The Corrosive Influence of Corruption in Media
A recent article in the New York Times (April 5, 2012) on widespread unethical and corrupt practices in Chinese media (“Good Press in China for Those Able to Pay”) may have contained nothing very new to China media hands, but it had quite an impact among international media owners.
Apart from outlining examples of common bad practices — such as PR firms giving red envelopes containing “travel allowances” to journalists who attend press conferences, paid editorial coverage (a.k.a. “soft advertising”), paid editorial travel, etc. — the NYT piece named names of publishers and public relations companies whose employees admitted to engaging in these or similar practices.
For U.S. companies named, this has potentially dire consequences, because of the Foreign Corrupt Practices Act (FCPA). In recent years, US government agencies have been much more aggressive in investigating and enforcement of alleged FCPA violations. FCPA binds not only US companies, but also their overseas agents, distributors, and licensees to compliance, with criminal consequences in cases where violations are proven.
It’s no wonder that companies are taking this seriously. An executive sitting in the U.S. head office who has responsibility for operations in China (or other countries) is potentially criminally liable — ie eligible for a jail term — for bribes paid by employees or their agents in country.
Conversations I’ve had in recent months with US law firms indicate that inquiries and activities related to FCPA are clearly on the upswing. US companies not only need to be compliant, but they are anxious to be seen to be engaged in training and communications in support of that goal.
Some of my non-American friends are cynical about FCPA, maintaining that there is corruption everywhere, including the US, and that US media is not immune to the exertion of commercial influence over content decisions.
Of course there is truth in that, but it’s also a matter of degree. Leading brands among news and business publications, for example, generally have high standards and high walls between the editorial department (sometimes referred to as “church” in this context) and the business department (“state”). Some other categories of media (e.g. business to business, consumer special interest, etc.) are a bit more relaxed in this respect.
The explosion of new media platforms and formats, and paradigm shifts in consumer consumption patterns, have unleashed waves of change and challenge to traditional practices, but the fundamental principles involved remain unchanged.
FCPA is a binding law which governs the operations of US companies around the world. There was an era when it was not as aggressively enforced as it has been in recent years. That era is past. Companies of other national domains need to take this reality into account, whether they like it or not. Or choose other partners to do business with.
With regard to unethical practices concerning paid content in media, the consumer is the first loser, because the content generation process is invisibly compromised, with the consumer’s best interests overridden by commercial concerns. Over time, consumers are smart enough to figure this out.
The real loser in the medium to longer term is the media brand, because its real value shrinks rather than growing, as its credibility and trust are eroded. The brand’s competitive differentiation becomes weak and vulnerable. In an overheated or hyperactive media market where quasi-monopolies protect incumbents, this doesn’t become obvious overnight; but in due course it must and it will. It’s clearly a case of short term benefit, long term loss.
Like individual reputation, a good brand reputation takes a long time for media or any other organization to build and nurture; but only a short time to damage. A damaged brand can take much longer to repair than the time which would be required to build a new one from start.
An important part of the solution to ethical malpractice in mainland media lies with top management of the media organizations. If they don’t endorse and showcase a set of good values, how can their editorial and business staff be expected to miraculously come clean?
Those values and principles should be enunciated starting with the recruitment and interview process, reinforced by codes of conduct, and buttressed by compensation and benefits packages which reduce the temptation to take red packets or other inducements.
Until the professional ethical landscape is cleared up, big swathes of Chinese media will continue to suffer from a credibility problem among consumers, as well as a growing inability to hire the right kind of talent to take them to the next level.
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