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Lessons from the Alan Jones saga

The fallout continues in the ‘Alan Jones saga’, with Macquarie Radio Network Limited (ASX: MRN), owner of the 2GB radio station, suspending all advertising during Alan Jones’ breakfast radio show this morning, citing cyber bullying against its sponsors.

The company hasn’t said how long it’s prepared to endure its self-imposed ban, but it’s expected to cost it around $2 million a month.

Alan Jones had previously suggested that Prime Minister Julia Gillard’s father had ‘died of shame’ over his daughter’s ‘lies’, shortly after his death. Following the ensuing storm of public outrage, he subsequently apologised, but the consequences of his initial allegation continue to reverberate.

Consumers see companies more than just the brand, and with the huge rise of social media, what people think about any aspect of a company’s business can be shared globally in an instant, through sites like Twitter and Facebook.

Here’s some of the lessons from this current saga.

  • Who you do business with matters – A consortium of banks, led by Australia and New Zealand Banking Group (ASX: ANZ) pulled its support of timber company Gunns recently, refusing to lend the company any more money. Gunns had faced legal battles and community anger over its plans to build a wood chip plant in Tasmania, which allegedly would result in the destruction of native forests.
  • What you do matters as much as who you are – Alan Jones is a respected figure in certain sectors of the community, but that’s not enough when things go bad. Many advertisers have already pulled their advertising from his morning show, fearing a backlash of public opinion (and they have been proven right so far). While Woolworths Limited (ASX: WOW) might be one of Australia’s most respected retailers, the company is facing a backlash because it’s also the nation’s largest owner of poker machines.
  • When you are wrong, apologise or fix the issue early. David Jones Limited (ASX: DJS) refused to acknowledge the online retail space for many years and is paying the price through falling sales and profits. Now DJs plans to ramp up the number of products sold online from 9,000 to over 90,000 by the end of this year.
Ethical investing has become more popular in recent years, due to demand from investors wanting to invest in companies they see as socially responsible. For some investors, ethical investment excludes investing in companies like alcohol and cigarette manufacturers, arms producers, poker machine operators and any other sort of business where people think the products don’t meet the need of society or can be harmful to people, animals or the environment.

Foolish takeaway

The public’s opinion of a company and its products matters enormously these days, and the consequences of falling foul of public opinion can be harmful to a company’s health.

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Motley Fool writer/analyst Mike King owns shares in David Jones and Woolworths. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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