The Pitch from Public Utilities   

The Los Angeles Times was looking for aggressive new ways to sell more newspapers a few years back, when one of the paper's executives proposed a simple plan: Pay public utilities to sell subscriptions to residents who call for electric or gas service.

It's a no-brainer: The paper "gets a demographic with a high probability of buying a newspaper," explains Jack Fulcher, an analyst with the Public Utilities Commission, the government agency that regulates utilities. And by having the utilities pitch the Times to people who want gas or electric hook-ups, the paper gets a "much better hit ratio than random advertising or random phone calls."

It works like this: After filling a resident's request for service, the electric or gas company customer service agent reads a prepared pitch hawking the Times. When customers agree to subscribe, the utility sends their personal information to the paper, which then fills the order.

The deal went through without problems. And with the exception of the state's attempt to block the continuation of the paper's partnership with Southern California Edison for a brief time last year, it has been highly successful at finding new subscribers and retaining them, says one executive. (Only Fulcher, with the PUC, would reveal how much the Times pays Edison. According to the latest contract the PUC has, which, Fulcher notes, is at least a year old, Edison gets $20 for each subscription that lasts at least 28 days.)

The partnership has aroused concern for some in editorial. In fact, Times news executives rejected a similar deal with the city-owned Department of Water and Power. What's the difference? "One's out-and-out government," explains Times Editor John Carroll. "The other is a government-regulated agency." So where do you draw the line? "I don't know," Carroll says, adding, "In the scheme of things, when you consider the ethical transgressions a paper can get into, this is not devastating. It's worth talking about, but I'm not losing sleep over it."

The deal is not unique to Los Angeles, reports John Murray, vice president for circulation marketing at the Newspaper Association of America. Newspapers all over the country have similar partnerships, though relationships with utilities are becoming passé, he says, supplanted by joint ventures with phone and cable companies and the post office. "It's pretty much standard in the newspaper industry," says Carroll, who inherited the Edison deal from his predecessor when he joined the Times last year. "Of all the things I had to tackle, that one didn't seem like a big deal. You could make the case that it's a conflict of interest, but it would be toward the minimum end of the scale."

True enough, says Bob Steele, director of ethics programs at the Poynter Institute. "Using utilities and other businesses [to sell newspapers] is a reasonable marketing tool." But, he adds, the burden falls to the newspaper to avoid creating the perception of a conflict. "The question is: Can the L.A. Times ensure that its editorial integrity is in no way compromised?"

The best safeguard of editorial integrity, says the Times' business executive who oversees these marketing deals, is editorial ignorance. "There is no connection between what we're doing and content," says Jim Garcia, outdoor marketing manager.

But in December 1999, a Times reporter did find out about the deal, and she reported it in a business brief to the paper's million-plus readers. The utility's executives had refused to submit documents required for government approval, says the PUC's Fulcher, and the PUC was threatening to kill the deal.

Eventually, the partnership won state approval, and the Times has since expanded similar circulation programs to Southern California Gas and "all kinds of other companies, cable companies, retail stores," explains Garcia, especially those with call centers, or businesses devoted to servicing customers via telephone. "Any partner with a call center, we have a similar relationship," Garcia says.

In the months since California's widespread power outages began, Times reporters have pounded Edison with hard-hitting stories, and that fact may be the best indication of editorial integrity, suggests Poynter's Steele. "If they do it strictly as a business-side initiative with no influence on the editorial side, then it's reasonable. But it may, at times, be unwise. Is it worth running the risk? I don't have the answer for that."