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Tesco vs. The Guardian

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There’s only so much you can learn about public relations from reading long, boring paragraphs of theory from a textbook. The best way to learn about PR is through examining the blunders of corporations facing a real life reputational crisis. It’s even better when the parties are one of the UK’s most well known news publications and retail corporations.

“A Chill on The Guardian” examines The Guardian’s standpoint on a conflict between retail giant Tesco and this media watchdog. When a reporter from the news publication developed a ‘hunch’ that Tesco was avoiding almost $2 billion in corporation tax, they attempted to expose the ‘injustice’ of the company. Later it was revealed that the article got the details wrong – it was only Stamp Duty Land Tax (SDLT) that Tesco was avoiding and Tesco took the matter to court, arguing that its name had been defamed and its integrity and ethics brought to disrepute.

An organisation’s reputation or image is central to its public relations success. Since The Guardian’s image is that of a quality media watch-dog, its journalism must meet that standard. By failing to meet that standard through lack of substantial research, The Guardian lost its credibility. This raises the question of whether a scorching hot headline is more important than responsible research. The Guardian therefore faces the reputational and ethical issue of whether it is truly doing its service as a ‘watchdog’ to the public. So the basic lesson is: GET THE FACTS STRAIGHT. Despite the editor’s defence in “A Chill on The Guardian”, the danger in printing inaccurate information is that readers, a key stakeholder, may lose faith in the newsworthiness of the publication, which would make them an “urgent” public (Agle, Mitchell & Wood, 1997) in their ability to simply stop reading the publication.

Because of this, The Guardian must immediately re-establish its credibility. The editor’s piece was part of The Guardian’s programme to vindicate it from being labelled the “bad guy”. This is where the systems theory (Grunig, Grunig & Dozier, 2002) comes in. Organisations and their environments are interdependent and each presents problems and opportunities for each other (Ibid.). The editor of The Guardian explains that economic conditions and increased competition increases concerns of corporations about their economic viability (Rusbridger, 2009) and uses a similar excuse that the news industry’s decline puts pressure on journalists to report on these issues. But the “external envrionmental” problems for The Guardian don’t stop here. The Guardian’s parent company Guardian Media Group (GMG) has also used tax-evasion strategies of setting up an off-shore company to make its acquisition of Emap (a British media company that specialises in business-to-business affairs) tax-efficient (Farey-Jones, 2008). Therefore, while The Guardian may claim that its reportage about tax evasion is for the sake of the public, it must look to its own methods of dealing with tax before playing the victim card. If other news media find out about the issue and become ‘aware’ stakeholders (Grunig, 1984), then The Guardian’s hypocrisy will escalate, sinking its reputation further. Therefore before pointing the finger at other companies (and using the claim that newspapers are underfunded, lawsuits are unfair, all private corporations are evil, money-hungry blood-suckers, etc) it should examine its own corporate structures first.

Tesco also has lessons to learn, lessons involving corporate credibility, responsibility and ethics. Tesco’s public relations mistake was making a bigger deal than necessary out of something that key publics (customers, shareholders and The Guardian readers) would have forgotten within a matter of weeks had Tesco settled the issue quietly with The Guardian. As a consequence of launching drawn out proceedings and extra publicity, the aforementioned publics are likely to become aware and even active (Ibid.) This will mean that Tesco will take much longer to dig itself out of this reputational pothole. Tesco, like The Guardian does in the article, needs to establish mutual understanding of its policies and issues with these key public to generate positive publicity. This lesson involves being honest and open and rectifying its mistakes.

The situational theory (Grunig; Hunt, 1984) also presents a lesson for both parties. The situation arose from lack of effective communication which lead to the reason to why Tesco sued The Guardian which was a direct result of such misunderstandings. Tesco saw The Guardian’s initial publication about their tax evasion as inaccurate and a threat to their reputation. Knowing that The Guardian’s claim was not based on valid facts, Tesco believed that if they sued The Guardian they could save their reputation. However, it created the opposite effect as Private Eye discovered the truth about other illegal practices. Tesco’s lesson would be to more personally communicate with journalists in a quieter form of conflict resolution rather than promptly launch into a drawn out legal proceeding. The court case has further damaged, rather than healed its reputation, as Tesco is scowled upon by the media as “being too big for its boots” (Greenslade, 2009).