Rupert Murdoch is to use PR firm Edelman

Rupert Murdoch‘s News Corporation has called in PR and lobbying specialists Edelman to help the embattled company handle mounting public anger and political pressure over the phone-hacking scandal in the UK.

The PR company will report directly to Will Lewis, general manager of News Corp subsidiary News International, the publisher of Murdoch’s British newspapers.

The appointment of Edelman comes after 11 days of sustained coverage of the phone-hacking scandal, which has forced News International to close the News of the World and News Corp to abandon its BSkyB takeover.

Robert Phillips, chief executive of Edelman’s Europea, Middle East and African operations, said the company had been providing News International with “ad hoc” advice since 20 June – before the hacking of Milly Dowler’s phone was made public – and was formerly appointed to provide “communications and public affairs support and counsel” to its management and standards group on Tuesday. This group is handling the internal inquiry into the phone-hacking scandal.

The Edelman team will be run by Alex Bigg, its managing director for corporate affairs, and James Lundie, its managing director of public affairs. Lundie is the long-term partner of David Laws, the former chief secretary to the treasury.

Edelman will report to News International’s new management and standards committee, which consists of Lewis, a former editor of the Daily Telegraph who joined NI in 2010, Simon Greenberg, the director of corporate affairs who arrived in January, and general counsel Jeff Parker.

Edelman recently hired Ed Williams, the BBC director of communications, to head its UK operation. Williams is due to join Edelman on 31 October and it is understood he will not be involved in the company’s work for News Corp.

However, the BBC confirmed on Thursday that he will be leaving the corporation immediately.

Edelman last year hired the BBC’s former director of news, Richard Sambrook, to head up its “crisis and issues practice”. It is unclear whether he will be part of the firm’s News Corp team.

 

Edelman, the world’s largest PR firm, handles the reputations of brands including Starbucks, Pepsi and Burger King. The company, which has 51 offices around the world, was founded by Daniel J Edelman in 1952 and is currently led by his son Richard Edelman.

The public announcement of Edelman’s appointment comes after rumours suggested that Matthew Freud, founder of PR firm Freud Communications and husband of Rupert Murdoch’s daughter, Elisabeth Murdoch, had been advising News Corp on the phone-hacking scandal.

On Thursday a spokeswoman for Freud Communications denied this. “Neither Matthew Freud or the agency was advising NI on this issue, nor had Freud advised on the closure of the News of the World.”

UK: is it the end of Murdoch’s media empire?

Rupert Murdoch is under intense pressure in the UK where Members of Britain’s Parliament plan to come together Wednesday across party lines to urge him to drop his bid to acquire British Sky Broadcasting, saying the purchase would not be in the national interest as investigations into phone hacking by the media baron’s papers continues.

The three major parties in the House of Commons have all voiced support for a motion calling on Murdoch to back away from his bid for the company, often called BSkyB. The motion was put forward by the Labour party and has gotten the backing of the Tories and the Liberal Democrats, BBC News reported Wednesday.

Though the measure is nonbinding, it adds another hurdle to the path toward approval of Murdoch’s attempt to buy up 61 percent of the company’s stock for $19 billion. The bid has been delayed for several months by the Competition Commission, which reviews potential mergers for monopoly concerns, and comes as other key British players have asked Murdoch to give up his efforts to buy BSkyB.

Murdoch and his son James have were asked Tuesday to testify before a Parliament committee, as was Rebekah Brooks, CEO of News International, the branch of News Corporation that oversees its British newspapers, including the now-defunct News of the World. The company said that senior executives “will cooperate” with the request for the appearance, set for July 19, although it remains unclear whether the Murdochs will appear in person.

Prime Minister David Cameron’s office announced Tuesday that it would support the resolution. That came after Deputy Prime Minister Nick Clegg on Monday asked Murdoch to “do the decent and sensible thing and reconsider: think again about your bid for BSkyB.”

On Tuesday night, three leaders of the Liberal Democrats wrote to Murdoch asking him to drop his bid. “News International is simply no longer respected in this country,” they said. His company is tainted “by a history of completely unacceptable journalistic practices,” they continued, and instead of trying to expand his empire, he should focus on cleaning it up.

Oil spill in Montana: Exxon learnt from BP PR mistakes

The Exxon Mobil oil spill in Montana’s Yellowstone River is minor in comparison to the BP Macondo spill as far as environmental disasters go but there are still some lessons for investors that apply regardless of the number of barrels of oil spilled.

In fact, the number of barrels of oil spilled is a good place for investors to begin in terms of assessing the risk for Exxon Mobil.

Exxon Mobil estimates that the total amount of oil released is between 750 barrels and 1,000 barrels.

In the early days of the BP oil spill, former BP CEO Tony Hayward estimated that 5,000 barrels of oil a day was being spilled, and uttered the line, “a guesstimate is a guesstimate, and 5,000 barrels is still the best guess.” The subsequent estimate for the flow rate from the BP spill was 3.2 million barrels, or roughly 35,000 to 60,000 barrels per day.

The lesson here is that investors should at least take heed that the earliest estimates of oil spills can be underestimated. Indeed, by Tuesday afternoon, Exxon Mobil said its original estimate of the oil spill may have underestimated its size, and the extent of its geographic spread, too.

In addition to its 750 to 1,000 barrel spill estimate, an Exxon Mobil spokesman originally said that the spill had been fairly well contained and that there is “very little soiling” of stream banks beyond 10-miles. On Tuesday afternoon, ExxonMobil conceded that the spill could have extended by the original 10-mile area.

The ruptured pipeline is submerged at the bottom of free-flowing river. Flooding of the Yellowstone river continues to be a fear for spreading the spilled oil over a greater range, as well as the high water level being cited as a potential cause of the pipeline rupture.

If the Exxon Mobil estimate does stand, this spill woulod be 3,000 times smaller than the BP spill.

Maybe of equal or greater relevance is headline/political risk. As Raymond James noted on Tuesday, “From a PR standpoint, the Silvertip spill comes against the backdrop of elevated scrutiny of the industry’s environmental track record…Memories of Exxon’s Valdez disaster in Alaska (1989) may also come to the surface. While the cause of Exxon’s spill has not yet been established, we would not be surprised to see some heated political rhetoric, particularly from Montana’s state and local officials. The bottom line is that Exxon investors should brace themselves for a few days (perhaps weeks) of adverse headlines.”

Exxon Mobil has existing public relations issues in Montana. According to the Natural Resources Defense Council, the larger Yellowstone Pipeline (of which Silvertip is a component, and co-operated by ConocoPhillips) has leaked hundreds of thousands of gallons of petroleum into the state’s rivers and lands over a 55-year history (the Silvertip pipeline is 22 years old). In particular, the NRDC estimates that, by the mid-1990s, the pipeline had spilled at least 71 times on the 1.2 million acre Flathead Indian Reservation. In one high-profile case, after a163,000 gallons leak into a reservation creek, the Confederated Salish and Kootenai tribes opted to not renew a lease to run the pipeline through tribal land.

After the spill on Saturday, press reports noted that the U.S. Department of Transportation notified Exxon Mobil in July 2010 of seven potential safety violations and other problems with Silvertip. Exxon Mobil said the notifications were unrelated to the spill events and effectively dealt with by the company.