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Report: Ad Unit That Showed Gangster Movies to Workers Is New Focus of News Corp. Probe

Posted Sep 27, 2011 1:49 PM CDT
By Martha Neil

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In addition to telephone voice mail hacking and possible police payoffs, another area of concern is reportedly being investigated in a probe of Rupert Murdoch's News Corp.: Whether a global marketing subsidiary used scare tactics and other anti-competitive methods to pressure clients and crush rivals for supermarket advertising.

Federal authorities have asked a BigLaw attorney to provide documents related to a 2009 trial involving the Delaware company's News America Marketing Group, reports Bloomberg, relying on an unidentified source.

A lawsuit brought by Floorgraphics Inc.—one of at least six such suits filed by competitors against News America since 1997—resulted in the 2009 trial. It ended with a settlement that called for News America to buy Floorgraphics for $29.5 million.

All told, litigation against News America since 1997 has resulted in two adverse verdicts and cost the Connecticut-based company $650 million in settlements, Bloomberg recounts in a lengthy article today.

However, a spokeswoman for News America, Suzanne Halpin, says it did nothing wrong. Other companies unable to compete successfully with News America on a level playing field, she says, filed suit as a business strategy.

Questioned in a 2008 deposition, the CEO of News America, Paul Carlucci, talked about clips he's shown his workers from gangster movies including A Bronx Tale and The Untouchables, Bloomberg recounts.

And, according to evidence in the trial of a case against News America, Carlucci at one point referred to A Bronx Tale as he talked to his sales agents about a scene in which a crime boss asks a young associate whether he would rather be feared or respected.

"Our clients have a fear," Carlucci allegedly said, although he denies it. "They have a fear of being left on the shelf."

He also insisted at deposition that he didn’t show the portion of The Untouchables in which Robert DeNiro, playing Al Capone, uses a baseball bat to deal with an underperforming associate. Halpin says he used another clip from the movie to portray "how not to promote teamwork.”

She told the news agency that claims the clips were used to promote misbehavior are “incorrect or exaggerated” and noted that Carlucci also used clips from films such as Singin' in the Rain to illustrate his points.

Additional and related coverage:

ABAJournal.com: "NYT: Hacking Settlements Are ‘Chicken Feed’ Compared to Payouts for Alleged Corporate Hijinks"

ABAJournal.com: "News Reports Claim Murdoch Entities May Have Hacked and Bullied at US Companies, Too"

ABAJournal.com: "News Corp. Board Knew a Decade Ago About Computer Hacking By US Subs, Amended Suit Says"

Bloomberg: "James Murdoch Media Adviser Alice Macandrew Said to Have Resigned"

Daily Mail: "Now U.S. prosecutors want to know if News Corp's papers in the UK bribed British police officers"

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