News Corp. (NWSA), a diversified global media company, reached an out-of-court settlement with Valassis Communications Inc. (VCI), one of the leading media and marketing services companies in the U.S., to settle a lawsuit that alleged anticompetitive behavior of News America Marketing, a division of News Corp.
Like its competitor Valassis, News America Marketing publishes coupon inserts for newspapers and sells in-store advertising in supermarkets. In its lawsuit filed in a federal court in Michigan, Valassis accused News America Marketing of engaging in unfair competition and tortuous interference. News Corp. was forced to reach an out-of-court settlement as “significant risks” developed during the pre-trial proceedings.
Under the terms of the settlement, News America Marketing will pay Valassis $500 million and will also enter into a 10-year shared mail distribution agreement with Valassis Direct Mail, a Valassis subsidiary. The compensatory damages included $300 million already awarded to Valassis in July 2009 to settle another lawsuit, as well as two additional lawsuits pending in Los Angeles and Michigan. In addition, the judge will issue a permanent injunction related to certain business practices.
News Corp is a diversified global media company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; integrated marketing services; newspapers and information services; book publishing; and other. Although News America Marketing is a relatively small unit, it has healthy profit margins and accounted for more than 7% of News Corp.’s operating income in fiscal 2009.
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