The News

Media and
Nonmarket
Issues
Chapter 3
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Topics Covered
• Introduction
• The role of the news media in nonmarket issues
• Messages and their interpretation
• A theory of news media coverage and treatment
• Extending the theory
• The nature of the news media
• Business interactions with the news media
• Recourse in disputes with the media

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Introduction
• Role played by news media
• Providing information to the public about
matters affecting people’s lives and the society
• Identifying nonmarket issues and stimulating
action that affects their progress

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The Role of the News Media in
Nonmarket Issues
• Identifying nonmarket issues
• Placing issues on the agendas of firms

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The Role of the News Media in
Nonmarket Issues
• Alert the public, activists, interest groups,
and government officeholders to
nonmarket issues
• Raise concerns about the policies and
practices of firms
• Provide information about the likely
effects of alternative courses of action
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The Role of the News Media in
Nonmarket Issues
• Reduce the costs of collective action
• Enhance a nonmarket strategy by
conveying information provided by a firm
or interest group
• Represent interests and principles
consistent with the news media’s
perception of its role in society
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In Conclusion
• The news media:
• Guards its independence
• Is careful to avoid being used as part of a
nonmarket strategy
• The news media has incentives to cover an
issue which is of interest to viewers and
readers

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Figure 3.1 - The News Media and
the Environment of Business

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A Theory of News Media Coverage
and Treatment
• Forms of treatment:
• Straightforward presentation of facts and
description of events
• Interpretation of the facts and events
• Exploration of their potential significance and
ramifications
• Advocacy of a course of action

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A Theory of News Media Coverage and
Treatment - Explanatory variables
• Intrinsic audience interest
• Societal significance

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Intrinsic Audience Interest
• The principal predictions of the intrinsic
audience theory are that:
• Coverage increases with audience interest
• Treatment will be chosen to appeal to and
retain an audience

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Societal Significance
• Reflects the media’s role in serving
democracy by providing the
information that citizens need

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Intrinsic Audience Interest and Societal
Significance: Combining the Perspectives
• Treatment depends more on societal
significance than on audience interest
• Coverage depends more on audience
interest

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Figure 3.2 - Theory of Media
Coverage and Treatment

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In Conclusion
• This theory of news media coverage and
treatment is based on:
• Societal significance
• Intrinsic audience interest
• Features of stories, such as visual effects,
human interest, confrontation, and
controversy, are important

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Extending the theory
• Newsworthiness
• The cost of coverage
• Balance and fairness

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Extending the theory
• An issue is more newsworthy if:
• It has a degree of immediacy or urgency
• It has a human interest dimension with which the
audience can identify
• If it involves a celebrity
• If it involves confrontation or controversy

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Extending the theory
• The cost of coverage
• News coverage depends on the costs of obtaining
information and producing a story
• Media organizations are forced to rely on low-cost
sources of information

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Extending the theory
• Balance and fairness
• Journalism standards and editorial controls
require that a story be accurate and the
treatment be balanced and fair

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The Nature of the News Media
• News organizations as businesses
• Primary objective is profit
• Highly competitive industry
• The profession
• Journalists are younger, better educated, and more liberal than
the American public
• Journalism is governed by standards enforced by news media
organizations and professional associations

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The Nature of the News Media
• Does the news media treat issues
selectively?
• The news media may not cover every issue under
the same criteria
• Most issues are treated under controls and
editorial standards

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The Nature of the News Media
• Bias, accuracy, and fairness
• Most nonmarket issues involving business are
complex
• The ability to present that complexity and achieve
accuracy, balance, and fairness differs considerably
among media organizations

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The Nature of the News Media
• The Internet and citizen journalism
• The rise of blogs and social media allows
citizens to be journalists
• Many use the Internet to comment on
nonmarket issues affecting business
developments

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Business Interactions with the
News Media
• Few companies like their activities to be publicly scrutinized
• The media guards its independence and in particular does not
serve as a public relations arm of firms
• The desire for balance and the incentive to develop controversy to
make stories appealing gives critics of the company an opportunity
to deliver their message to the public
• Some executives agree that the media caters to antibusiness
sentiments
• In the case of television interviews, the control of the editing
process gives the media the opportunity to select the parts of an
interview that make the best story, and those may not be the parts
business wants to have aired
• Media treatment results in oversimplification, precluding the 3-24
presentation of a full account of a company’s side of the story
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Business Interactions with the
News Media
• The need for information
• Many business issues are newsworthy
• Only business has the information that can
serve as the basis for a story

