Twenty-First Century Fox 2008 Annual Report Download - page 119

NEWSCORP
Notes to the Consolidated Financial Statements (continued)
News America Marketing
On January 18, 2006, Valassis Communications, Inc. (“Valassis”) filed a complaint against News America Incorporated, News America Marketing
FSI, LLC and News America Marketing Services, In-Store, LLC (collectively “News America”) in the United States District Court for the Eastern
District of Michigan. Valassis alleges that News America possesses monopoly power in a claimed in-store advertising and promotions market (the
“in-store market”) and has used that power to gain an unfair advantage over Valassis in a purported market for coupons distributed by free-
standing inserts (“FSIs”). Valassis alleges that News America is attempting to monopolize the purported FSI market by leveraging its alleged
monopoly power in the purported in-store market, thereby allegedly violating Section 2 of the Sherman Antitrust Act of 1890, as amended (the
“Sherman Act”). Valassis further alleges that News America has unlawfully bundled the sale of in-store marketing products with the sale of FSIs
and that such bundling constitutes unlawful tying in violation of Sections 1 and 3 of the Sherman Act. Additionally, Valassis alleges that News
America is predatorily pricing its FSI products in violation of Section 2 of the Sherman Act. Valassis also asserts that News America violated
various state antitrust statutes and has tortiously interfered with Valassis’ actual or expected business relationships. Valassis’ complaint seeks
injunctive relief, damages, fees and costs. On April 20, 2006, News America moved to dismiss Valassis’ complaint in its entirety for failure to state
a cause of action. On September 28, 2006, the Magistrate Judge issued a Report and Recommendation granting the motion. On October 16, 2006,
Valassis filed an Amended Complaint, alleging the same causes of action. On November 17, 2006, News America answered the three federal
antitrust claims and moved to dismiss the remaining nine state law claims. On March 23, 2007, the Court granted News America’s motion and
dismissed the nine state law claims. The parties are engaging in discovery, which has been combined with the California and Michigan state cases
discussed below. News America expects a Scheduling Order, including a jury trial date, to be entered by the Court shortly.
On March 9, 2007, Valassis filed a two-count complaint in Michigan state court against News America. That complaint, which is based on the
same factual allegations as the federal complaint discussed above, alleges that News America has tortiously interfered with Valassis’ business
relationships and that News America has unfairly competed with Valassis. Valassis’ Michigan complaint seeks injunctive relief, damages, fees and
costs. On May 4, 2007, News America filed a motion to dismiss or, in the alternative stay, that complaint. On August 14, 2007, the Court denied
the motion. On July 7, 2008, Valassis filed an Amended Complaint alleging the same causes of action, based on essentially the same factual
allegations. The parties are engaging in discovery, which has been combined with the federal case discussed above and the California state case
discussed below. The trial is set to begin on January 12, 2009.
On March 12, 2007, Valassis filed a three-count complaint in California state court against News America. That complaint, which is based on
the same factual allegations as the federal complaint discussed above, alleges that News America has violated the Cartwright Act (California’s
state antitrust law) by unlawfully tying its FSI products to its in-store products, has violated California’s Unfair Practices Act by predatorily pricing
its FSI products, and has unfairly competed with Valassis. Valassis’ California complaint seeks injunctive relief, damages, fees and costs. On
May 4, 2007, News America filed a motion to dismiss or, in the alternative stay, that complaint. On June 28, 2007, the court issued a tentative
ruling denying the motion and reassigned the case to the Complex Litigation Program. On July 19, 2007, the court denied the motion. The parties
are engaging in discovery, which has been combined with the federal case and Michigan state cases discussed above. The trial is set to begin
March 9, 2009.
News America believes that all of the claims in each of the complaints filed by Valassis are without merit and it intends to defend itself
vigorously in the three matters.
Other
Other than previously disclosed in the notes to these consolidated financial statements, the Company is party to several purchase and sale
arrangements which become exercisable over the next ten years by the Company or the counter-party to the agreement. In the next twelve
months, none of these arrangements that become exercisable are material. Purchase arrangements that are exercisable by the counter-party to
the agreement, and that are outside the sole control of the Company are accounted for in accordance with EITF D-98. Accordingly, the fair values
of such purchase arrangements are classified in Minority interest liabilities.
The Company experiences routine litigation in the normal course of its business. The Company believes that none of its pending litigation will
have a material adverse effect on its consolidated financial condition, future results of operations or liquidity.
The Company’s operations are subject to tax in various domestic and international jurisdictions and as a matter of course, the Company is
regularly audited by federal, state and foreign tax authorities. The Company believes it has appropriately accrued for the expected outcome of all
pending tax matters and does not currently anticipate that the ultimate resolution of pending tax matters will have a material adverse effect on
its consolidated financial condition, future results of operations or liquidity.
118 NEWSCORP 2008 Annual Report