In the last month, we have seen two significant disasters befall FTSE Companies. Thomas Cook, a subject already covered in our blog, apparently hit every PR pitfall possible following the results of the inquest into the deaths of Christi and Bobby Shepherd in one of its hotels in Corfu in 2006. Then, we witnessed a tragic accident at Alton Towers, which left Merlin, the park’s owner, scrambling to protect its brand.
However, the different strategies employed by the two Companies led to wildly differing outcomes, not only in public perception, but also to their share price. Thomas Cook, as stated previously, refused to apologise, failed to contact the family, and only handed over (half) of the compensation they received to charity when it became untenable for it to hold onto it in its entirety. Clearly, a omnishambles of epic proportions.
Compared to this Merlin appeared to handle its own disaster, a crash on one of its rollercoaster’s, with as much tact as was possible in the circumstances, save for the initial delay on calling the ambulance. The park did its utmost to appear open to investigators, apologised to the victims immediately and unreservedly, and its CEO Nick Varney immediately gave interviews outlining what the Group would be doing to improve safety across the board.
Indeed, the public clearly thought that the Company’s response had been sufficient because when Kay Burley, a Sky News presenter, used aggressive interview tactics in an attempt to unsettle Varney which spectacularly backfired, as almost 2,000 people complained to Ofcom about her conduct. On top of this, an online petition calling for Sky to sack her received 50,000 signatures. If Kay had done this to Peter Fankhauser, CEO of Thomas Cook, such is public feeling, the petition may well have been for her to receive an OBE.
It was not only in the public gaze where Merlin came out on top. Investors, clearly spooked by Thomas Cook’s woeful handling of the situation, deserted the stock, seeing it fall from a high of just under 500p to 430p today. Merlin on the other hand saw lesser losses, from a high of 470p to 435p.
This, above all else, proves the positive benefits of good crisis PR. Here you have two listed Companies who broadly act within the same sector, entertainment & leisure. Both have suffered crises within the last month, and only one handled the situation correctly. Unsurprisingly that Company has come out on top. Firms, looking at tightening their PR budget, should look at the cautionary tale of Thomas Cook and realise that it may well prove a false economy.