Did the media cost Stanley O’Neal his job as the chairman and chief executive officer of Merrill Lynch? Veteran public relations man Paul Pendergrass, who goes by the nom de plume “Jack Flack” when blogging for Portfolio.com, believes that the fourth estate is at least partially responsible for O’Neal’s forced retirement.
O’Neal’s ouster was a foregone conclusion when Pendergrass weighed in over the weekend and highlighted four factors that involved the media and that he believes contributed to O’Neal’s demise:
1) “The espoused story was never the real story.” In other words, what the media was reporting was what the powers that be who wanted O’Neal out were telling the media, not necessarily the truth behind why they wanted O’Neal out.
2) “The media were quite happy to be used.” Pretty self-explanatory here. Reporters and editors want scoops, regardless of the motive behind those giving them the scoops.
3) “The story wanted to happen.” Speculation about O’Neal’s ouster was rampant after Merrill Lynch, the world’s largest brokerage firm, reported $8.4 billion of writedowns on loans and mortgage-linked bonds, leading to a record $2.24 billion quarterly loss. After the announcement, O’Neal became the poster child for the implosion of the subprime mortgage market and the subsequent credit crunch, and thus became the scapegoat for the actions of others.
4) “The board [of directors] got media-hot-boxed.” Men and women are, after all, human. When the stuff hits the fan and everyone is screaming for someone’s head, it’s not uncommon for a group of people to close ranks and figure out a way to serve up someone’s head.
While it would be wrong to suggest that Merrill Lynch’s recent woeful news was not a big reason why O’Neal was forced out, Pendergrass is correct in his assessment. I know this from my own experience.
Let’s take another look at Pendergrass’ four factors:
1) “The espoused story was never the real story.”
Tell reporters that the CEO should be fired because of the company’s poor recent performance and they will write that story because it’s plausible. The poor performance is a fact, thus the reporter does not have to worry about getting the other side of the story.
Tell a reporter that the CEO should be fired because he stepped on toes, blew up the existing corporate culture and generally made people mad and you’ve got a different story. The reporter does not have facts, just speculation and a lot of off-the-record material. This is a more difficult story to write and one many reporters do not want to write.
I’ve seen good and bad reporters latch onto obvious stories while missing the big story. Laziness, deadlines, fear of being scooped and pressure from editors are just some reasons why this happens. When it does happen, it’s a disservice to the public and to the people affected by the stories. There is almost always “more to the story,” but oftentimes the subject of the story is hamstrung and unable to get the “more” out. When the subject lacks control, others will happily fill the void and drive the story.
2) “The media were quite happy to be used.”
Few reporters will pass up a good scoop, even if it’s not necessarily true and they know they’re being used. What matters is that the sources are credible, even if they may be lying, and that story could be true.
Case in point, last month, The New York Times reported that billionaire Warren Buffett, among others, was interested in buying a stake in Bear Stearns. The report caused shares of Bear Stearns to rally and investors immediately took a more favorable view of the company’s future. The following day, Bear Stearns sold $2.5 billion in debt to investors.
Buffett has publicly said that he has never engaged in talks with Bear Stearns and that he was never interested in acquiring a stake in the company. (Unfortunately for the reporter, Buffett took almost a month to say this.) The prevailing wisdom on Wall Street now is that someone floated a doozie of a story to The New York Times in an effort to give Bear Stearns’ debt sale a boost.
3) “The story wanted to happen.”
I’ve reported on small stories that snowballed into huge stories. For some of those stories, I honestly still cannot figure out how the news went from page A16 to page A1. Other times, however, I know that it was simply the fact that my editors and I “forced” the story into the news every day, making others take notice. Still other times, it seemed as if the public would not be satisfied unless the story played out to a certain conclusion.
Think about the final episode of “The Sopranos” and why so many fans of the show were angry. Humans instinctively need closure and without that closure, they become angry. When that happens, closure is sometimes just forced on us. That is often the case when the media gets its hands on a story. It needs to force it to closure.
4) “The board [of directors] got media-hot-boxed.”
The pressure of being in the news can make people do stupid things. I’ve seen not only people, but entire organizations, do amazingly dumb things because they felt they had to take some sort of action or the media would continue to hammer them. It’s sad because oftentimes the smartest – and bravest – thing they could do is not do anything. Simply put, you cannot allow the media to force a decision or act as a decision-maker.
Merrill Lynch is no small fish in a big pond. The company churns out more than $28 billion in revenues each year and it has a market value of more than $56 billion. That a company so big, so well-known and so powerful could be forced into a decision by the media should send a message to everyone.
By the way, don’t cry for O’Neal. He walked away with a golden parachute worth more than $160 million. Hmmm … Maybe he should be thanking the media.
This article, written by Ben Silverman, originally appeared in PR Fuel (http://www.ereleases.com/prfuel), a free weekly newsletter from eReleases (http://www.ereleases.com), the online leader in affordable press release distribution. To subscribe to PR Fuel, visit: http://www.ereleases.com/prfuel/subscribe/.