News America Marketing

News America Marketing

News America Marketing, often referred to as just News America, is a marketing business owned by the News Corporation. It is one of three companies in the United States (the other two are Valassis Communications and Insignia Systems) that control almost all the in-store ads and grocery coupons in the United States.[1]

One major division of the company is SmartSource iGroup, formed in 2000 from acquisitions and investments.[2] It publishes SmartSource Magazine, a weekly consumer-branded newspaper insert offering advertising and coupon promotions, delivered in over 1,600 newspapers in the U.S.[3] The SmartSource brand began in 1998.[4]

Contents

Operations

In the fiscal year ending June 2005, the company had 28% operating margins, the highest of all News Corporation businesses. Its annual revenues were $1.1 billion, an increase of 9% from the prior year.[5] As of 2007, News America produced the majority of revenues for News Corporation's magazines and inserts division, and it controlled an estimated 50% to 60% of the insert market and as much as 90% of the in-store business.[6]

Legal cases

In 2005, Theme Promotions, a merchandising firm, won a $6.8 million jury verdict against News America.[6] The California jury found News America guilty of violating civil antitrust and unfair-competition laws.[5]

In 2006, the state of Minnesota accused News America of engaging in unfair trade practices. The company settled in 2008 by agreeing to pay costs and not to falsely disparage its competitors.[7][8]

Between 2009 and 2011, the News Corporation paid out about $655 million to settle charges of corporate espionage and anticompetitive behavior by News America.[7]

  • In 2009, a federal case in New Jersey (Floorgraphics v. News America Marketing In-Store Services Inc, 04-cv-3500, U.S. District Court, District of New Jersey, Trenton[9]) brought by a company called Floorgraphics went to trial, accusing News America of hacking into Floorgraphics’s password-protected computers. Much of the lawsuit was based on the testimony of Robert Emmel, a former News America executive who had become a whistle-blower. After a few days of testimony, the News Corporation settled with Floorgraphics for $29.5 million; several days after that, it bought Floorgraphics.[7][10][11][12] On 20 July, US Senator Frank Lautenberg wrote a letter to the Department of Justice requesting that the on-going FBI probe include the Floorgraphics hacking allegations.[13] On July 21, 2011, it was reported that representatives of the United States Department of Justice and the FBI had begun investigation into the Floorgraphics allegations.[14]
  • In 2010, the News Corporation paid $500 million to settle a case brought against it by Valassis Communications,[7] after that company had won a $300 million verdict in state court in Michigan.[15] The lawsuit by Valassis was based on claims that News America had gained market share by forcing its packaged-goods customers to sign long-term insert contracts or risk huge price increases on their in-store advertising displays[6] The settlement included News America entering into a 10-year shared mail distribution agreement with Valassis Direct Mail, a Valassis subsidiary.[16]
  • At the beginning of 2011, in a case in Minnesota brought by Insignia Systems, News America faced more than $600 million in fines.[17] The News Corporation paid out $125 million to settle the allegations of anticompetitive behavior and violations of antitrust laws.[7] This was the third time that the two companies had been involved in lawsuits. In August 2000, Insignia was sued by News America regarding exclusive promotional agreements with several major supermarket retailers,[18] a suit that was settled confidentially in November 2002. In November 2003 Insignia was sued again, regarding Insignia's right to market in-store advertising and promotional services.[19]

References

  1. ^ Jim Edwards (February 9, 2011). "Why News Corp.’s Settlement With Insignia Creates a Grocery Ad Cartel". BNET (CBS). http://www.bnet.com/blog/advertising-business/why-news-corps-settlement-with-insignia-creates-a-grocery-ad-cartel/7533. Retrieved 2011-07-18. 
  2. ^ "News America Marketing Forms E-Business Unit". Direct Marketing News. May 3, 2000. http://www.dmnews.com/news-america-marketing-forms-e-business-unit/article/66071/. Retrieved 2011-07-19. 
  3. ^ "Our Products – SmartSource Magazine". News America Marketing. http://www.newsamerica.com/ourproducts/consumersathome/Pages/smartsourcemagazine.aspx. Retrieved 2011-07-18. 
  4. ^ Theresa Howard (April 16, 1998). "News America Makes Move to Branded Coupons". Direct Marketing News. http://www.dmnews.com/news-america-makes-move-to-branded-coupons/article/58927/. 
  5. ^ a b Peter Lattman (October 31, 2005). "Marketing With Muscle". Forbes. http://www.forbes.com/forbes/2005/1031/066.html. 
  6. ^ a b c Jennifer Reingold (July 20, 2007). "News Corp.'s trouble in aisle three". CNN. http://money.cnn.com/2007/07/19/news/companies/newsamerica.fortune/. Retrieved 2011-07-18. 
  7. ^ a b c d e David Carr (July 18, 2011). "Troubles That Money Can’t Dispel". New York Times. http://www.nytimes.com/2011/07/18/business/media/for-news-corporation-troubles-that-money-cant-dispel.html. 
  8. ^ Jim Edwards (February 3, 2010). "Valassis-News America Deal Raises History of FTC Antitrust Issues". BNET (CBS). http://www.bnet.com/blog/advertising-business/valassis-news-america-deal-raises-history-of-ftc-antitrust-issues/4185?tag=content;drawer-container. Retrieved 2011-07-18. 
  9. ^ David Glovin, News Corp. Response to Hacking Was ‘Deficient,’ Expert Said, Bloomberg News, July 21, 2011
  10. ^ Floorgraphics Inc. v. News America Marketing In-Stor, (3rd Cir. 2011), vLex
  11. ^ News America Marketing v. Robert T. Emmel, (11th Cir. 2011), vLex
  12. ^ Ed Pilkington, A life unravelled … whistleblower who incurred wrath of the Murdoch empire, The Guardian, profile of Robert Emmel, August 16, 2011
  13. ^ Sen. Lautenberg Letter
  14. ^ Michael Isikoff, US looks into alleged hacking by News Corp.'s ad arm, NBC News, July 21, 2011
  15. ^ Jim Edwards (January 29, 2010). "Valassis Could Win $3B From News America in Court, Analyst Says". BNET (CBS). http://www.bnet.com/blog/advertising-business/valassis-could-win-3b-from-news-america-in-court-analyst-says/4110. Retrieved 2011-07-18. 
  16. ^ Jim Edwards (January 31, 2010). "Why FTC Should Examine Valassis and News America’s $500M Settlement". BNET (CBS). http://www.bnet.com/blog/advertising-business/why-ftc-should-examine-valassis-and-news-americas-500m-settlement/4124. Retrieved 2011-07-18. 
  17. ^ Jim Edwards (February 4, 2011). "News Corp.’s $600M Dirty Tricks Trial Starts Monday… Unless It Settles". BNET (CBS). http://www.bnet.com/blog/advertising-business/news-corps-600m-dirty-tricks-trial-starts-monday-8230-unless-it-settles/7484. Retrieved 2011-07-18. 
  18. ^ "Marketeers locked in legal dispute". St. Paul Pioneer Press. August 15, 2000. http://nl.newsbank.com/nl-search/we/Archives?p_product=PD&s_site=twincities&p_multi=SP&p_theme=realcities&p_action=search&p_maxdocs=200&p_topdoc=1&p_text_direct-0=0EB73A05F1CA8344&p_field_direct-0=document_id. 
  19. ^ Benno Groeneveld (November 7, 2003). "Insignia sued by Murdoch-owned competitor". Minneapolis/St. Paul Business Journal. http://www.bizjournals.com/twincities/stories/2003/11/03/daily47.html?jst=b_ln_hl. Retrieved 2011-07-19. 

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