The Jian Ghomeshi Saga: A Lesson in Economics?

03 Nov The Jian Ghomeshi Saga: A Lesson in Economics?

Yes, it is an economic story. Goodness knows the Jian Ghomeshi mess has a little something for everyone – horror, drama and apparently porn – but if you were making a movie it could also be a financial thriller. So much of the drama of the past days involves economic motives, and rational ones at that, as well as some graphic lessons in celebrity branding.

Just in case you have been lucky enough to miss the story, I’ll fill you in. Jian Ghomeshi is an ex-rock musician who over the past few years has been phenomenally successful as a radio host of Canada’s public broadcaster, CBC. His show was carried by 170 radio stations on satellite in the U.S., and at the height of his popularity, Mr. Ghomeshi had 284,000 Twitter followers. His ‘brand’ was cool, cutting edge and high-brow, while at the same time maybe a little dark.

As it turns out, there was a lot of darkness that went with Jian Ghomeshi. Following his abrupt firing from CBC last week, the ever-reported news is that he likes violent interactions with women. He says it has always been a fun, Fifty-Shades-of-Grey thing; a bunch of women (including three who have filed charges with Toronto police) say differently. (Feel free to Google if you need way more details on all this).

I thought Jian Ghomeshi’s show Q was okay, but just okay. For a time a few years ago I was generally in my car sometime between 11:00 and 12:00 and would often check out what CBC had on. I liked it in the pre-Q days when veteran CBC broadcaster Shelagh Rogers hosted the space. Shelagh covered books and theater and music and all that, but she also realized that most of us do not spend every evening in a club listening to whatever was deemed cutting-edge. Sometimes she even had features on how to plan a dinner at the end of the work day. It worked for working moms like me, but CBC apparently did not care if we listened or not.

So that was economic decision number one: CBC wanted something more urban, more edgy, more likely to draw in younger listeners. As it turned out, Jian Ghomeshi was not actually that young – he is now 47 – but he acted like he was. His show focused on celebrity interviews, up and coming rock musicians, and intricacies about music that did not particularly interest me. His celebrity grew though, particularly after a much-publicized interview with Billy Bob Thornton. He became a brand, and a celebrity brand is a valuable thing.

A celebrity brand is a very valuable thing actually. A decade ago when Shania Twain got paid some enormous amount of money to peddle lip gloss, someone in the media called me to ask whether that made any economic sense, and of course it did. Just a flash of Shania with her lips painted and shining made people think glamour, sexiness and confidence, which was a lot for a little pot of gloss to communicate on its own. It was worth having her attached to the brand. It has been well worth it too for  companies to hire David Beckham or Miley Cyrus or Tiger Woods or whoever to sell products, because they communicated something. Thing is, you have to make sure that what you communicate is not negative, which did eventually become an issue for Tiger Woods at least.

Jian Ghomeshi peddled his brand to host various arts events and as a speaker, but I would say he was only on the edge of what he might have been able to do with it. His international celebrity status was just building and over the next few years he may well have been able to build a much bigger profile in the U.S. and elsewhere. Whatever he was commanding in appearance fees was no doubt set to grow, and perhaps a U.S. radio or television gig and subsequent endorsements were in the works. It was all good – except that it was not. And how quickly the value of that brand topped. One week he was getting 90,000 Facebook ‘likes’ following a (presumably sincere) post about how broken hearted he was at the death of his father. The next, he was losing Facebook followers exponentially.

There is a lot more economics at play in the sordid story, of course. I am not sure exactly when CBC knew something was up, but presumably it was before Jian Ghomeshi played a graphic set of home movies in the boardroom to show that bruises can happen when things are consensual (I wish I was kidding about that story). I do know that if he was a guy who worked in the control room, he would have had his stuff in a cardboard box and would have been escorted by security to his car pretty smartly following the first allegations, particularly if a co-worker had gone to her union to report seriously inappropriate behavior (as was apparently the case with Ghomeshi). The idea that he might be able to show his ‘evidence’ would have been laughable. Then again, CBC’s behavior is rational in a purely economic sense: the asset they had in Ghomeshi was so valuable that it was worth the risk of things spinning out of control. Control-room guys are dime-a-dozen, and can be hired and fired at will.

Now the financial part of the story is more straight-forward: it involves paying lawyers and investigators and presumably, eventually damages to victims. Whatever the CBC has to ante up will be with public money, which unfortunately makes this whole tawdry tale everyone’s business. And, if it bankrupts Jian Ghomeshi, I imagine a lot of people will be able to live with that.

Is there an economic lesson to be learned from the Jian Ghomeshi saga? If there is, it is about the power of celebrity, and the way that power can cloud good decision-making. What you see is not necessarily what you get, meaning that you may end up paying top-dollar for a product that you never expected to buy.