Fundraisers see potential growth
in multimarket local dealsOriginally published in Current, Sept. 19, 1994
By Steve Behrens
A number of public TV fundraisers with noses for loose cash have sniffed out a category of corporate underwriting they believe could grow and grow.
It's the corporations with wider interests and a deeper pocket than required for local underwriting, but not enough of one or the other to carry Masterpiece Theatre on their backs.
This category, now known as multimarket underwriting, now amounts to about $3 million of the estimated $68 million that local stations sell in a year, according to PBS.
Of that, $827,500 was arranged by WGBH in a special experiment with PBS's blessing. Some 30 stations got underwriting income from such firms as Saab, Everdry waterproofing and Raytheon, says Barbara Fountain, WGBH's director of multimarket underwriting.
Even more underwriting was arranged by the privately owned, New York-based rep firm Public Broadcast Marketing Inc., according to President Keith Erling Thompson. He estimates sales of $6 million or more this year for about 100 stations.
And Pacific Mountain Network's new online database/communications service called Market Connection will be ready to facilitate multimarket deals in November or December 1994. Seventy stations are participating so far.
With the backing of PBS's logo for the WGBH project, Fountain has been assigned to make multimarket deals since January, and has found various reasons for underwriters to sign with her.
A few may buy multimarket because there was no room for them as national underwriters of certain shows. That's how Levitz Furniture turned up with local credits around how-to shows; it was unable to buy This Old House nationally.
Others could afford to underwrite national shows, "but need to get their feet wet," she says. "We want to make sure they will have the best experience they can possibly have."
But the major reason companies go multimarket is that they can't afford to go national, says Fountain. "So they choose their most important markets, in terms of revenue, where they have the best customer prospects or the most important constituent groups. . . It can be top-10 markets, or it can be East Lansing. It depends on the priorities of the underwriter."
The Italian food company Parmalat, for instance, made a deal with WNET to underwrite in several cities, choosing them on the basis of plans for introduction of its line of packaged milk, says Jeanne Feinstone of WNET.
Some of the biggest deals involve mid-sized cities, Fountain says, because a bouquet of the largest markets would break the budget for some underwriters.
Of course, dealers in multimarket credits have run across the famous station-to-station inconsistencies in underwriting acceptance criteria, credit lengths and prices. Their work, however, may tend to reduce those differences as local markets open up to one another.
"It's going to create more dialogue and may force some changes," says Donna Vogel, manager of PMN's Market Connection in Denver. She doesn't plan to play underwriting cop to enforce guidelines, but PMN is asking stations to consider using the PBS guidelines, which have been more restrictive than some stations' local guidelines.
Thompson, too, has to deal with inconsistent station rules. To improve the chance that various stations will accept an underwriter, Thompson tries to get corporations to submit a variety of proposed credits.
Though both WGBH and Thompson's rep firm are talking multimarket, their pitches are distinctly different.
WGBH's Fountain insists that public TV is not "a numbers buy," and that she never brags about her cost-per-thousand viewers. "Anybody who's looking at numbers should be knocking on other doors," she says. And she usually arranges credits of 10, 15 or 20 seconds.
Thompson's niche, in contrast, is 30-second credits, sold with close attention to cost-per-thousand. Since he competes in a market that talks in terms of cost-per-thousand, underwriting prices are "completely connected" to audience size, he says, and 80 percent of PBM's sales are credits of 30 seconds or longer, he says.
Ninety percent could afford it
PMN President Joseph Zesbaugh sees great potential in multimarket underwriting by looking around his town of Denver. "In this city," he says, "if you targeted 50 or 100 companies, probably 2 percent could do a national buy; about 3 percent could only afford to do a local; 90 to 95 percent could afford to do more than local."
More often than not, however, nobody asks the prospect to consider a multimarket donation. There's no local incentive to do pursue it, and the logistics of arranging the deal are too time-consuming to contemplate.
"The problem was that if an underwriter asked you for 10 different markets, you'd have to call them all," says Zesbaugh. "Often there were phone calls back and forth for weeks."
