Murdoch's marketing firm takes another legal hit

News America, assailed for bully tactics, gets tagged with a $300 million verdict.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Jennifer Reingold, senior writer

Who will benefit most from the Obama administration's proposed financial regulations?
  • Consumers
  • Banks
  • Regulators

NEW YORK (Fortune) -- The legal setbacks just keep coming for News America Marketing, the $1 billion unit of Rupert Murdoch's News Corp. that does supermarket in-store promotions and produces newspaper circulars. After settling for an undisclosed amount with competitor Floorgraphics in March, the company yesterday was ordered by a Michigan court to pay competitor Valassis Communications $300 million in compensatory damages.

A jury found the company guilty of interference and unfair competition; it was the second case relating to unfair business practices that the company has lost, and may not bode well for its chances in a similar case filed by Insignia Systems (ISIG), another rival. Virtually all of News America's remaining competitors have filed some form of legal challenge to the company's business practices.

Although Valassis (VCI) had asked for $1.5 billion and had essentially gambled the company's future on the outcome, spending millions on legal fees, CEO Alan Shultz claimed to be satisfied with the results. "I am very proud of the efforts of our employees, who have been competing on this uneven playing field for nearly a decade," he said in a press release. News America CEO Chris Mixson offered the opposite take in a statement. "We are disappointed with today's decision, which rewards a company that turned to litigation as its business strategy rather than compete." He vowed to appeal.

Although it may take years for such an appeal to wend its way through the judicial system, News America is officially on the hot spot. After settling with Floorgraphics, losing an appeal against Theme Promotions, and facing two more suits from Valassis as well as the Insignia case, the company's methods of doing business have been severely put into question. The Valassis trial reportedly featured testimony from News America executives admitting that they charged higher prices to companies like Unilever (UL) and Kraft (KFT, Fortune 500) if they refused to bundle their coupon and in-store business only with News America.

Moreover, the in-store promotions business has lately been evolving into a model in which the large consumer-product companies have more clout than the middlemen such as News America and Valassis. All of which suggests that it may be time for News Corp. (NWSA) CEO Murdoch to take a break from the woes of his media businesses and focus his efforts a bit more on a business unit whose tactics appear to be costing the company a lot more than it has gained -- both in reputation and in cold, hard cash. To top of page

Company Price Change % Change
Bank of America Corp... 30.00 0.06 0.20%
Advanced Micro Devic... 30.44 -0.55 -1.77%
General Electric Co 9.38 0.02 0.21%
AT&T Inc 36.77 -0.39 -1.05%
Freeport-McMoRan Inc... 10.36 -0.05 -0.48%
Data as of 3:59pm ET
Index Last Change % Change
Dow 27,147.08 36.28 0.13%
Nasdaq 8,177.39 -8.62 -0.11%
S&P 500 3,006.73 1.03 0.03%
Treasuries 1.79 -0.03 -1.43%
Data as of 4:16pm ET
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.