If Rupert Murdoch's boys rode into your company's territory, what would you do: run for the hills or stay and fight? In the tradition of Gary Cooper's greatest role, the guys at one advertising company decided to stand tall.
No harm in asking. That thought had Richard Rebh sitting at a round table in the corner of a Chinese restaurant in Manhattan on an afternoon in July of 1999. On the other side of the table was Paul Carlucci. Both Rebh and Carlucci are CEOs, but the parallel pretty much stops there. Carlucci is a corporate chieftain who runs a division of News Corp., Rupert Murdoch's global media empire. Rebh heads Floorgraphics, an advertising company based in Princeton, N.J., that specializes in placing colorful poster-size ads on grocery-store floors.
In mid-1999 Floorgraphics was three years old. Its revenue would hit $25 million that year, an impressive number but, of course, scarcely a blip next to that of News Corp. (whose sales for 2003 totaled about $17 billion).
The meeting at the Dish of Salt restaurant was at Floorgraphics' request, but it was Carlucci who ordered a platter of hors d'oeuvres and presided. Accompanying Carlucci was Dominick Porco, then his second-in-command at News America Marketing. News America is best known for its SmartSource discount coupon booklets (called freestanding inserts or FSI), which hundreds of newspapers distribute every Sunday. In 1997, the News Corp. division began offering in-store promotions, notably dispensing discount coupons from little red boxes on shelves in thousands of grocery stores.
Stunned by what they perceived as a bald threat coming from one of the world's most powerful companies, Floorgraphics executives quickly left the restaurant.
By mid-1999, News Corp. was reportedly eyeing Floorgraphics' burgeoning floor-ad business, a niche Floorgraphics had created and considered its own. Rebh's goal in seeking an audience was to strike a deal that would allow the two companies to cooperate in the in-store marketing business--to "live in this space together and not conflict with each other" is how he puts it. Along with Rebh were two other Floorgraphics executives: his brother George and Gary Henderson, a sales executive.
A waiter arrived with the hors d'oeuvres platter, and the five men exchanged pleasantries. Then Carlucci turned to Rebh: "What's on your mind?"
Rebh pointed out that his company's expertise was in advertising and graphic arts, and suggested that what Floorgraphics was doing with in-store advertising was quite different from what News Corp. was doing with in-store promotions. Then Rebh got to the point: "Maybe we could work out a business arrangement where we would give you equity in our company so that you would have an in-store advertising play." In return for News Corp.'s leaving in-store advertising to Floorgraphics, Rebh proposed, his company would stay out of in-store promotions.
As Richard and George Rebh recall four years later, the exchange then turned ugly. Carlucci declines a request for an interview, according to a News Corp. spokesman, who says the company has no comment. But the Rebhs say the conversation went something like this:
"So you're not here to sell your business?" Carlucci asked.
"No," Rebh replied.
"Congratulations, guys, on what you developed," Rebh recalls Carlucci saying, "but I have one problem: I work for a guy who has to have it all. And I kind of like floor advertising. So eat up, boys." Then came the kicker. "Carlucci said, 'I want to tell you one more thing. If you ever go into my business, I will destroy you."
Rebh's brother leaned over the table. As Rebh tells it, "George asked, 'Paul, let me see if I've got this right? It's okay for you to come into our business. That's fine. But if we ever go into your business, you're going to destroy us.' And Paul said, 'That's right."
Stunned by what they perceived as a bald threat coming from one of the world's most powerful companies, Rebh and the two other Floorgraphics executives quickly left the restaurant. They had a sinking feeling that they had just blown their best chance to avert Murdoch's juggernaut.
The meeting in Manhattan would presage fierce competition between Floorgraphics and News Corp. The way the showdown has played out does not fit any of the narrative conventions that customarily describe what happens when vastly asymmetrical forces meet. It is not a David-and-Goliath story (ingenuity triumphing over raw power) or one like the tale of Icarus, who flew too close to the sun, causing the wax on his wings to melt and bringing him crashing to earth (arrogance of a lesser power causing it to overreach).
Instead, the Floorgraphics-News Corp. rivalry has a story outline very much its own. That the outcome is still in doubt is a testament to the Rebhs' true grit, but no less to their stubbornness. "Ninety-nine percent of people would say, 'Let's get out while the getting is good,' but we said that we were two guys who would never do that," George Rebh says, recalling the brothers' vow to tough it out against News Corp.
People say that Richard and George Rebh look like brothers, yet no one would mistake one for the other. Richard, who is 49, is of medium height and rail thin, his angular features softened by a ginger beard flecked with gray. George, who is two and a half years older, has brown hair and is taller and broader than his brother. Richard is a vegetarian, George is not. "George's genius is how he deals with people," says Fred Potok, who launched Floorgraphics in 1996. "Richard's genius is business."
Potok says he came up with the idea for floor ads while running his industrial graphics company in Montclair, N.J., that used to install laminated logos on the sides of trucks. To sell the concept of floor space as an altogether new ad medium in retail stores, Potok recruited George Rebh, who had strong credentials as both a salesman and a freelance artist, as a partner. The plan posed a daunting challenge. It meant overcoming retailers' gut resistance to ceding control of their floors. "You want to put what on my floors for advertisers?" George remembers grocers asking. It also meant persuading manufacturers such as Procter & Gamble and Campbell Soup ("You're suggesting that people walk on my name?" was their initial response) that two- by three-foot vinyl floor ads were an inexpensive way to boost sales.
