Carr Discusses Corporate Culture At News Corp

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Robert Siegel talks with New York Times business columnist David Carr about News America Marketing, an arm of Rupert Murdoch's News Corp empire. Carr reports that News America is an in-store and newspaper insert marketing business that News Corp has paid more than $650 million in settlements to make corporate espionage and other allegations for the company disappear.

ROBERT SIEGEL, Host:

Is the hacking scandal in some way typical of Rupert Murdoch's global media empire, or does it reflect an attitude that may have more in common with Murdoch's Fleet Street competitors, say, than with his holdings in the U.S.?

Well, in his column today, New York Times media columnist David Carr sees signs of a broader corporate culture in the manner that Murdoch's News Corp has handled litigation.

And David Carr joins us now from New York.

Welcome.

DAVID CARR: Nice to be with you, Robert.

SIEGEL: And you write in today's column: Time and again, the News Corporation has used blunt-force spending to skate past judgment and to silence its critics. What do you mean by that?

CARR: Well, in the instance that I was pointing to in the United States, they have a rather obscure but profitable division called News America. And when you go shopping and you see a sign in your cart or pull out a newspaper and there's coupons or you're in the spice rack and you see a coupon machine, that's News Corporation, too. Its competitors charged again and again in America that they competed in untoward ways, which, you know, people can sue each other for almost anything.

The interesting part, the part that caught my eye, is they paid out - they meaning News Corporation - paid out $650 million to make these cases go away. That's like a fifth of what the entire company made in 2010.

So there has to be something to these charges which - by the way, wait for it - included hacking, hacking of a competitor's computer system.

SIEGEL: You're saying that News America's M.O. here was settling, facing big lawsuits and using the enormous cash reserves of News Corp to pay off and even buy their plaintiffs, at least in one case.

CARR: Yeah. There was an ethos there. The man who ran it, Paul Carlucci, was fond of showing them a film in which Al Capone beat a guy to death with a baseball bat, and that was the way of sort of motivating that. When that didn't work, sometimes they ended up getting sued, and the charges were very similar.

The customers were paid not to do business with competitors. Their prices were set in a way designed to drive competitors out of business that again and again that News America, which had the dominant market position, probably 90 percent of the business, attempted to use that leverage to rub out its competitors.

SIEGEL: Then they'd get sued.

CARR: Then they'd get sued, and then they'd either settle or buy the company in question.

SIEGEL: I assume, by the way, that when Mr. Paul Carlucci showed people the scene from "The Untouchables" movie in which the Al Capone character beats someone with a baseball bat, he was speaking metaphorically of how people should behave. He didn't advocate beating competitors with baseball bats.

CARR: No. And, you know, he's known as a very tough competitor, and he's a well-liked guy at the New York Post. It's just a sort of a peek through the keyhole at the underlying ethos, and yes, we're speaking in metaphors, of course, about winning at all costs and pounding your opponents into submission using a variety of tactics, some of which the plaintiffs in these lawsuits suggest were not cricket, as they say in Britain.

SIEGEL: Do we know that they're that different? If we examine the record of Disney or Comcast or some other big media company, would they look all that different in the way they've handled plaintiffs?

CARR: Well, you're right. Anybody can bring a lawsuit for any reason. What you have is a pattern in practice here of their competitors are all smaller. Three of them bringing very similar suits, plus the state of Minnesota, the state of New Jersey, various regulators, coming in saying - suggesting that News Corporation is behaving in anticompetitive ways.

After a while, after the - all this stuff begins to mount up, not any single lawsuit, but when you attach a number of, say, $655 million, I think there's probably something less than pristine about the way that division is being operated.

SIEGEL: David Carr, thanks so much for talking with us today.

CARR: Oh, a pleasure to speak with you, Robert.

SIEGEL: That's David Carr, media columnist for The New York Times, speaking to us from New York.

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