The 10 Biggest PR Disasters of the Year
Like most years, 2011 provided no shortage of PR nightmares. Whether it was Netflix doubling its prices or MF Global losing $1 billion of its customers' money, the screw-ups were huge and in some cases caused permanent damage. In other cases, however, swift action quelled the situations without much harm. Here is a rundown of this year's worst PR disasters. Live and learn, as they say!
DVD-rental giant Netflix learned this year that it'd be nice to be able to hit a real-life rewind button. Over the summer, the company announced plans to split up its DVD rentals and streaming services, which in the end amounted to a doubling of the customer's monthly fees.
The move caused a fury among its customers and by September, Netflix CEO Reed Hastings was scrambling to repair the damage. In a letter to subscribers, he simply said, "I messed up. I owe everyone an explanation."
His mea culpa appeared to come up short, with Netflix announcing in October that the company had lost 800,000 subscribers and saw stock prices tumble from an all-time high of nearly $300 a share in July to just $75 in October.
Bank of America
This year showed Bank of America that U.S. consumers are fed up with unnecessary fees. The bank this fall announced plans to start charging $5 monthly fees for all debit-card users.
The added amount was met with universal displeasure, with one Time Magazine poll showing 75 percent of Bank of America customers planning to switch to a new bank to avoid the charges.
Amid the public backlash, the bank announced less-than-two months later that it was abandoning its plan for the added fee. In a statement, Bank of America's co-chief operating officer David Darnell said, "We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."
Despite the quick reversal, Bank of America continues to pay the price in its stock shares. After quickly dropping 6 percent in the wake of the announcement, the shares have continued to sink, and this month fell below $5 a share for the first time since 2009.
White Coke Cans
Coca-Cola learned this year that some things should never be changed. Looking to get into the holiday spirit, Coca-Cola switched its long-standing red cans to a snow-themed white that bore a striking resemblance to the brand's long-standing silver Diet Coke cans.
The change caused mass confusion among Coke and Diet Coke drinkers, both of whom were mistakenly picking out the wrong cans. In the days after the cans hit the shelves, consumers turned in force to social media with their complaints, and also claimed that Coke tasted different in a white can.
Despite a company spokesman telling the Wall Street Journal that the can has been "well-received and generated a lot of interest and excitement,'' Coca-Cola ended up listening to its customers. The cola giant scrapped the white cans -- similarly to what it did in 1985 with New Coke -- in early December in favor of the traditional red.
This year taught financial derivatives broker MF Global that losing $1 billion is not going to go over well with your clients – or with Congress.
In October, MF Global declared bankruptcy; afterward, $1.2 billion in customers' funds, most belonging to farmers across the country, were discovered missing.
While MF Global CEO Jim Corzine immediately resigned, he still was forced to answer for his actions before members of the House Agriculture Committee. Instead of coming clean, Corzine, the former New Jersey governor, claimed he had not idea what happened to the money and that he wasn't aware of the missing cash until just before bankruptcy was filed. With the FBI investigating the case, it's only a matter of time before we know whether Corzine was speaking the truth.
Christian Dior showed us that a company's biggest asset can also become its biggest problem. After more than a decade as its head designer, John Galliano was fired by the French fashion house after being caught on videotape making anti-Semitic remarks.
Christian Dior moved swiftly, suspending Galliano four days after the tape surfaced. But it wasn't until Oscar-winning actress and Dior spokeswoman Natalie Portman publicly condemned Galliano that the company announced it was firing him.
Less than a week later, Dior's CEO, Sidney Toledano, told those at Dior's event during Paris Fashion Week: "What has happened over the last week has been a terrible and wrenching ordeal for us all. It has been deeply painful to see the Dior name associated with the disgraceful statements attributed to its designer. However brilliant he may be."
Galliano's fall from grace continued throughout the year. He eventually was fired from his own John Galliano label, also owned by Dior parent-company LVMH, and found guilty in a French court of making anti-Semitic remarks and ordered to pay an $8,400 fine.
