Newscorp tough-guy Paul Carlucci

Law officers say News America depositions lead back to its CEO….and his unique management style.

U.S. regulators and law enforcement officials are focusing on the business practices of Murdoch subsidiary News America, one of the nation’s largest providers of newspaper inserts, and the subject of Slog pieces in the past relating to its policies of extortion and blagging.

One major case file, among many others, shows that in 2004 the New Jersey company Floorgraphics (a direct NewsAm competitor) accused Newscorp of hacking into their password-protected computer systems to obtain proprietary information for an ‘investigative’ news story at Newscorp tabloid The Post. The subsequent journalism was described as “utterly false and malicious” by the company, which lost several lucrative contracts as a result. To avoid a federal case, Newscorp bought Floorgraphic for $30M – effectively buying off the victims who caught them out at the business of blagging computer systems. This included emails….a subject UK MP Tom Watson has said will, in time, dwarf the phone hacking saga in its media and political ramifications.

According to sources in Washington and New York, several Government agents have singled out News America CEO and New York Post publisher Paul Carlucci – a shadowy figure who, while very senior in Newscorp, maintains an ultra-low profile. He cannot, for instance, be found on any list of senior Newscorp executives – and the blurred shot at the head of this piece is the only one at Google pictures. “But he speaks with Murdoch most days,” said the Slog’s New York source, “and to be blunt, he’s a piece of work”. Law enforcement officers are following up several leads in relation to mobster-style business practices at News America – most of which lead back fairly quickly, I understand, to Carlucci. The Floorgraphics takeover, for example, removed a major competitor in what is an increasingly low-margin sector in the electronic age. Even Reuters (in a piece only last night) referred to Carlucci’s ‘bare-knuckle business tactics’.

Lawsuits brought against News America by several competitors have cost around $700 million in settlements. Such is the cost of achieving a monopoly – but this is always Murdoch’s way: he claims to relish competition, but actually prefers to destroy it. And while Carlucci doesn’t fit the usual mould of ex-pat Aussies running major Newscorp companies, he is very much the Do What it Takes street-fighter beloved of the Newscorp patriarch. Says a British former Newscorp staffer in the US:

“He’s basically a crude Italian thug. You know – finds it hard to complete a sentence without f*ck, m**herf**ker and worse getting in there. Most people are scared of him.” His appearance tends to fit this image: known among his close friends as “Johnny Legit,” Carlucci wears his hair slicked back, and has “a reputation for step-on-your-throat business tactics” – Reuters again.

New York Times columnist David Carr writes that News America ‘has come under scrutiny for a pattern of conduct that includes below-cost pricing, paying customers not to do business with competitors, and accusations of computer hacking.’ In short, illegal monopolism and mafia-style tactics. Indeed, Floorgraphics co-founder George Rebh testified in a deposition that Carlucci, over what was supposed to be a friendly lunch, bluntly told him, “I will destroy you. I work for a man who wants it all, and doesn’t understand anybody telling him he can’t have it all.”

Nice. Where’s Eliot Ness when you need him?