The Dark Side 2

Critical Cases on the Downside of Business

Pauline Fatien Diochon, Albert J. Mills, Emmanuel Raufflet, Pauline Fatien Diochon, Albert J. Mills, Emmanuel Raufflet

• Publisher: Routledge
• Year: 2017
• Print ISBN:
  9781906093921
• eBook ISBN:
  9781351277105
• Topic: Business
• Subtopic: Business General
• Index: Business

This second collection of outstanding shortlisted contributions from the Critical Management Studies (CMS) Interest Group of the Academy of Management (AOM) Dark Side" case-writing competition continues to go where other business case studies fear to tread.There are very many case studies of business best practice when engaging with social, environmental and ethical issues. But when educators look for resources to illustrate to students the more typical examples of bad – let alone scandalous – practices of some firms, the cupboard is almost entirely bare. And yet there is a critical need for business educators to expose students and managers to such issues to understand the different multifaceted phenomena of our late capitalist era; to support critical, reflective moral development; and to reflect and understand the complexities of organizational life. To argue that such cases deal with the bad apples in an otherwise functioning system misses the point. Whether focusing on the phone-hacking scandals at national newspapers, the influence of big pharma companies on clinical trials, the Bhopal tragedy or the use of child labour in the garment industry, the problems discussed are of major importance and in many cases have been demonstrated to be common practice for particular companies. Good news they are not, but all are stimulating and present students with dilemmas and decisions to make in a myriad of ways.Each of these 14 selected cases from 2009–2012 has been thoroughly documented, peer-reviewed and edited. They cover four continents (Asia, the Americas, Europe, and Oceania) and both business and public organizations. The industries covered range from extractive industries, the energy industry, consumer products, pulp and paper, movies, media, municipal affairs, academia, banking, and the drug industry. The book is split into three sections: 'Community and Environment'; 'Human Rights and Business'; and 'Ethics and Policy'.Online Teaching Notes to accompany each chapter are available on request with the purchase of the book.

Section C
Ethics and policy

9
Ethical breaches at News of the World¹

Debapratim Purkayastha
IBS Hyderabad
AJ Swapna
IBS Hyderabad

This case study is about the closure of the News of the World (NOTW), the 168-year-old national tabloid of the UK, owing to various ethical breaches over the years. James Murdoch, Deputy Chief Operating Officer, Chairman and CEO, News International, announced that the July 2011 edition of the paper would be its last. Many people were arrested, including the former News International CEO Rebekah Brooks and ex-NOTW editor Andy Coulson. News Corp had to withdraw its US$12.5 billion bid for British Sky Broadcasting Group following the public protest and political backlash brought on by the phone hacking scandal.

The case discusses the questionable practices which were common at the tabloid and which eventually led to its fall. The newspaper resorted to hacking phones and bribing police officers in order to publish juicy news. The public backlash over the phone hacking scandal led to a dip in its advertising revenues and ultimately paved the

way for the shutdown of the media giant. News Corp and its senior management came under severe criticism following this scandal. Though News Corp had released a code of ethics in July 2011 and distributed it to all the employees, experts opined that the real challenge before Rupert Murdoch and the senior management was how to enforce this code.

This case study is a critical case study as it deals with the ethically volatile issue of phone hacking. When journalists hack into phones, they violate laws and invade privacy. Following the major public outcry against News of the World, several staff members of the tabloid were jailed, the chief executive was arrested, and the tabloid was shut down. Phone hacking by government is useful to fight crime and terrorism, and is permissible within legal limits. Similarly, the media frequently uncovers corruption in public and private sectors and plays a role in keeping everyone honest. Journalists may find information about corruption or that saves lives. Whether it is the media or governments listening into private conversations, both raise ethical concerns. It raises vital questions like: When does hacking violate privacy? Can phone hacking by media ever be justifiable? When is phone surveillance justifiable? Is it ever ethical? Then, the case also includes other questionable practices such as the media group resorting to bribery to gain vital information that could be delivered to its readers as scoops.

[M]any wonder, amid a parade of arrests and revelation, whether the phone hacking and bribery at NOTW are truly the actions of one News Corp enterprise or an example of the company’s overall corporate culture² (Patricia Harned, President, Ethics Resource Center³, in 2011).

“It is becoming increasingly clear this scandal was not perpetrated by a few rogue reporters, but was systematically orchestrated at the highest levels of News Corp.”⁴ (Melanie Sloan, Executive Director, CREW⁵ in 2011).

“Thank You and Goodbye” read the headlines of Britain’s best-selling Sunday tabloid,⁶ the News of the World (NOTW), as it rolled its last edition off the presses on July 10, 2011.The tabloid had sold around 4.5 million copies in July 2011, much higher than the average of 2.7 million copies it sold in the preceding weeks⁷ (Refer To Exhibit 1 for the first and last edition of the News of the World). On July 7, 2011, the parent company of the 168-years-in-print tabloid, News Corporation (News Corp), announced that the NOTW was being permanently closed. The tabloid was forced to shut down after the unethical practices it had been following came to light and kicked off a major controversy in 2011. The tabloid NOTW was entangled in a series of controversies which included hacking the phone lines of celebrities and the royal family, and those of murder and terror victims. It was also accused of paying bribes to police officers for obtaining information and so on. The revelations that the phone of a murdered schoolgirl Milly Dowler⁸ had been hacked generated a public outcry. Public enquiry reports later showed that employees of NOTW had also tapped the phones of deceased British soldiers and their families, the victims of the London bombings⁹ and their relatives’ phone and voice mails. Following the phone hacking controversy, many top senior executives resigned from News Corp and a few, including the former News International CEO Rebekah Brooks (Brooks) and ex-NOTW editor Andy Coulson, were arrested on suspicion of conspiring to intercept communications and unlawfully accessing voicemail messages. News Corp had to withdraw its US$12.5 billion bid for British Sky Broadcasting¹⁰ (BSkyB) Group following a public protest and a political backlash against the phone hacking scandal. Advertisers too began to boycott the tabloid. The loss of revenue eventually led to the tabloid’s closure.

