Rupert Murdoch's Other Hacking Scandal

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David Carr writes today in the New York Times about several instances of News Corp. paying large settlements in response to lawsuits filed by companies in the U.S. In particular the Times notes a complaint from a company called Floorgraphics, against News America Marketing, a News Corp. subsidiary that does in-store and newspaper insert advertising.

In 2009, a federal case in New Jersey brought by a company called Floorgraphics went to trial, accusing News America of, wait for it, hacking its way into Floorgraphics's password protected computer system.

The complaint summed up the ethos of News America nicely, saying it had "illegally accessed plaintiff's computer system and obtained proprietary information" and "disseminated false, misleading and malicious information about the plaintiff."

The complaint stated that the breach was traced to an I.P. address registered to News America and that after the break-in, Floorgraphics lost contracts from Safeway, Winn-Dixie and Piggly Wiggly.

Much of the lawsuit was based on the testimony of Robert Emmel, a former News America executive who had become a whistle-blower. After a few days of testimony, the News Corporation had heard enough. It settled with Floorgraphics for $29.5 million and then, days later, bought it, even though it reportedly had sales of less than $1 million.

Carr also documents that News America paid $125 million to Insignia Systems to "settle allegations of anticompetitive behavior and violations of antitrust laws." News America also settled a lawsuit with Valassis Communications "in exchange for $500 million and an agreement to cooperate on certain ventures going forward."

The executive in charge of News America at this time was Paul V. Carlucci, who reportedly described those uncomfortable with the company's aggressive sales philosophy as "bed wetting liberals." Carlucci is currently the publisher of the New York Post and continues to be in charge of News America.

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