1. Business and the Media Chapter 20 McGraw-Hill/Irwin Copyright © 2008 The McGraw-Hill Companies, All Rights Reserved.

2. Ch. 20: Key Learning Objectives  Understanding the responsibilities of business’s public relations managers as they interact with various stakeholders  Analyzing how businesses can most effectively manage a crisis situation  Evaluating when advertising is deceptive or unnecessarily exposes young people to indecency and violence  Knowing how governments around the world have regulated advertising, especially the tobacco industry  Ensuring that gender and racial diversity are appropriately reflected in the media 20 - 2

3. 20 - 3 The Media and Business  Media A means of communication that widely reaches or influences people  Comprises many channels, including television, radio, books, magazines, and the Internet  Business utilizes various media channels to educate and interact with its stakeholders through public relations announcements, crisis management efforts, and advertisements  Media is a both a stakeholder of business, as well as a profit-making enterprise in its own right, with its own stakeholders

4. 20 - 4 Public Relations  Fundamental to any organization’s relationship with the media is to design and manage an effective public relations program  Public relations programs send a constant stream of information from the company to the public  Opens dialogue with stakeholders whose lives are affected by company operations  Should be proactive, not reactive  One purpose of the public relations function is to promote a positive image for the firm in the media  In today’s dynamic and complex world, an effective public relations function must be a year-round, ongoing process that operates both internally and externally

5. 20 - 5 International Public Relations  Multinational businesses have extended their public relations strategies globally  New challenges emerge with global perspective  Public relations (PR) managers must be sensitive to cultural disparities  Impact of PR program might be very different given a country’s culture, social or political systems or history  PR managers need to be able to communicate in the local language to be sure embarrassing or misleading communications do not occur due to poor translations

6. 20 - 6 Crisis Management  Corporate crisis is a significant business disruption that stimulates extensive media coverage  Can affect the company’s normal operations and potentially negatively affect corporate reputation or credibility  Crisis management is the process organizations use to respond to corporate crises  Crises escalate rapidly, with intense pressures, and is very costly to develop strategic response once the crisis occurs  Experts recommend organizations develop a crisis management plan in advance

7. 20 - 7 Crisis Management  An effective crisis management plan must: 1.Include an internal communication system that can be activated at any time; key employees must be identified in advance 2.Communicate quickly, but accurately; best to take the offensive and be the first to comment on a situation 3.Use the internet to convey the message, this can minimize fears and provide assistance 4.Do the right thing; a crisis is often the true test of an organization 5.Follow up and make amends if necessary; seek to restore the company’s reputation

8. 20 - 8 Media Training of Employees  Media training of employees and executives who are likely to have media contact is very important  Advice from media communication experts  Resist the temptation to see reporters as the enemy; business spokespersons should build bridges with the media  Keep the long-term reputation of the company in mind  Being open and honest is a successful media strategy  Make communications a priority and the training of the company spokesperson an ongoing program

9. 20 - 9 Responsibilities of Public Relations Managers  PR managers face a number of ethical and social issues in representing their firms  How they portray themselves and their firm in the media can greatly influence stakeholder and public perception of the firm  Public Relations Society of America is professional association for PR managers  Its Code of Ethics, adopted in 2000, has 6 core values: advocacy, honesty, expertise, independence, loyalty and fairness

10. 20 - 10 Deceptive Advertising  Presentation of fair, balanced and truthful information is a business necessity  Deceptive advertising occurs when an advertisement misleads the consumer by lying, withholding information, or creating an unreasonable expectation  Businesses are subject to legal challenges or FTC enforcement when engage in deceptive advertising  Some industries have adopted self-regulatory marketing controls  Example of 23 pharmaceutical companies that adopted voluntary standards

11. 20 - 11 Free Speech  Free speech issue is how to balance the constitutional right to free expression and the trustworthiness of information used by stakeholders to take action (e.g. make a purchase, seek employment)  Legal basis is 1 st amendment to the Constitution  Business have often relied on right to free speech to promote their advertising yet this can lead to questions of respect for others  This is particularly true in other countries where standards for advertising may be different

