The deal puts an end to bitter rivalry between ActMedia and News Corp.'s News America FSI, the nation's No. 2 distributor of coupons through national free-standing inserts in newspapers (AA, Feb. 24).
News America FSI had begun building its own in-store couponing network, undercutting ActMedia's prices and driving down the cost of in-store couponing at the same time as many entrepreneurs were targeting the medium with a variety of discounted electronic, Internet and scanner-based coupon systems.
That competition will continue despite the merger and the exit of what would have been a major rival for ActMedia in Mr. Murdoch.
CENTS-OFF MAY REBOUND
And cents-off couponing-which appeared to be losing favor as Procter & Gamble Co. last year began testing several initiatives to curtail its coupon use-could be on the rebound if News America FSI begins offering, as expected, attractive pricing deals to marketers for newspaper FSIs paired with in-store coupon promotions.
Combining News America FSI's resources with ActMedia's 50,000 Instant Coupon Machines in supermarkets is an ideal way to capitalize on the rapid changes in the sales promotion arena, said industry insiders.
Those in the coupon industry are upbeat. The recent rivalry has driven up couponing activity, and the merger is likely to spur more couponing overall with the cross-promotion possibilities as News America FSI also promotes in-store couponing and ActMedia promotes newspaper couponing.
PRICES NOT EXPECTED TO RISE
For advertisers, prices are not expected to go up given the rampant influx of competitors in couponing venues. Valassis Communications, the nation's No. 1 coupon distributor through FSIs, is optimistic about competing with the combined News Corp./ActMedia.
"Now ActMedia won't be involved in bashing traditional coupons to manufacturers, and they're also going to promote both kinds of coupons. So overall this is good news for the FSI business," said Lynn Liddle, VP-corporate communications for Valassis.
Catalina Marketing, another in-store rival, may also benefit from a "positive" atmosphere for couponing, said a spokesman. Valassis may soon join News Corp. in the acquisition mode.
"We're looking to grow by acquisition if needed to increase our marketing toolbox options through in-store, direct mail, account-specific and Internet marketing channels," said Ms. Liddle.
Executives close to the News Corp./Heritage deal said no obstacles are foreseen for the deal, a $754 million stock swap.