Sara Lee "Rape" Memo Returns to Haunt News Corp.

An infamous memo in which a Sara Lee marketing executive compared News Corp. (NWS) to a "rapist who enjoys it" has reared its head again -- this time, prior to a new upcoming trial on the issue of whether News uses anti-competitive practices in its supermarket-coupon agency. News wants the memo excluded from the trial on the grounds that it is irrelevant and/or prejudicial.

Most people don't know that in addition to owning Fox TV, the Wall Street Journal, MySpace and a raft of other media properties, Rupert Murdoch's News Corp. also owns an obscure but lucrative grocery-coupon ad agency, News America Marketing, that for years has dominated its field. Historically News America provided $350 million in annual operating income to its parent company (News no longer breaks out those numbers). The grocery-coupon category is a bare-knuckled business.

The undated memo, written by Sara Lee's former director of business services procurement Debra Lucidi (pictured), describes the fury that News America generated within Sara Lee over its pricing of grocery coupons. She uses words like "pissed," "livid," "intolerable" "unforgivable," "ludicrous," and "ridiculous" to describe dealing with News, which allegedly raised its prices for in-store advertising because Sara Lee did not let them keep a separate contract for newspaper coupons. The memo first emerged in a different case that News settled, preventing testimony about it. The most memorable sentence in the note describes what it is like being a News America client: "Feels like they are raping us and they enjoy it--"

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In the case, Insignia Systems (ISIG), a small grocery-coupon agency, is alleging that News uses price-gouging tactics to force advertisers to use both its newspaper coupon and its in-store advertising service. Clients who wanted one and not the other got exorbitant prices, Insignia claims.

In a pretrial motion, News argues that:

... even if Lucidi's notes were of any relevance and were otherwise admissible, which they are not, a reference therein to News America as a "rapist who enjoys it" should still be excluded ...

Given the "rape" statement's manifest potential for unfairly prejudicing News America and its lack of any probative value to the issues in this business dispute between two "in-store" advertising competitors, it should be excluded from the evidence

• Paul Carlucci (pictured), the colorful publisher of the New York Post and CEO of News America Marketing. He once threatened to destroy a competitor over lunch, called staffers who wanted to do "the right thing" "bed wetting liberals," and used the scene from The Untouchables in which Al Capone beats a man to death with a baseball bat as a motivational aid for employees.
• Robert Emmel, a former News America employee who walked out of the company with a laptop full of internal documents. He has previously testified that News America paid millions to supermarkets in order to obtain exclusive contracts that barred competing agencies from placing ads in their stores.
• Dominic Porco, president of News America. He sent a letter to advertisers that allegedly made the false claim that only 20 percent of their ads were correctly placed by Insignia.
• George Rebh, the former owner of Floorgraphics Inc., a supermarket ad agency that was bought and then shuttered by News America. Rebh was the man to whom Carlucci said, "I will destroy you!"
• Alan Schultz, CEO of Valassis (VCI), a competing coupon agency that won a $500 million settlement from News on largely similar claims to Insignia's.
• Pamela (Menks) Wesson: A Sara Lee employee who alleges she was told by a News America sales rep that the agency would tear down in-store advertising placed by anyone other than News America.

Related:

• The Logic Behind News Corp.'s Wall Street Journal Coupon Switch
• Secret Videos Mean Murdoch's Grocery-Ad Troubles Just Took a Turn for the Worse
• Rupert Murdoch, Down $530M in Antitrust Fight, Now Faces a Poker Champ Who Trained With Bill Gates
• Sara Lee "Rape" Memo Emerges: Client Alleges "Unforgivable" Behavior by News America