The Minnesota Company Rupert Murdoch Couldn't Kill

While its products are seen by millions of grocery shoppers each week, Insignia Systems is not exactly a high-profile name in American commerce. The Maple Grove–based maker of in-store, shelf-edge advertising for food products has some major supermarket chains as clients—notably California-based Safeway and Cincinnati-headquartered Kroger.

Still, it’s safe to say that Insignia’s CEO, Scott Drill, doesn’t have quite the same renown as Rupert Murdoch, whose massive media company, News Corporation, is a multibillion-dollar, widely diversified conglomerate best known for its newspapers (New York Post, The Times of London) and its television properties (Fox Network, Fox News). Insignia’s 2005 revenues were $19.6 million.

But despite the contrast in their companies’ sizes, the two men are competitors. More than competitors, in fact: They’ve been at war.

The legal battles were threatening Insignia's viability. There was little business signed up for 2006, and morale "was as low as you can imagine," CEO Scott Drill recalls.

One of the Murdoch empire’s less familiar divisions is News America Marketing, a New York City–based business that, like Insignia, produces advertising signage for grocery retailers and packaged-goods manufacturers. It also offers a number of other options to its clients, including discount-coupon booklets called SmartSource that appear in hundreds of newspapers and coupon-dispensing machines on supermarket shelves. Six years ago, News America and Insignia began battling not only in supermarkets but also in courtrooms. Each has spent millions on legal fees. News America claims that Insignia muscled in on exclusive deals that the Murdoch company had made with retailers; Insignia counters that those deals involved predatory pricing—with News America Marketing underpricing its goods in order to drive competitors out—and collusion with retailers.

It’s unlikely that Murdoch has been touched by this ongoing legal warfare. For Drill, it’s a different story. “I’m coming out of three years of business hell,” he says. During those three years, Insignia’s sales were in a freefall, and its stock price (Nasdaq: ISIG) dropped 97 percent, from a high near $11.50 in November 2002 to less than 25 cents in November 2005, nearly knocking it off Nasdaq for failing to meet minimum valuation requirements. It looked to many observers as though Insignia would end 2005 out of business.

Instead, Insignia has roared back. Its first two quarters of 2006 were both profitable, following several quarters in the red, and it has inked new deals with major supermarket chains. Meanwhile, its stock price has been steadily climbing this year. (The price was at $3.56 as of October 4.)

It’s too much to say that Insignia has the mighty News Corporation on the run. But it is looking more and more as though the little guy will win this round.