News of the World

News Corp: Beware the knee-jerk crisis response

July 12, 2011: 11:25 AM ET

Rupert Murdoch's News Corp. has responded to the scandal at News of the World by jettisoning the publication. That crisis judgement call, among others, could come to haunt the company.

By Shelley DuBois, writer-reporter

Rupert Murdoch

FORTUNE -- When it comes to crises, most of us are hard-wired to either fight or flee. This is useful during, say, hand-to-hand combat, but it often spells trouble during a corporate crisis.

Make no mistake about it, Rupert Murdoch's News Corps. (NWSA) is in crisis. And the phone-hacking scandal surrounding the recently-shuttered News of the World grows more complicated by the minute. Some of the decisions Rupert Murdoch has made in the melee look like knee-jerk reactions, says Steven Fink, president and CEO of crisis management firm Lexicon Communications Corp.

Murdoch closed the British tabloid, which printed its final issue on July 10, and is now in the UK trying to salvage a delayed deal to take over the remainder of British broadcasting company BSkyB, which is facing new scrutiny in light of the scandal.

Murdoch and his son James have prioritized protecting Rebekah Brooks, editor of News of the World at the time of the hacks and currently the chief executive of News International, News Corp.'s UK arm.

It's a strange move, Fink says: "It just doesn't smell right. You don't rush out to defend somebody like that who is so close to the fire."

The quick decision to close the 168-year-old tabloid was another curious move. News of the World was doing well. It had a weekly circulation of about 2.6 million and it was profitable. Instead of shedding it, Fink says, "They should have purged the miscreants from the News of the World and brought in a credible and respectable team of journalists to right the ship." More

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