Abercrombie & Fitch and The Situation
This year taught clothing giant Abercrombie & Fitch that some people can't take a joke. Over the summer, the clothier launched a campaign asking Jersey Shore star Mike "The Situation" Sorrentino to stop wearing the brand's clothes.
While the move was designed as a public relations stunt, neither investors in the company nor Sorrentino found it funny. Abercrombie & Fitch's stock fell nearly 10 percent after launching the campaign, and Sorrentino filed a lawsuit against the company three months later claiming it had used his name and likeness to create brand awareness without his consent.
The PR stunt has turned into a legal battle as the two sides are waging war in the courtroom. In a motion to dismiss the case, attorneys for Abercrombie & Fitch argued the whole situation was a joke and that, as a public figure, Sorrentino is subject to being parodied.
As the case drags into 2012, it's still to be determined who will have the last laugh.
"All My Children"
This year showed the cast and crew of the long-running ABC soap opera "All My Children" that nothing can live forever.
In April, ABC announced it was canceling the show after more than 40 years on the air. The move came under sharp criticism from fans, as well cast members themselves.
While ABC issued a statement defending its decision by saying viewers were looking for something else from its programming, an online company quickly swooped in to save the soap for fans.
Less than a month after ABC canceled it from its daytime lineup, Prospect Park announced it was bringing "All My Children" to the Web.
The reprieve was short-lived, with the online company saying in November that plans to bring the soap opera online had fallen through.
"In the end, the constraints of the current marketplace, including the evolution and impact of new media on our industry, simply proved too great a match for even our passion," the company said in a statement.
Lowe's learned in 2011 that the holiday season isn't always a festive time. The home-improvement retailer generated a fury of controversy in the last two weeks after a decision to pull advertising from the reality-television show "All American Muslim."
The decision came after complaints from the Florida Family Association, a conservative Christian group, that the show was a front for spreading the Islamic agenda.
Despite pleas from a host of religious and political leaders to reconsider, Lowe's has steadfastly stuck to its guns amid the rising controversy.
The company's lone response has been a posting on its Facebook page defending its actions, which included: "Individuals and groups have strong political and societal views on this topic, and this program became a lighting rod for many of those views. As a result, we did pull our advertising on this program."
This year showed FedEx that in an era of heightened technology, someone is always watching. The shipping giant has come under fire after a 20-second video showing a FedEx deliveryman tossing a package containing a computer monitor over the fence of a California home went viral.
Within hours, the video, captured on a security camera outside the home, had been seen by millions of people, prompting a swift response from FedEx in the midst of its busiest time of year.
Just one day after the video went online, FedEx officials went on the offensive. They apologized to the customer in person, replaced the broken monitor and made sure the delivery person was no longer interacting with customers while the situation is investigated.
FedEx Senior Vice President Matthew Thornton also reached out to FedEx customers everywhere with a blog and an online video of his own explaining how the matter had been resolved and what steps the company is taking to ensure it won't happen again.
Thornton wrote: "We are also going to build this into our training programs as a constant reminder of the importance of earning -- and keeping -- your trust with every single delivery. <br><br>We hope that you, like the customer involved in this incident, will see it as an unfortunate exception that proves the rule that our company cares for its customers."
The Kardashian family learned this year that when it rains it pours. The Kardashian brand took a big hit this fall following Kim's filing for divorce from Kris Humphries just weeks after saying "I do," and now the family's image is taking another blow after a tabloid ran a story this month claiming the family uses child-slave labor in the Chinese factories where their clothing line is produced.
The family went virtually silent following Kim's divorce, but this time, they're not being so quiet. Family matriarch Kris Jenner went on the defensive, telling celebrity gossip site TMZ, "As far as I know the factories that are used to manufacture the Kardashian clothing and shoes have nothing terrible going on at all and the factories are very well policed and meet factory standards."
The Kardashians are planning to go on the attack by filing lawsuits against anyone and everyone behind the child-slave-labor accusations, according to TMZ.