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'Pay Radio' Tunes In Charities, Turns Off Some Consumer Groups

August 24, 1986|DAVID JOHNSTON | Times Staff Writer

The California Museum of Science and Industry has found a way to get something for nothing.

Well, almost.

The museum's foundation receives about $1,000 per day in donations from a Los Angeles entrepreneur in return for letting him use the museum's name to promote a "976-" telephone number. The 4,000 or so children calling each day hear a recorded science trivia message.

To the museum, the cash cost of raising this bonanza is almost nothing. The museum just authorizes use of its name. (Museum employees get paid extra by the entrepreneur for the trivia; the museum only checks for accuracy.)

To parents, the Museum Storyline is a much more costly enterprise. Calls cost $2 each, so parents get billed $8,000 per day.

And to the entrepreneur, the Museum Storyline appears to be a profitable enterprise, one that he says encourages him to find other charities interested in a similar deal.

Welcome to the emerging world of charity-business co-ventures via "pay radio."

Pay radio is what Bob Lorsch, a veteran products promoter, calls 976- telephone prefixes like his Museum Storyline. The telephone companies describe pay radio with the more prosaic term "information access services."

Pay radio is attracting growing interest among charities across the country seeking new ways to generate money to cope with rising demands for services and cuts in government support. Fund-raising experts caution that without careful planning, pay radio's seeming something-for-nothing advantages can be costly to a charity's good will. These experts emphasize that nonprofit groups should thoroughly investigate offers before signing contracts and apply sound business judgments.

Pay radio also is controversial, under fire from consumer groups that say it offers little value at high cost. They also question the ethics of TV commercials aimed at enticing children to make calls that cost a dollar a minute.

The phone companies are reprehensible, said attorney Robert Gnaizda of Public Advocates, a San Francisco public-interest law

firm that is suing Pacific Bell and General Telephone of California over their pay-radio practices.

"We are providing a network service," an indignant General Telephone of California spokesman said.

In addition to consumer protests, a variety of conservative religious groups object fiercely to sexually explicit pay-radio services, which Pacific Bell refers to as "emotional messages."

The telephone companies believe 976- prefixes present one of their most promising opportunities to make more money. Pay radio is extraordinarily profitable for a public utility service.

Pacific Bell keeps 60 cents of the $2 charge for a two-minute 976- call, according to Bill Dunkle, the company's information access services general manager. Pacific Bell's costs are 12.5 cents for a one-minute call and less than 15 cents for a two-minute call, Dunkle said, which means that each $2 call adds nearly half a dollar to Pacific Bell's pre-tax profits.

Solicits Calls

The problem faced by entrepreneurs who want to profit from pay radio is coming up with messages the public believes are worth as much as a dollar a minute.

That's where children enter the picture, er . . . switchboard.

Lorsch solicits calls for his Museum Storyline with commercials on Southern California children's TV shows.

The commercials feature K.I.T.T., the talking computer car of the recently canceled NBC television series "Knight Rider." The car K.I.T.T., its voice supplied by veteran actor William Daniels, urges children to call 976-2233 in area codes 213, 818 and 619 to hear a recorded science trivia message.

The ads tell children that 25 cents of the $2 charge for the call will be donated to the museum. Both the TV ads and the opening of the message when they call the Museum Storyline remind youngsters to get parental permission before calling.

The California Special Olympics has a similar deal with Lorsch, giving the charity 25 cents for each child's $2 call to Lorsch's Santa Claus and Easter Bunny lines.

The American Red Cross has also tried pay radio, but under a different agreement that brought it about 90% of the gross revenues, instead of the 12.5% that the California Museum of Science and Industry Foundation and the California Special Olympics get from Lorsch.

Sold Cigarette Filters

Lorsch said what he has done--and believes other entrepreneurs will do--is "create merchandising programs with enough of a revenue stream that a charity can share in that revenue stream."

Lorsch, 36, got into sales promotions at age 17 when, he said, he netted several hundred dollars a day selling cigarette filters out of the trunk of his car to liquor stores and convenience markets. "I decided then I would never make less than $100 per day," he recalled.

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