12. 20 - 12 Marketing to Children  American Psychological Association has expressed grave concern over effect of advertising on children  40,000 advertisements per year are targeted at children  Alliance for American Advertising, formed by major food companies (e.g. General Mills, Kellogg and Kraft) promoted its rights to advertising AND its willingness to police itself  Children’s Advertising Review Unit, industry group that monitors children’s advertising, has guidelines that food companies should advertise truthfully with appropriate messages children can understand  Many food producers follow the Review Unit’s self- regulatory standards

13. 20 - 13 Special Issue: Government Regulation of Tobacco Advertising  Should tobacco advertising – particularly ads aimed at underage smokers – be regulated or even banned by the government?  Question asked by many stakeholder groups over the years  National Association of Attorneys General and tobacco industry 1998 settlement provided for significant restrictions on media marketing  Examples include prohibiting all advertising targeting youth and stopping marketing through clothing logos  Some positive effects have been seen since agreement

14. 20 - 14 Special Issue: Government Regulation of Tobacco Advertising  Governments of other countries have also tried to regulate tobacco industry  In 2002 European Union health ministers voted to outlaw most tobacco advertising

15. 20 - 15 Special Issue: Government Regulation of Tobacco Advertising  World Health Organization sponsored global effort to limit or prohibit tobacco advertising  In 2005 the world’s first anti-smoking treaty came into force, the Framework Convention on Tobacco Control (FCTC)  Signed by 168 countries as of May 2006  Ratifying countries were obligated to Establish strict health warnings on cigarettes and ban tobacco advertising and sponsorship Outlaw misleading marketing terms, like light and mild Increase efforts to reduce exposure to second-hand smoke

16. 20 - 16 Ethical and Social Responsibility in the Media Industry  The media, like any other business, is subject to ethical and social responsibilities  Issues particularly relevant to the media industry  Issues of decency in broadcasting  Diversity in portrayal of women and minorities  Presentation of fair and balanced view of the issues

17. 20 - 17 Issues in Decency in Broadcasting  Has been series of relevant government rulings:  1969: U.S. Supreme Court ruled free-speech protections for broadcasters narrower than publishers  1978: Supreme Court upheld FCC ban on indecencies  1995: Indecency ban validated by a Federal appeals court but limited time to between 6 a.m. and 10 p.m.  Despite government rulings, 2005 Kaiser Family Foundation study found 70% of all TV shows include some sexual content  Active monitoring by FCC has caused industry to develop self-regulatory practices  Despite industry’s attempts at self-regulation, Broadcast Decency Law passed in June 2006

18. 20 - 18 Portrayal of Diversity in the Media  Question of whether various social groups are portrayed in a biased or discriminatory light in the media  Are ethnic groups portrayed as second-class citizens?  Are women only portrayed in a subservient role?  Have been some steps towards greater diversity in characters in prime time shows, but issues remain  Advertising revenues and good time slots tend to still go to mainstream shows  Has also been some positive movements in depiction of women in advertising  Starting to use “everyday” women as opposed to super thin, super tall models

19. 20 - 19 The Fairness and Balance Issue  Fairness and balance issue is about how the media reports business activities  Pro-business organizations and business leaders claim coverage of business activities is unfair and that media does not provide adequate information for viewers to make informed decisions  FCC, from 1949-1987, was entrusted with enforcing the Fairness Doctrine  Required television and radio broadcasters to cover both sides of important or controversial issues and to give the opportunity for contrasting viewpoints to be aired  Gave FCC authority to rule on the fairness of broadcasts  Law was repealed in 1987

20. 20 - 20 The Fairness and Balance Issue  Study by Pinnacle Worldwide, independent PR firm, whether media portrays business fairly  Reported significant differences in opinion between business and media executives  For example, business executives rated their ethical behavior as an 80 on a 100 point scale; media leaders gave business a 30 point rating  Pinnacle advised businesses to seek out or generate opportunities to communicate their values and principles through the media  “Too many businesses appear to be taking an ostrich position” Jerry Klein, President of Pinnacle Worldwide