International Star Registry sues ABC Radio Networks
International Star Registry, a direct response company which sells naming rights to stars, is suing ABC Radio Networks for breach of contract, fraud, deceptive trade practices and tortuous interference with business relations. The advertiser says ABCRN under-delivered on its audience guarantee by up to 24% and claims ABC guaranteed ratings points and concealed the shortfalls.
"ABC fraudulently entered into contracts for radio advertising knowing that its delivery rates fall substantially below the contracted amount and also concealed those underdeliveres," ISR said in a release through its law firm Gregory E. Kulis and Associates.
International Star Registry is asking for 5+ million in compensatory and punitive damages. In the complaint, ISR issued a statement that this has been going on consistently for 20 years. We wonder why he'd still do business only one year after knowing such a "crime" has been committed.
ISR President Rocky Mosele tells RBR/TVBR that all along, ABCRN has been giving them internal documents stating they've been delivering the audiences, and in 2004, based on what business they've been seeing coming through the door, something was not right. "We know if our ads are running properly when the phone rings. We demanded a post, and they were reluctant to give it. We got a total of three different flights. All three were deficient by 24%."
We asked Mosele about any make goods that were offered. "They didn't offer me make goods. They did some bonusing that was negotiated upfront with my buy because the buy was above X number of dollars. That bonusing does not compensate for any shortfall in the campaign. They knew they were going to fall short; they didn't notify us prior to the shortfall. In the direct response business, we're occasion-based. So we have a small window of time for the advertising to pay off."
Again, if you've been doing business with them for 20 years and consistently suffered these audience shortfalls, why go back year after year? "This was something we've only discovered recently. In discovery, it will come out. Obviously we will get all of the documents. In network radio, it's cost-prohibitive to track where the ads are coming in, other than a RADAR post. And the RADAR posts are deficient. So essentially, ABCRN has been billing us, knowing even after the fact that it was deficient, and taking our money without notifying us."
Mosele says this is something they've been trying to get to the bottom of with ABCRN since January '05. He's been working with ABCRN SVP/Paul Harvey Sales Dennis Glynn and SVP/Sales Mike Connolly. Both were unavailable for comment at deadline.
ABCRN President Jim Robinson tells RBR/TVBR: "I've become more familiar with [Mosele] as of late, but you don't have to be real bright to figure out what this guy is up to. We have not wronged him, that's for sure. I [also] believe he's done this with other people."
Indeed, Mosele admits to a similar problem with Westwood and others some years ago, but he says Westwood worked with him in a solution. He said he tried to do the same with ABCRN, but met with "resistance all the way. This lawsuit is the last resort."
We asked Rich Russo, JL Media's SVP/Director of Broadcast Services to make some sense of all this: "When you negotiate the buy, if you negotiate a post or delivery, you then factor in if it's an underdelivery. Now I'm assuming ISR is a cash in advance account. Because if it's not, the invoices come in, you run the post off the invoices, then you say, 'Hey, I spent 10 grand, you only gave me 7,500 worth. I'm going to short pay you because you underdelivered.' Now if it's a cash in advance account, it would be the buyers' job to factor in underdelivery or delivery-we're going to agree on 100 rtg. points or whatever the number is. If this posts later at 62, you either owe me 38 rtg. points or you owe me my money back based on what we were paying. This would be the make good. If ISR didn't factor that in, I'm not sure it's ABC's problem. And if they keep overcharging him, then why does he keep paying? I mean ABC is usually pretty legit."
| See the lawsuit here |
RBR observation:
Mosele should check the new spot monitoring services like Verance, MediaMonitors and Mediaguide as a possible solution going forward. However, remember, while getting closer every day, these companies still don't track spots on every station in every market. Part of the beauty of network radio is its reach and ability to get into every last little nook and cranny in this country. And those aren't necessarily very profitable nooks and crannies for these monitoring companies. RADAR is based on actual clearance reporting and affidavits from the affiliates themselves. While it takes weeks to see the results, it's considered pretty accurate.
Good Morning - Gain a personal edge on today's business day. Are you reading this from a forwarded email?
