Thursday, March 12, 2009

News America Acquires Floorgraphics

News America Marketing announced that it has acquired Floorgraphics' network of in-store contracts and other assets (presumably as part of their recent settlement agreement).

News America's press release, as reported by BNET, states:

News America Marketing announced today that it has entered into an agreement with FLOORgraphics, Inc. to purchase the company's network of in-store contracts and other assets. This will expand News America Marketing's network of at-shelf, floor and cart advertising and in-store promotion products to 50,000 stores in the United States.

Laura Richards, News America Marketing's Vice President of Corporate Communications, stated, "We're pleased to be expanding our network of stores to better serve our customers and we're very excited to incorporate the quality network so ably developed by FLOORgraphics."

News America took a large number of retail contracts away from Floorgraphics through allegedly anticompetitive means, which was at issue in their recent lawsuit that ended in a settlement mid-trial. While Floorgraphics' remaining retail contracts were largely limited to smaller retailers, the acquisition helps ensure that News America will continue to have a monopoly on the in-store floor, coupon, and shelf advertising business in grocery stores, as it will be difficult or impossible for any potential new competitor to gain a significant foothold, even in smaller stores.

In addition to the in-store floor, coupon, and shelf business, News America has been attempting to gain a dominant market share in the market for Free-Standing Inserts, and in the market for in-store price-based signs. In each market, News America faces a single major competitor (Valassis and Insignia respectively), both of which have lawsuits against News America scheduled for trial later this year, alleging that News America has engaged in unlawful competition. While the outcome is not yet clear, retailers and manufacturers will almost certainly benefit from victories for Valassis and Insignia that foster vigorous competition, as their continued survival and competition with News America will ultimately benefit stakeholders in the consumer goods industry.

Additional analysis of the acquisition is available here, from BNET.

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