Fishing Expedition: News Corp. Wants Allegation of Ad "Bribe" Nixed

Last Updated Dec 6, 2010 1:06 PM EST

News Corp. (NWS) has asked a federal judge to ignore allegations that one of its executives bribed a Winn-Dixie (WINN) employee with a fishing pole after winning an in-store advertising contract. It's a reminder to those in the advertising business that gifts, even small ones, can destroy your credibility.

In the case, News is being sued by Insignia Systems (ISIG), a small supermarket-coupons ad agency, over whether News uses anticompetitive practices to maintain a dominant position in the grocery advertising business. In addition to Fox TV, the Wall Street Journal, MySpace and other media properties, Rupert Murdoch's News Corp. also owns News America Marketing, which handles newspaper coupons and in-store advertising for supermarkets. News told the judge:

Insignia should be barred from introducing evidence at trial that in early 2001, after a contract for in-store advertising was negotiated between News America and Winn-Dixie (a retail supermarket chain), a News America employee gave a Winn-Dixie employee a fishing pole.
... even if evidence of the fishing pole incident was somehow relevant (which it isn't), any marginal relevance is outweighed by unfair prejudice, since the only reason Insignia would attempt to introduce evidence relating to such a tangential event would be to turn the jury against News America by insinuating that the fishing pole was some sort of bribe, and that therefore News America must regularly engage in unethical business conduct.
Winn-Dixie has a strict policy on accepting gifts from vendors: Employees may not receive anything worth more than $50. Although a fishing rod seems way too small of a gift to affect the type of contract that can cost millions of dollars, marketing execs have tripped up over such tiny favors before. Julie Roehm famously lost her perch as one of Walmart's (WM) ad chiefs for accepting a crate of vodka. At Grey Group it was World Series tickets. At the Ad Store, it was an Italian villa. Walmart is particularly strict, its rules "prevent anyone from accepting so much as a breath mint from a supplier."

Of course, we don't know anything about the Winn-Dixie situation. There is no evidence entered into the case yet. News only mentioned it in pretrial rulings because it believes it is irrelevant to the case (and covered by a previous agreement between the two companies that settles all disputes prior to 2002).

Still, it proves the old adage: An appearance of a conflict of interest is almost always as damaging as an actual one, and managers should avoid both with equal fervor.

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Image by Flickr user moonjazz, CC.