Good Financials Drive Business News, But Can’t Capture Glory Alone
By Matt Merlin, Director, Delahaye
The public may be aghast at the increase in oil prices and sky-high earnings of oil-related companies, but the majority of industry news in Q1 2006 wasn’t about consumer anger or alleged unethical behavior; it was mostly about company financials. This helps explain why Exxon Mobil had a relatively high ranking in the Delahaye Index, despite some rabid coverage.
The Delahaye Index is a quarterly assessment of how news coverage reflects and helps to shape the corporate reputation of the 100 largest U.S. companies. We begin by gathering news from America’s most prominent national news sources. Each company’s score is based on how many positive and negative reputation-driving attributes are found within each story. These attributes are classified into five dimensions: Stakeholder Relations, Financial Management, Products and Services, Organizational Integrity and Organizational Strength.
In the first quarter Index results we’ve determined that 30 percent of popular corporate messages and themes in the media were financial-related, whereas 46 percent of oil-related industry news was financial-related. This means that financial news is contributing to a larger percentage of visibility of the oil industry’s coverage in the media. (Chart 1)
Chart 1
Percentage of Corporate Reputation Messages in the Q1 2006 Delahaye Index
Visibility is not the only factor when analyzing news coverage, as we also need to account for the quality of this coverage. Eighty-seven percent of oil-related companies’ financial news was neutral or positive, but only 75 percent of the total Delahaye Index news was neutral or positive (Chart 2). The oil-related industry has more financial coverage and better quality coverage than the rest of the Delahaye Index companies being analyzed.
Chart 2
Financial Management messages in the Q1 2006 Delahaye Index
For news with references to a company’s Organizational Integrity, which includes stories about ethical bounds and environmental responsibility, the oil-related industry scored lower than the total Delahaye Index (Chart 3). As a matter of fact, this particular industry had more negative news than positive news in this area. Those stories were a smaller proportion of the total coverage of news (Chart 1), but still influential on the industry’s overall score.
Chart 3
Organizational Integrity messages in the Q1 2006 Delahaye Index
Much of that negative news for Exxon Mobil and its competitors appeared at the end of the first quarter, leaving Exxon Mobil with a Q1 2006 Delahaye Index ranking of 21st out of 100 companies. While that is certainly not a bad position to hold, such strong financial news generally propels companies much higher. A consistent finding of the Delahaye Index reveals that financial information is the engine behind news coverage of corporations, in terms of volume as well as tone.
Even with the strongest possible “engine” behind them (and perhaps because the financial engine was so strong), the vocal critics of these oil-related companies definitely put a damper on Exxon Mobil’s reputation in the news. In an unprecedented form of PR outreach, ExxonMobil’s CEO Rex Tillerson appeared in televised national interviews to help mitigate the negative momentum.
Matthew Merlin is a director at Delahaye, analyzing media that comprise the Delahaye Index of corporate reputation, which tracks the largest 100 companies. He can be reached at mmerlin@delahaye.com