The closure of NOTW and the exposure of the scandal brought to the fore the issue of ethical standards at News Corp and the lack of self-regulation. The cut-throat competition in the media industry had paved the way for yellow journalism or ‘gotcha journalism’.¹¹ “Quite simply, we lost our way. Phones were hacked, and for that this newspaper is truly sorry”, said a message posted on the tabloid’s website. In its last issue, Rupert Murdoch, CEO of the media conglomerate, issued an apology. He acknowledged the fact that NOTW had been involved in phone hacking and had bribed police and investigating officers for information (Refer to Exhibit 2 for the copy of the apology statement issued by Rupert Murdoch). The last edition carried no advertisements and the company decided to donate the sales proceeds to charity. The front page of the last issue had an epitaph, “The world’s greatest newspaper 1843–2011”, with a strapline: “After 168 years, we finally say a sad but very proud farewell to our 7.5m loyal readers.”¹²

In July 2011, News Corp, whose credibility had been questioned following this crisis, released a code of ethics and distributed it to all its employees. The move prompted observers to comment that the next big challenge for News Corp would be the effective implementation of the code. The question before Rupert and James Murdoch and the senior management at News Corp was: Is releasing a code of ethics enough? What else should they do to address this issue?

Background note

American multinational conglomerate, News Corp, was incorporated in 1979 in Australia and was headquartered in New York. Rupert Murdoch was the founder, Chairman, and CEO of the News Group, which was the world’s second largest media house in terms of revenue, as of 2011. As of September 30, 2011, the company had total annual revenues of approximately US$34 billion.¹³ News Corp had operations in six industry segments: cable network programming; filmed entertainment; television; direct broadcast satellite television; publishing; and others. Apart from these, News Corp had made many acquisitions over the years in the fields of film entertainment, the Internet, magazines, television, and books. One of these was the takeover of the News of the World in 1969 for £34 million¹⁴ (Refer to Exhibit 3 for the list of business units under News Corp).

The first issue of NOTW was rolled out by John Browne Bell on October 1, 1843, in London. By 1939, sales had reached around four million and it had become the world’s biggest selling newspaper in 1950.¹⁵ At its peak in 1951, circulation was around 8.4 million issues sold per week.¹⁶ Under Rupert Murdoch, in 1981, Sunday Magazine was rolled out along with the NOTW newspaper and in 1984, the newspaper changed its format to a tabloid. In 2007, James Murdoch, son of Rupert Murdoch, became the non-executive chairman and deputy COO of British Sky Broadcasting Group Plc from being the CEO (Refer to Exhibit 4 for the list of senior executives at News Corp). Though the major portion of the news covered in the NOTW was related to scandals, there were occasional stories which were done in public interest.

Questionable practices

In its heydays, NOTW took to the path of yellow journalism to increase its circulation and to grow at a faster pace.¹⁷ The editors and the journalists of NOTW used questionable means to obtain information and generated sensational stories to woo the public. Very soon, NOTW became the source of news about scandals and crimes. The cheap price¹⁸ at which it came was also one of the reasons for its success. It was affordable and became popular among middle income grade literates. Some observers believed that the tabloid did not maintain a balance between serious and sleazy news and said that for the NOTW journalists, ethics always took a backseat. The journalists gave ethics the go by when the phones were hacked as they were more interested in obtaining information which their rivals could not get.¹⁹

While News International was admired for its creativity and energy in surviving in a highly competitive industry, it also attracted criticism as many felt that its employees had adopted Rupert Murdoch’s ethos of a “do-whatever-it-takes-to-win attitude”.²⁰ Many considered Rupert Murdoch, who was credited with creating a global media empire from a newspaper in Adelaide, to be one of the most powerful men in the business—brilliant, but with a ruthless streak.²¹ His critics often alleged that Murdoch had a reputation for interfering with the editorial decisions to further his own business interests.

On the one hand Britain had the most popular BBC,²² a very well-respected news organization, and at the same time questions were raised with regard to the unfair means adopted by many journalists across the nation. “It’s more important to ask about the culture of journalism in Britain and why it seems to sustain this sort of behavior,”²³ said Stephen Ward (Ward), professor and ethics expert at the University of Wisconsin-Madison Journalism School.

The scandal

The Guardian²⁴ had reported in July 2011 that NOTW had hacked the phones and voicemails of Milly Dowler, relatives of deceased British s...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Introduction: Dark side cases: challenging the "bright side" bias of mainstream management education Pauline Fatien Menlo College, CA, USA Emmanuel Raufflet Department of Management, HEC Montreal, Canada Albert Mills Saint Mary's University, Canada
• Section A: Community and environment
• Section Β: Human rights and business
• Section C: Ethics and policy