Ex-Journal exec sues for firing after finding illegal ad sales


Inside Tucson Business reports Journal Broadcast Group and its KGUN-TV (ABC) is being sued by former SM Adam Johnston who says his employment was wrongfully terminated after uncovering the station was violating federal rules on political advertising. So far Journal has not filed a response.

The suit seeks unspecified damages on its claims including wrongful termination, retaliation and defamation. Johnston now lives in Austin. The lawsuit maintains Johnston, who came from WMAQ-TV (NBCU) Chicago in April 2007, found numerous difficulties when he arrived at KGUN, including the GM, Andrew Stewart, had left just two weeks earlier, said the story.

“But what got Johnston sideways with management was his discovery of a confidential agreement that KGUN had sold commercial ad time during the 2006 election season to Sam Levitz Furniture stores at rates that were below what was sold to political candidates,” said the paper.

That would be a violation of the FCC’s rules requiring candidates be given the opportunity to buy spots at the lowest rates given to its most favored advertiser within 45 days preceding a primary election or 60 days preceding a general election. As a result the lawsuit says candidates, including those running for U.S. Senator and Arizona governor that year, “were systematically overcharged by at least $1.5 million for television advertising alone, with additional amounts for radio (Journal owns KGMG-FM, KQTH-FM, KMXZ-FM and KRRN-AM in Tucson) advertising.”

The Journal Broadcast Group stations did this, according to the suit “in an effort to maintain its lucrative relationship with Levitz, a major commercial advertiser on both television and radio, and other large accounts.”

The root of the problem, Johnston’s suit argues, is that KGUN was using an ad rate card based on a grid system instead of a one-rate system he wanted to use. Under the grid system, there might be four or five different rates for a particular commercial break, with lower rates subjecting the advertiser to a higher potential for being “bumped” out by another advertiser willing to pay a higher rate.

The one-rate system doesn’t include any probability levels for pre-emption. Instead, if a situation arises where more commercials are sold than are available for a particular time slot, the advertiser paying the lowest rate is always pre-empted. Under this scenario, political advertisers are given the option of either staying at the lowest rate or paying a higher rate to assure their commercial airs.

“While the grid system can be properly used in compliance with the law, it is easier to conceal any illegalities under that system,” the suit maintains. “For example, if a station did not adhere to the pre-emption guidelines on its rate card, it might allow a favored commercial advertiser to pay low rates for the lowest class of ads (which should be subject to the highest probability of pre-emption).”

After consulting with high-ranking Journal Broadcast execs, Johnston’s suit said it was agreed KGUN needed to negotiate a new contract with Levitz to bring the station into compliance. But the lawsuit says Levitz’ buyer, Kathi Levitz, refused to renegotiate or give up her favored status of not having her commercials pre-empted. She also objected to disclosure of her rates to political clients.

After obtaining the approval of Journal’s president and chief lawyer, Johnston informed Levitz that KGUN could not continue to accept advertising in violation of FCC rules. As a result, Levitz pulled its advertising from KGUN and said it would not return until Johnston was terminated.

In October 2007 when Julie Brinks arrived as KGUN’s new GM, the suit says she told Johnston to stop his plans to switch to the one-rate pricing policy and develop a “realigned” grid system. He said the realigned system was never implemented by the station’s traffic department, which worked under the supervision of the GM, not him.

In his May 2008 performance review, Johnston’s suit says Brinks criticized him for not implementing his revised pricing plan. She also reiterated KGUN would not go to a one-rate system because “it exposed us to risk and was not acceptable.” The lawsuit says Brinks did not specify the risk.

Johnston says his employment was terminated shortly after that performance review.

The lawsuit maintains the termination was in retaliation for his “whistle-blowing of KGUN’s illegal activities, his refusal to engage in such illegal activities and his refusal to allow the station to engage in illegal activities” and to get Levitz back on the air as an advertiser.

Levitz has returned as an advertiser on KGUN, the suit says.