PMN's Market Connection deals with both problems--giving a 10 percent commission to stations that initiate multimarket deals, and speeding up communication among stations.
With 70 subscribing stations in fall 1994, the service is approaching its target of 75 to 100. Among subscribers, two-thirds of the largest markets are represented, Vogel says.
Subscribing stations will pay PMN a flat $500 to $2,500 a year plus 2 percent of multimarket contracts signed. Stations that initiate a contract get another 10 percent.
Vogel, a former management consultant and Control Data Corp. marketing manager, is now heading the project, taking over from initial manager George Pupula.
The on-line database and e-mail system is meant to eliminate the "nightmare" of arranging a multimarket deal, says Vogel.
She describes how Market Connection would help seal a deal: "A station here in Denver has a corporate client interested in underwriting how-to programming," she says. "They are also interested in Salt Lake and Reno. In the past, the corporate development person here in Denver would have to make phone calls to find out what how-to programming is available for underwriting in Salt Lake and Reno."
"In this case, both are subscribers to Market Connection," Vogel continues. "She can dial into the system, enter the call letters of the station in Salt Lake, enter the code for the type of programming, and can even specify the time of day and demographics, if that is of interest to the client. And that will bring up what is available in Salt Lake."
The underwriting rep then uses the system to send e-mail or a fax to Salt Lake City, letting her counterpart there know that a buy is in the works and seeking confirmation that she has correct schedule details and prices.
The service is open to any CPB-qualified station, such as WGBH, which is a member, but not to nonstations such as Public Broadcast Marketing, Zesbaugh observes.
"Keith Thompson really runs commercials," says Zesbaugh. "Some stations find that his material stretches their sensitivities."
"We go after those news buys"
Thompson uses the salesmanship and the computer system of the commercial TV "spot" sales business, where he learned his trade before discovering that the FCC was permitting 30-second credits on public TV. He started PBM in 1986 and has since sold an array of such underwriters as Lexus, Royal Viking Line and Dean Witter.
His competitors are commercial TV. "We go after those news buys, and after that, Sunday morning lineup on commercial television," he says. PBM chases advertisers who would ordinarily buy time around commercial stations' local newscasts and tries to sell them credits adjacent to Nova, Nature and the like. "Every dollar we write has to come out of some commercial network's pocket."
Though the credits he sells are more commercial-like than some pubcasters like, he finds that only a minority of ad campaigns can fit within FCC underwriting guidelines. "We have to forego pursuing probably 75 percent of the advertising."
Last year PBM did $4 million in business, he says, and this year he expects to do $5 million to $7 million.
"We believe that the funding potential from corporations can equal and surpass the combined government and viewer or listener funding," he says. "The only reason that has not happened is because we have yet to finish the education of the corporations."
"Even after 10 years, we have to go to corporations or their agencies and educate them to the fact that this is available."
Thompson is clearly at odds, philosophically if not commercially, with WGBH, PBS and other bastions of concern for the appropriateness of credits.
WGBH, he says, "exerts undue influence" on PBS's guidelines, limiting national underwriting sales to the kinds of subdued credits that "large stations in wealthy communities" can acquire through philanthropic connections. This restriction in turn limits the competition in national production, Thompson argues.
"There are those in the public television community [who] would force their corporate messages standards on public broadcasters."
PBM expanded into public radio two years ago and now does 15 percent of its business with radio. (PBM is nearing a further expansion into international syndication. Starting in April 1995, it will be distributing to U.S. public TV a German dramatic series, Southern Stars, which Thompson regards as a "Beverly Hills 90210 with an international twist." Also coming: a series of historical sports documentaries.)
Since 1989, when coverage of the firm's public TV clients reached half the population, PBM has been moving away from time-consuming multimarket sales and toward what Thompson calls "network television"--nationwide packages. "Network" sales now make up about 70 percent of PBM's sales.
Representing outlets with more viewers than many cable networks, PBM can get in to see advertisers' decisionmakers. "Cable had done us a fabulous service," says Thompson. "They had convinced companies that it was fine to buy lower audience numbers. That's what really stabilized our business."
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