telling us that our approach is able to generate new intellingence about the content profile of all news covering any issue. This result provides us legitimacy and credibility when we show other results where intution about the results is unclear.

News of the World impact on News Corporation reputation

Now we come to the analysis of the main question of this post: to which extent the NoW scandal is reaching News Corporation reputation, a media group that owns many leading newspapers and news providers.

Before showing the reputation analysis, we provide first data about media coverage received by the scandal. The degree of international media attention of a local issue is an excellent indicator on how serious a reputation crisis is.

According to our results, just 29.7% of all news about News of the World come from Britain. International media generate the other 70% of all news. News from United States count for 26%, while media from Europe publishes another 31%. Australian media, country origin from newspaper’s owner produces 5% of all news.

Results about the newspaper media coverage can be compared to media attention to the media group News Corp. We find that main source of news is now US media, with 44.1% of all news. News Corp is listed in NYSE, and News Corp controls also several leading newspapers and broadcasters in the United States. Our results indicate that News of the World scandal is followed in the United States mainly linked to the economic and financial implications for the media group.

Share of British media drops from 29.7% to 14.5%. The weight of media from Europe slighly decreases from 31.4% to 25.7%. Media attention in Australia is higher for News Corp (a share of 5.9%) than for NoW (5.0%).

In order to deal with this issue, we compare News Corp media reputation based in news about the media company during year 2010, against news in the midst of the current scandal, between mid-June and mid-July 2011.

We show first the evolution of the association with negative brand vectors “Scandal” and “Tragedy”.

According to our results, the current reputation crisis is basically affecting components scandal and scandalous of reputation vector “Scandal”, while the other components keep stable.

As for vector “Tragedy”, the ongoing crisis is increasing the association with components tragedy and horrible.

Based in our results, it seems that globally speaking, the damages suffered by the whole group are not that strong, at least in comparison with 2010 values.

A complementary check is needed in order to measure the impact of the News of the World scandal on News Corp. It is wise to compare also the status of brand vectors linked to positive values, as those showed to compare NoW with NYTimes and WPost.

Now we find that current brand value of News Corp tends to be lower than in 2010 in all selected vectors: “Acclaimed”, “Excellence”, “Leadership, Commitment” and “Respected, Coherent”.

We can thus conclude that present brand value of News Corp has substantially decreases when compared to 2010 values, not only because ob observe a sligh increase of association to bad reputation vectors, but mainly because it loses ground in all key positive brand vectors directly linked to reputation and brand equity.

We derive from our empirical analysis and conclude that the News of the World scandal was tarnishing the brand value of News Corp. In terms of reputation crisis management, serious measures were needed in order to show that all News of the World misbehaviour was clearly against the culture of News Corp. The decision by Rupert Murdoch was radical and unprecedented: simply to close the source of the scandal as news provider, even if it was the leading newspaper in Britain in terms of sales.

New scandalous revelations appear day after day. Time and investigation will show us to which extent all bad (and probably delictive) practices where part of the group culture or just individual decisions. This element plus Rupert Murdoch attitude towards British justice and legal investigations will probably influence long term impact of this current reputation crisis in News Corp reputation and brand value. Future measurements of all affected people and companies will help us to answer this question.

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  1. Pingback: News Corp Scandal Media Coverage in US Newspapers | Crisis, Media, Reputation (and Wikileaks)

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