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Business Interactions with the
News Media
• Media strategies
• The unusual is usual
• Emphasize the consistency of business and the public interest
• Remember your audience
• Communicate through the press
• The medium is the message
• Establish credibility – not friendship

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Business Interactions with the
News Media
• Responses and media vacuums
• Business prefers to avoid media coverage
• One tempting strategy is not to comment to
the media in the hope that no story will appear

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Business Interactions with the
News Media
• Media interviews
• Managers frequently grant interviews to the media and are called
on to speak to the public
• Anticipating issues
• When media coverage of an issue can be anticipated, the firm has
the opportunity to prepare
• Unanticipated events

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Figure 3.3 - Hewlett-Packard
Company Media Guidelines

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Recourse in Disputes with the
Media
• Private
• Recourse to the law: Defamation and
libel
• Political

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Cases - General Motors: Like a
Rock? (A)
• Large pickups were one of GM’s few profitable products from
its ailing North American operations
• For years GM had managed to avoid the eye of the media by
fighting on a case-by-case basis as many as 140 fuel tank-
related lawsuits
• Most were settled out of court with settlements occasionally
exceeding $1 million
• One large database on accidents indicated that in terms of the
overall probability of a fatal accident, GM trucks were
marginally safer than their competitors

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Cases - General Motors: Like a
Rock? (A)
• NBC’s Dateline aired a 15-minute segment entitled, “Waiting
to Explode?” Its focus was the GM series C/K pickup trucks
• Each test simulated a side-impact crash by using a tow truck to
push a Chevy Citation along the road into a pickup
• GM was able to locate and acquire the two wrecked Citations
and the two wrecked pickups
• The recovered pickups were sent to GM’s plant in Indianapolis
where workers discovered a model rocket engine in the bed of
one truck
• Additional inspection of tapes and photographs fueled suspicions
that a detonator or starter device had been wired to the rocket
engine
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Cases - General Motors: Like a
Rock? (A)
• GM officials wanted to examine the trucks’ fuel tanks but they
had been stripped from the trucks
• Having obtained the pickups and the tanks, GM identified and
contacted the trucks’ previous owners
• From the owner of the truck that was struck and caught fire, GM
learned that the gas cap was nonstandard
• Additionally, GM conducted background checks on NBC’s “safety
experts”
• On February 4, 1993, an Atlanta jury awarded $101 million in
punitive damages and $4.2 million in compensatory damages
to the parents of a 17-year-old boy killed in a fiery death in a
GM C/K pickup
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Cases - General Motors: Like a
Rock? (A)
• GM management started considering delicate strategic
options
• One major option was to file a defamation suit against NBC
• A second major option was to go public with the information it
had developed on the Dateline segment

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Cases - The News of the World
• The newspaper The News of the World had the largest
readership in the United Kingdom
• The demise of the newspaper began as the rival newspaper
The Guardian reported information about The News of the
World based on its own investigative journalism
• The scandal spread as far as Prime Minister David Cameron and
Rupert Murdock, CEO and chairman of the News Corporation,
owner of The News of the World
• The Federal Bureau of Investigation (FBI) in the United States
began an investigation of the News Corporation newspapers

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Cases - The News of the World
• The Murdoch newspapers were powerful in the UK, and
executives interacted frequently with government officials
• The beginning of the scandal was The News of the World
article that revealed details of the knee surgery on Prince
William
• The royal family had never released any information on the knee
problem and suspicions arose that the cell phones of the staff of
the royal family had been hacked
• The most incendiary case was the hacking of the cell phone of
a 13-year-old girl who was missing and feared kidnapped

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Cases - The News of the World
• As more privacy violation cases were filed in 2010, James
Murdoch turned the information over to the police
• A select committee of Parliament took up the case and held
hearing in July
• In the hearing the Murdochs denied knowledge of the hacking
and payments to the police, and James Murdoch stated that his
understanding had been that the hacking was the work of a
single reporter

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Cases - The News of the World
• In addition to the allegations of police officers being paid for
information for stories and of possible bribery, Scotland Yard
had hired as a public relations advisor Neil Wallis, a former
editor of The News of the World
• After the scandal had erupted, News Corporation announced
an internal investigation

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