UPDATED: News America Marketing's Acquisition of Floorgraphics Not Big Enough to Show Up in Q1 Numbers
Observers of the acquisition/settlement between Rupert Murdoch’s News America Marketing and Floorgraphics Inc. were left wondering how much NAM had paid for the upstart provider of floor ads in supermarkets. That was not revealed at the time of the settlement in March.
On May 6, NAM’s parent, News Corp., released its Q1 (fiscal Q3) results … but the filing with the SEC contained no word of the settlement sum. In News Corp’s “Magazines and Inserts” section — where NAM is presumably located within the Murdoch Empire — revenue rose 4 percent to $97 million. But nowhere was there a specific charge taken for the FGI deal.
UPDATE: In News Corp’s slighty more detailed 10-Q form, filed May 7, the company has this to say:
Operating income at the Magazines and Inserts segment increased $4 million, or 4%, as compared to the corresponding period of fiscal 2008, primarily due to the revenue increase noted above, partially offset by higher printing and paper costs for free-standing insert products and higher legal expenses. Operating income for the nine months ended March 31, 2009 decreased $6 million, or 2%, as compared to the corresponding period of fiscal 2008, as the increase in revenues noted above was more than offset by higher paper and printing costs for free-standing insert products and higher legal expenses.
That’s still not terrifically informative. But a source points BNET at News America’s $1 billion debt raising in february — right before the FGI case settled. The press release said:
News America will receive gross proceeds of $998,384,000 from this offering and expects to use the net proceeds for general corporate purposes.
Does this mean FGI cost NAM $1 billion? Not necessarily. NAM is facing other cases that may need to be settled, and its long-term revenues are in decline as well.
Companies generally have a duty to report anything that is “material” to their finances to the SEC. The lack of info on the cost of FGI in News Corp’s Q1 suggests that the settlement may have been small — or at least much smaller than $1 billion.
That does not bode well for Valassis, which has three suits pending against NAM this year (see below). In its federal claim, Valassis seeks $1.5 billion in damages.
- See BNET’s previous coverage of the in-store marketing wars:
- Valassis Q1: Legal Bills Running at 22% of Profits; Hints of Layoffs?
- News America Marketing Sues Valassis Alleging Bogus Web Posts
- Valassis Accused of Using Hidden Identities in Online War With News America Marketing
- News America Marketing Forces Whistleblower Into Bankruptcy
- News America Marketing Whistleblower: Clients Were Charged for Ads That Never Appeared
- Was N.Y. Post’s Carlucci the Reason for News America Marketing’s Settlement With Floorgraphics?
- News America Marketing’s Alleged Plans to Seize Safeway Account Outlined in Suit
- Valassis to Stick With “Majority” of Newspapers; Settles Fraser Billing Dispute
- Valassis, Insignia Stock Jumps on News America Marketing Group Settlement
- Valassis CEO Got Big Raise Despite Company’s Losses
- News America Marketing Group Wins Summary Judgment Against Whistleblower Robert Emmel
- News America Marketing Group Buys Floorgraphics Just Hours After Settling Spying Lawsuit
- News America Marketing Group Settles With Floorgraphics; Valassis, Insignia Likely Rejoicing
- Valassis May Not Be Able to Pay Debt; Litigation May “Materially Harm” the Company
- Trial: Did News America Marketing Group Break Into Floorgraphics’ Computers?
- Valassis Stock Threatened With De-listing by NYSE
- Valassis’ Plan to End Newspaper Coupons Outrages Middle America
- Valassis Suit vs. News America Being Conducted in Secrecy
- Valassis: Layoffs Will Continue as It Reduces Newspaper Coupon Business; It’s All News America’s Fault
- Valassis Writes Down $245 Million in Assets; Legal Bills Running at 10% of Profits
- Valassis Angers Blogger Moms by Yanking RedPlum Coupons From Newspapers
- Valassis Reduces the Cost of Fun for Employees
- Direct Mail Giant Valassis Is “Not Paying Its Bills”; Stock Is “Worth $0”
- The Cost of Valassis’ Suit vs. News America Is Eating Its Profit
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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