New York
Beacon
Retailers, restaurants, healthcare companies and technology firms often turn to newspaper
inserts, as a tried-and-true method to reach consumers, especially minority consumers.

A major anti-trust lawsuit has been filed by the owner of an independent marketing
company, who says that, if he’s victorious, millions—if not billions—of dollars in pre-print
advertising (inserts) could begin to flow freely to minority-owned publications that serve
minority communities; publications that are often locked out of the market due to “forced
buys.”

Redan Bilingual Media, a Dallas-based strategic marketing company that specializes in helping
companies reach the Hispanic-American community through out-of-home Hispanic
marketing programs, bilingual employment recruiting, and translations services, has filed an
action against the “Fort Worth Star-Telegram” and its parent company, McClatchy, alleging
fraud.

Further, the 15-page lawsuit filed in the District Court of Tarrant County, Texas, notes that
Redan and its founder, Brent Murphy, believe that publications that serve the Hispanic,
African-American and general markets may not be aware that they’re losing opportunities to
compete for millions in advertising dollars, due to the actions of a few publishing
conglomerates, who dominate the industry and might be colluding with some advertisers,
while others are unaware of the controversy.

“We believe that the national advertisers are not aware of this issue,” Murphy said. “We
believe that national advertisers may not understand how their own agencies may be working
in concert with conglomerate publishers.”

Murphy continued: “We believe national advertisers will be very interested to learn how
‘forced buys,’ fraudulent audit reports and industry collusion may have forced these national
advertisers to spend millions over the last four years on products that they could have
obtained at a much lower rate.”

As much as $6.24 billion in revenue was generated by the local media industry from
advertising inserts, also known as “circulars,” in 2014, according to the latest figures
published by Borrell Associates, a research and consulting firm that tracks local advertising
and helps media companies develop executive strategies.

The suit alleges that the Star-Telegram provided Redan with outdated media kits, which did
not contain current and accurate audit results. The newspaper had misrepresented and
mischaracterized the distribution of past products, the suit said.

Redan said it relied on accurate information when selling advertising in “En Casa” or
“Mercado,” both Spanish-language publications.

Also, after promising not to convert En Casa from a Spanish-language publication to a
bilingual one, the Star-Telegram did proceed with those plans, resulting in significant
economic loss to Redan, including the ultimate shuttering of Mercado.

Further, Redan said it had a longstanding business relationship with the marketing and
advertising company, Motivate, Inc.

Motivate, Inc., agreed to place multiple pre-print and run of paper advertising orders for its
customers through Redan, but the Star-Telegram, in breach of its agreement to extend an
exclusive rate structure to Redan for the sale of advertising in “En Casa,” offered
significantly lower prices to Motivate, Inc. in order to persuade the company to place insert
orders through the Star-Telegram.

The Star-Telegram did so despite the knowledge that Redan had an existing agreement with
Motivate, Inc., which caused Redan to lose an entire year’s worth of insert orders and run
of paper advertising in En Casa and Mercado, which contributed to the ultimate loss of
Redan’s publication, Mercado, among other costs and expenses.

Further, the suit states that Redan and Valassis had an agreement that Valassis was to place
multiple pre-print insert orders for En Casa and Mercado from 2015 through 2017.

In October 2015, Redan received insert orders from Valassis for placement of pre-print
inserts in En Casa, orders which were filled, but went unpaid by Valassis, the lawsuit alleges.

Leaders at the National Association of Hispanic Publications (NAHP) and the National
Newspaper Publishers Association (NNPA) said that they’re keeping a close watch on the
court proceedings.

Leaders from both groups said that they believe insert advertising in the print industry may
be skewed, due to forced circulation buys, which don’t put the advertiser’s best interest first
and restrict the advertiser’s ability to work with media companies that specialize in the
Hispanic and Black markets; that omission could also inhibit the buyer from choosing the
best consultant and publication for a campaign, the leaders from the NNPA and NAHP said.

That practice, the organizations said, decreases the equal opportunity for all publishers to
compete and those serving minority communities are mostly affected.

“Insert ads are very important because obviously, all publications, minority-owned and other
companies, rely on this advertising to remain afloat,” said John Trainor, who runs the
innovation and marketing company, Kreativa in Chicago, Ill.

Trainor is also the former CEO of Papel Media, a Hispanic advertising agency that also has
history with Valassis.

“I’ve been involved in the insert industry for two decades and the problems that I saw 20
years ago, are similar to what we see today,” Trainor said. “Minority publications tend not to
be home delivered and have a small subscription base and a lot of them are free, so
advertisers, who have coupons of value are going to try and stay with publications that give
them a little more control on inserts and the costs add up.”

Trainor said that today the goal is to win the digital age.

Still, the Redan lawsuit could potentially open a Pandora’s box that major publishers and
some advertisers fear could leave them exposed to even more lawsuits from minority-owned
publishing firms serving the Hispanic and African-American communities, according to court
documents.

“The National Newspaper Publishers Association and the National Association of Hispanic
Publications have established an ongoing strategic alliance to increase the advertising
business opportunities for our member publishers across the nation,” said Benjamin F.
Chavis, Jr., the president and CEO of the NNPA.

Chavis continued: “We are very interested in the Texas case concerning advertising inserts.
We support all efforts to establish more economic equity and parity in the marketplace for
Black and Hispanic publishers with specific reference to the billions of dollars annually spent
on newspaper inserts.”
MINORITY-OWNED COMPANIES
FIGHT FOR EQUITY IN
ADVERTISING