Monitoring Murdoch’s Meltdown

Agency CEOs are watching the drama of the hacking scandal for hints of U.S. contagion

Many U.S.-based ad executives—the people with the true power to control Rupert Murdoch’s destiny through the billion dollar ad budgets that provide most of his companies’ revenue—still view the News Corp. scandal from afar. It’s damaging, but it’s primarily a U.K. story, right?

They realize though that all this can change—and quickly in the age of minute-by-minute updates and instant pile-ons—if instances of hacking turn up in the U.S. And, especially, if the allegation that News International’s News of the World also hacked the phones of 9/11 victims proves true. At the close of the week, The Wall Street Journal, a Murdoch paper, reported that the Justice Department was preparing subpoenas to investigate the 9/11 allegations. Meanwhile, agency CEOs are just as gobsmacked as anyone by how quickly the Murdoch power—and perhaps empire—has unraveled.

Ogilvy & Mather chief executive Miles Young’s main takeaway from the hacking scandal is that “media have to be very careful about assuming that a free society allows them to arrogate political and social power to themselves. But that’s hardly a new angle in the U.S.—from the 19th century to today.”

But Young injects a note of caution, pointing out that the evidence of hacking taking place in the U.S. is “slender and the conditions in the U.K.—cozy police/News International/government relationship—do not exist here. So, I think it’s very different.” Likewise, Nick Brien, CEO of McCann Worldgroup, says, “I don’t believe the spillover will be significant in the U.S. unless malfeasance is proven.”


“If it becomes evident that vulnerable Americans were used as news fodder during moments of public distress, people will be outraged, and if something like that is proven in the U.S., it will be radioactive,” says Stephen Gatfield, former CEO of Lowe and co-chairman of Naked Communications.

A “hornet’s nest” of that magnitude could turn the Murdochs and their company into a “social pariah” here and ignite public outcry, says Horizon Media CEO Bill Koenigsberg. Such a reaction could in turn trigger boycotts of News Corp. movies, TV shows, and newspapers. What’s more, “when negative social currency happens, it can move at light speed,” Koenigsberg says.

“In this new media world, advertisers have to be very careful about the editorial environment they buy into,” says Alan Siegel, founder of brand consultancy Siegel + Gale. “Look at Glenn Beck. He had the highest ratings in his time slot, but advertisers still fled.”

The vilification of News Corp. in the U.K. came fast once The Guardian reported that NOTW’s hacking victims weren’t just celebrities and politicians but also a 13-year-old girl who had been murdered. As Brien sees it, “Sadly, the implications in the U.K. are as severe as the consequences so recklessly ignored.” And obviously, given the powerful characters and bizarre plot twists, it’s a titillating story.

“It’s the sexy story of the month,” says Koenigsberg. “Last month it was Casey [Anthony] and this month, it’s Murdoch.”

The scandal doesn’t surprise TBWA CEO Tom Carroll, who attributes it to the arrogance of the Murdoch empire.

“They have no conscience about people,” Carroll says. “They don’t care about other people. They only care about themselves and their political agenda. They’ve made that clear.”

Carroll adds, “I can’t believe the arrogance of Murdoch to manipulate the American public and Fox. And to think that people inside his organization think it’s OK to hack the public’s phones because of their political agenda. I mean I find it mind-boggling. But I’m not surprised.”

So, does the now embattled Murdoch survive the storm?

“Yeah, money survives the storm, right?” replies Carroll. And while media manipulation isn’t new, the irony of it continuing in an age of consumer control isn’t lost on Carroll. “In the age of the Internet, with the empowered consumer and you can find an answer to anything, we’re still being manipulated by the press,” he laments. “What’s it going to take for people to not put up with this anymore?”

For now, News Corp.’s leaders must balance between “contagion on one hand and presumption of innocence on the other,” says GroupM North American CEO Rob Norman.

“There are some thin lines here. It remains possible that a Murdoch newspaper could have obtained a piece of information legally, like details about the health of a child, but then the decision to use it becomes a moral one rather than legal,” Norman adds. “If they made a poor ethical decision, the presumption of innocence becomes very difficult.”

Even as the scandal remains largely contained in the U.K., Murdoch may not be able to duck its consequences in the court of public opinion in the U.S.

“He’s an incredibly powerful person in this country, given his influence in the financial and political media,” notes Nick O’Flaherty, strategy director at brand identity shop Wolff Olins. “But it’s going to take some kind of miracle to restore his credibility after all of this.”