Thursday, December 27, 2012

Retweet: WaPo profiles dubious TV production firm

I suppose that in some ways this story is along the same lines and of the same theme as my last post: a company that makes money using questionably tactics. But whereas some firms employ the lure of "increased exposure" in order to gain access to a journalist's original content, the story produced by the Washington Post last night is all about cold hard cash.

Written by Paul Farhi, the story is headlined Production firms stir suspicion among networks, would-be clients, and tells the tale of a company that approaches companies, trade associations and nonprofit organizations such as schools, with a somewhat unique proposition: they will shoot a short video about their organization to air on a television program, the piece will be flattering and will garner the organization much attention. The catch is that it will cost them a production fee of over $20,000.

You can read the entire piece on the WaPo website here.

There is an interesting comment posted after the story by a PR professional who has run into this outfit and tells how they work and that sometimes the firm says it is doing "research" and does not immediately ask for the money – that comes later, of course.

The reason the story is interesting to me is that these kinds of firms operate in many other areas, including in the magazine publishing field. The pitch and angle is often different, but it is the same scheme, nonetheless.

One publishing company I actually worked at for about a year made this business model into quite a successful venture. The company would employ a phone room split into two: one part would call companies to tell them that the magazine wanted to do a feature story on them, all they needed to do was submit to an interview and supply the magazine with a list of companies they worked with; the other part of the phone room would take that list and hard sell them ads that would surround the feature story. The pitch was that the company being featured wanted them to participate, and that not doing so would be bad for business. Once enough advertising was sold the feature would "go live" and be passed on to someone in the small editorial department that would churn out a story.

Each issue would start with zero ads and only a bare minimum of editorial. Then the features would be sold and the issue would take shape. In this way an issue could go from $0 to over $500,000 in three weeks. The publishing company could create these magazine for any imaginable topic and could publish them monthly, bi-monthly or quarterly depending on the success of the phone room. In this way a magazine could be started up and made profitable instantly.

I came on board because the CEO said he wanted to go legit and needed a magazine pro to help him out. In the end, being slimy proved more profitable than actually trying to produce a legitimate magazine and so eventually I was gone.

But the real story here, I think, is that our industry, the magazine publishing industry, doesn't look at a company like this one described as in any way illegitimate. On the contrary, a big NYC private equity firm, one that has backed many other magazine companies, invested in this one, as well. Apparently strong arming businesses didn't bother them in the least.

(The PE firm still lists the magazine company they invested in on their website, though they say they have exited the investment.)

Let's not pretend the things the reporter for the WaPo is writing about are unique to the television industry. We have our own share of shady characters, and it doesn't take much effort to find them.