Mattel Tries to Get Out Ahead of Whistleblower

When major toy company Mattel received a letter from an anonymous whistleblower, the decision was made to get out ahead of the story. The company announced it had received a letter with the explanation that the company was canceling a debt sale in order to “investigate the matters set forth in the letter…”

That announcement caused the company shares to drop more than 15%. Part of this downturn may have been the lack of specificity in the letter, leading to uncertainty. Mattel did not describe the allegations or disclose what potential wrongdoing may have been included in the letter.

This is unwelcome news considering how well Mattel stock had been doing so far in 2019. After a few years of revolving leadership in the CEO spot, Mattel seemed to find a good fit in former TV studio executive Ynon Kreiz. In 2019 alone, Mattel stock was up 35 percent, thanks to better than expected end of year sales in 2018 and the resurgence of top brands including Barbie and Hot Wheels.

The company also has plans to branch out, greenlighting live-action movies based on Barbie and Hot Wheels. This seems a world away from this time a year ago, when Mattel and its top rival, Hasbro, were left reeling after Toys R Us closed its doors. Mattel and other big toy companies had to reconfigure their merchandising plans, pushing more products into big-box stores such as Walmart and Target, as well as working with the online giant, Amazon.

While the company was in that process, it was leaked that at least one other toy company was trying to buy the company, offers that Mattel rejected.

The question now, from a PR perspective, is what’s next for Mattel? Will whatever is in this mysterious letter be damaging to the company? And, if so, what will they reveal, and how will they deal with it? Will Mattel continue to take a proactive approach, trying to get out ahead of any potential blowback? Or will they get their message ready to respond to whatever may be disclosed by the mysterious third party?

This is definitely a situation that bears watching as a good example of the quandary some companies face when they learn that someone has information that may potentially damage their brand or standing in the marketplace. The calculus of what to say, when, and how much must be precise; and a response to all potential responses to those decisions must be considered and decided ahead of time while maintaining enough message flexibility to adjust as necessary.

Ronn Torossian is the CEO and Founder of 5W Public Relations.