News Corp. Faces $621M in Damages If It Loses Grocery Ad Case

Last Updated Jan 24, 2011 7:08 PM EST

News Corp. (NWS) could be on the hook for $621 million in damages if it loses an upcoming antitrust trial over its obscure but lucrative supermarket coupon business, according to a pretrial ruling in the case.

It's the first time a solid dollar number has been placed on News' potential liabilities should it lose its fight against tiny Insignia Systems (ISIG). The grocery advertising agency claims News told lies to its clients and enforced exclusive contracts that restricted competition among in-store supermarket advertisers.

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 and the companies who sell products on their shelves. Insignia has a colorful set of claims against News. It alleges that the company bribed a Winn-Dixie executive with a fancy fishing rod to sign an in-store advertising contract, and that a Newsclient at Sara Lee felt so violated by the way News raised its prices SL they gave any business to rival ad agencies that she once wrote, "Feels like they are raping us and they enjoy it."

The new ruling allows Insignia's economics expert, Dr. Thomas Overstreet of CRA International, to testify on how much financial damage News has wreaked at Insignia:

According to Overstreet, "[t]he same conduct that has harmed competition has also harmed Insignia. Based on various assumptions about the appropriate benchmark for the 'but-for' world, [Overstreet] estimate[s] that Insignia's damages fall in the range of $121.7 million to $214.5 million."
In a separate opinion, Overstreet lowered his estimate to $207 million. In federal antitrust cases juries can triple damages -- hence the $621 million total.

What's interesting about $621 million number is that it's even more than News has already lost in previous fights with other grocery ad agencies on similar issues. Over the last few years, News has lost or settled three cases for a total of $533.5 million. All told, the $1.1 billion in total potential damages all occurred under the reign of New York Post publisher Paul Carlucci, who is also the CEO of News America Marketing.

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Images: Ruper Murdoch courtesy of Flickr user World Economic Forum, CC.