• Morgan Stanley, BP to Pull Ads for Bad Press
  • June 3, 2005
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • In the wake of General Motors' decision to yank ads from the Los Angeles Times in protest over the newspaper's editorial coverage, Morgan Stanley and BP have each adopted policies demanding that newspapers inform them of pending negative press, so they can decide whether to withhold advertising.

    Financial giant Morgan Stanley has planned an addition to ad contracts reading, "In the event that objectionable editorial coverage is planned, agency must be notified as a last-minute change may be necessary. If an issue arises after-hours or a call cannot be made, immediately cancel all Morgan Stanley ads for a minimum of 48 hours."

    It's unlikely that the new policy will produce only press that flatters the embattled firm. And with a Chinese wall between editorial and advertising at most publications, the guidelines could prove nearly impossible to accommodate, since ad departments almost never know what stories are running in the next day's paper. At some publications, marketers' ads are occasionally subject to "pull policies" in which, under certain conditions, ads are removed from editions covering the marketers in question.

    The publications that have received the directive or have had other discussions concerning Morgan Stanley with its media agency, Publicis Groupe's Starcom USA, reportedly include USA Today, The Financial Times, The Economist, Business Week, The New York Times, Fortune, and The Wall Street Journal.

    A few days after Morgan Stanley's announcement, oil-and-energy giant BP also adopted a zero-tolerance policy toward negative editorial coverage. A memo from its public relations company, MindShare, cites a new BP policy document entitled "2005 BP Corporate-RFP" demanding that publications which run BP ads inform the company in advance of any news text or visuals they plan to publish that directly mention the company, a competitor, or the oil-and-energy industry.

    A BP spokesman said that the new policy "is not meant to be Draconian or to influence coverage. We are just asking for a head's up" about a cover story about the oil industry. "We never asked to read [editorial] copy in advance." The spokesman said he did know of one prior occasion in which BP pulled a corporate ad after being alerted about an oil industry cover story and moved the ad to a later issue. He added that the policy involves corporate ads, not BP's retail gas advertising, and only affects advertising in major news magazines, not newspapers or broadcasts.

    The MindShare memo lays out five directives, ranging from notifying the media agency prior to running any editorial that contains fuel, oil, or energy news text or visuals, to providing the agency the option to pull any advertising from the issue without penalty. If the ad cannot be pulled, then the agency "must receive notification immediately of the situation in order to alert BP and to manage the situation proactively," the memo said. It also states that if MindShare is not notified of the mentions prior to the issue's on-sale date, immediate advertising schedule suspension will "likely result."

    Nearly a decade ago, a move by automaker Chrysler Corp. set off a maelstrom of reaction when it sent letters in early 1997 demanding that magazine sales staffs warn them of potentially "offensive" or "provocative" editorials. Editors' concerns over the policy's potentially chilling effect were realized when Hearst Magazines' Esquire killed a short story containing homoerotic scenes, apparently to avoid losing the automaker's business. The marketer, now known as Chrysler Group, discontinued its policy in the fall of 1997. That October, two publishing organizations, the Magazine Publishers of America and the American Society of Magazine Editors, took the unusual step of issuing a joint policy on the topic of editorial integrity that bars magazines from giving advertisers a sneak peek at stories, photos, or tables of contents for upcoming issues.

    Significance: Many publishers are not in the financial position today to ignore rules from advertisers and it is expected that moves similar to Morgan Stanley's and BP's will continue. Practically speaking, monthly and weekly publications are in a better position to pull ads than dailies. Already, some magazines have unwritten guidelines with advertisers from several industries, including auto, airlines, and tobacco, to pull their ads if related negative stories are in the issue. The moves by GM, Morgan Stanley, and BP reflect the increasing sensitivity of companies to negative press, in light of harsh lessons learned by the likes of Enron Corporation, whose financial shenanigans first came to light in a Fortune cover story, and the financial giants of Wall Street, whose not-quite-legal industry practices, such as IPO "spinning," were exposed in a series of articles by The Wall Street Journal. Such policies, however, can backfire, making it seem as if the companies that impose them have something to hide.