Spin Out: How Can You Survive A Media Assault?

The NY Times somberly intones that bad PR can be the kiss of death for big businesses, and looks at three case studies of companies that "bungled" their responses to recent troubles. The Times wonders, "are some crises so dire that a public relations victory is not possible?" You'll never guess which three the Times chose to profile:

Toyota, celebrated for engineering cars so utterly reliable that they seemed boring, endured revelations that its most popular models sometimes accelerated for mysterious reasons. The energy giant BP, which once packaged itself as an environmental visionary, now confronts the future with a new identity: progenitor of the worst oil spill in American history. And the Wall Street iconGoldman Sachs, an elite player in the white-collar-and-suspenders set, found itself derided in Rolling Stone as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Last month, Goldman agreed to pay $550 million to settle federal securities fraud charges.

“These were real reputational implosions,” says Howard Rubenstein, the public relations luminary who represents the New York Yankees and the News Corporation. “In all three cases, the companies found themselves under attack over the very traits that were central to their strong global brands and corporate identities.”

Toyota, Goldman and BP may not be paragons, but their "PR problems" were as much the result of ignorance, Ludditism, and politically calculated anger, as they were the result of company policy. Thus, the question should not be "can they survive?" It should be "can any of us survive when ignorance and hysteria are the framework for public debate?"

In the case of BP, there was a true PR disaster. BP came in with a reputation for safety issues and cost cutting, which finally came together catastrophically at the Deepwater Horizon rig. And, any oil company that has a spill on its watch can expect to pay a heavy price, both in fines and bad publicity. (Humorously, the Times intones that BP's hard won reputation as a "Green" company has been irretrievably lost. Come on! The BP = Green was all marketing intended to curry favor with global warmists in the corridors of power. Fat lot of good that did.) But the apocalyptic ranting in both the political arena and in the media reporting was completely divorced from reality with breathless reports of the Gulf of Mexico "dying" and beaches in the Atlantic threatened with tar balls. The much-hyped job losses came more from the government's overreaction by banning off shore drilling - never let a crisis go to waste, right? - than from anything BP did. And while the spill's optics were bad, the actual effects have yet to approach the Beyond Thunderdome predictions of doom we heard from media experts. The Times specifically points to CEO Tony Hayward's comment that

“The Gulf of Mexico is a very big ocean,” Mr. Hayward told The Guardian amid debate over the extent of the spill. “The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.”

Four days later, he told a TV reporter that “the environmental impact of this disaster is likely to have been very, very modest.”

Everyone screamed bloody murder over that, yet as things have shaken out, Hayward looks like someone who knew what he was talking about (hey, he only has a Phd in geology) while the "Plug the Damn Hole/Boot On The neck" strutting by the government looks like ignorant, politically expedient posturing.

Goldman is likewise an unsympathetic entity, inasmuch as it was crass enough to make obscene profits in the post-bailout era after other reckless banks and investment houses became functionally insolvent or simply disappeared forever. But, the specific "fraud" that Goldman committed - arranging a deal that allowed John Paulson to bet against the housing market - was hardly emblematic of the practices that resulted in the Crash of '08. Moreover, the SEC fraud action was announced on the day debate began on the Dodd-Frank financial reform bill (with accompanying screaming front page headlines, of course), and the case settled for $500 million on the same day as the final Senate vote on the matter. Funny how that worked.

After months of presidential and senatorial demonization of Goldman Sachs, it might be hard to remember that the Crash of '08 and the Little Depression arose from mismanagement and fraud at banks that went out of business precisely because of ... mismanagement and fraud! The world didn't turn upside down because Goldman shorted the housing bubble. Wall Street "died" because Bear, Lehman, Merrill, Fannie, Freddie, WaMu, Wachovia, Countrywide, AIG, and dozens of others went long at precisely the moment they should have been getting out! These companies, and their executives, are the ones who helped cause the Crash, but they seem immune from any sort of attention, let alone government sanction. Why this is a "PR problem" for Goldman is beyond me.

Toyota is the most egregious example of the government imposed "PR problem." Anyone who read PJ O'Rourke's Parliament of Whores knows that sudden-acceleration incidents in cars are a figment of the imaginations of lawyers, consumer advocates, and boat-footed drivers. But, journalists and Democrats have not read Parliament of Whores, so when sketchy reports surface of cars suddenly accelerating out of control, hustling liberals jump on them with both feet. Never mind that reputable engineers have never been able to replicate SAI's in the lab. Never mind that the most spectacular SAI - the runaway Prius in San Diego - was a hoax. (incredibly, the debunking did not receive the same level of media attention as the "runaway"). And also, never mind that Toyota earnestly tried to diagnose the problem and even established as official corporate policy that it would not blame the drivers, even though Toyota had to have suspected the drivers were at fault. No, it was much more important for Democratic congressmen to drag Toyota executives to DC for a show trial to showcase their corporate sins. Added bonus: Toyota is a competitor to Government Motors, and its executives were Japanese, i.e. Dread Furriners. This from the Party of Tolerance and Science.

BP, Goldman, and Toyota may have had their problems. They may have been blameworthy. But their PR problems were dwarfed by the sustained assault they received from the media and political elites. That's not a PR problem. That's war.