In the case, News is being sued by Insignia Systems (ISIG), a small supermarket-coupons ad agency, over whether News uses anti-competitive 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.
Insignia alleges that News had a corporate strategy, dubbed "Project Popeye," to drum its rivals out of business:
The evidence will show that News America embarked on a campaign to remove the competition, dubbed Project Popeye, whereby News America would first try to buy a competitor, then compete illegally, then sue to put them out of business.News did in fact buy out one of its competitors, Floorgraphics Inc., to settle a lawsuit in which FGI made similar allegations as Insignia. That settlement cost News $30 million. It previously lost a $3.5 million verdict favoring another small agency, Theme Promotions, in 2005. And in January of this year, News wrapped up two more trials that it lost, both against Valassis (VCI), another grocery coupon shop, for $500 million.
All of this augurs poorly for News. Insignia is small enough to be easily acquired by News. ISIG's stock has risen steadily as the trial date nears, suggesting that investors think an FGI-style takeout may be an option. Rather than opening a new can of spinach, News may simply give its lawyers (and its bankers) new instructions instead.