March 2nd, 2011
07:39 AM GMT
(CNN) – It’s been a tough week for the celebrity business.
The bizarre behavior of Charlie Sheen, the highest paid star on U.S. television, has – for now – pulled the plug on the popular “Two and a Half Men” television series.
A profanity-laced video put online Tuesday showing a drunken John Galliano – the famed chief fashion designer for Dior – expressing his love of Hitler was the final straw for the company, which plans to terminate his contract following his arrest for allegedly making racist remarks.
Businesses tie their fortunes to star employees, star executives, star entertainers, because it works: Despite (or, perhaps, because of) Sheen’s checkered past, the troubled star has powered the CBS television show for eight years, earning him a reported $2 million an episode as the ne’erdowell foil to his live-in brother and nephew.
Galliano joined Dior in 1996 and turned its moribund fashion into an industry driver; Dior is a division of LVMH, which made more than $4.3 billion euros last year – half from its fashion division, its most profitable business.
CBS didn’t waste time in pulling the plug on the rest of the season after Sheen’s scathing comments on a U.S. radio show, including an attack on the show’s creator. Dior’s reaction was equally swift (it didn’t help that the Galliano incidents exploded in between two of Dior’s largest events of the year – Sunday’s Oscars show and Dior’s ready-to-wear show at Paris Fashion Week).
“I think the more that [the video] spread across the internet … they weren’t really left with any choice,” said James Fallon, editor of Women’s Wear Daily, of Dior’s decision to pull Galliano’s plug.
“[Dior] acted swiftly and decisively, and that’s what you need to do in a situation where you’re facing pressure in this case, and there is something that was so horrific and disgusting, the roadmap for the company was clear,” said Jeremy Robinson-Leon, COO of Group Gordon, a crisis management firm.
“Ultimately Dior’s biggest problem right now is that the brand is inextricably linked with Galliano,” Robinson-Leon said. “Galliano is Dior, and Dior is Galliano … Dior’s going to need to move beyond this by finding a replacement for Galliano rather quickly."
Sheen’s media drive, including a live one-hour interview with CNN’s Piers Morgan, has been described as his “Scorched Earth Media Tour.” The show – which is to say, the product – was created around Sheen. It’s difficult to imagine the product surviving without him.
We live in an era where consumer brands in mature markets and industries are less able to differentiate themselves on product, and focus more on brand experience – of which, association with celebrity is increasingly important. Yet these debacles cost companies real money.
Look at Tiger Woods and the financial fallout to his sponsors following his well-publicized marital troubles in 2009. A study by the University of California, Davis, shows that the loss of shareholder value to eight of Wood’s sponsors in the wake of scandal was $12 billion.
Years of work building a celebrity’s brand can be eviscerated in one drunken outburst caught on a mobile phone camera. But celebrity careers are known for redemption and resurrection – Sheen’s career already has had more lives than your average feline. But can Sheen and Galliano bounce back from this week’s events? Should companies still be beholden to celebrity branding?
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