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Guthy-Renker’s New Edge

NEW YORK -- "They promised big things when we joined up with them, and now they're delivering," said Greg Renker, president of Guthy-Renker, an infomercial marketing and production company.<BR><BR>He was referring to the firm's decision last November...

NEW YORK — “They promised big things when we joined up with them, and now they’re delivering,” said Greg Renker, president of Guthy-Renker, an infomercial marketing and production company.

He was referring to the firm’s decision last November to sell a stake to MacAndrews & Forbes, Ronald O. Perelman’s holding company.

Perelman’s investment in Guthy-Renker puts the infomercial firm in the company of some important siblings — MacAndrews & Forbes’s holdings also comprise New World Communications Group, which includes a production company and television stations, and Revlon Group.

Renker believes a recent deal between New World and Fox Broadcasting will expand Guthy-Renker’s opportunities by playing off the potential synergies among the three companies.

Guthy-Renker wants to produce infomercials for Revlon products, gain access to air time for its infomercials on the Fox network and produce transactional programming for Fox.

The New World-Fox deal, which astonished the television industry, works like this: Fox agreed to invest $500 million in New World, which owns seven TV stations and plans to buy eight more. Twelve of those 15 stations will switch their affiliation to Fox. (Eight stations were CBS affiliates, three were ABC affiliates and one was an NBC affiliate.)

With Fox as a guaranteed buyer of New World programming, Guthy-Renker hopes to become a regular supplier. “It’s remarkable what they’ve done,” Renker said. “It’s a big, big, deal. The opportunity it gives programmers like us to create cutting-edge product is profound. On the networks, it’s difficult to break through with new concepts.”

Renker said his company has been in “extensive” discussions with New World about transactional programming, which usually refers to entertainment or talk shows that also have purchasing opportunities, such as Joan Rivers’s “Can We Shop?”

Fox has been discussing transactional programming internally. “We are most interested in creating new formats and this new alliance gives us a launching pad,” Renker said.

The deal could also benefit Guthy-Renker’s infomercial business. While the price of the limited infomercial air time on the broadcast networks has skyrocketed, Guthy-Renker finds itself in an enviable position. According to sources, the company currently owns all the infomercial time on New World’s seven stations.

Renker would only say, “Presently on the New World stations we have a preferred relationship.”

Ben Vandebunt, vice president of business affairs for Guthy-Renker, said he hoped New World’s deal with Fox would also give the company more access to distribution for its infomercials and other programming.

“The New World deal is not going to free up more time for infomercials, per se,” said David Grant, executive vice president of Fox Broadcasting. “Technically, it possibly could. But it raises the ante on how good programming on Fox has to be because of the increase in viewership. Generally, infomercials are put on a station that doesn’t have large ratings and wishes to compensate for that.”

Perelman, the chief executive of Revlon Group, has been collecting media properties for years.

His minority stake in Guthy-Renker, which is in Palm Desert, Calif., is believed to be between 37 and 40 percent, with an option to buy up to 50 percent. Guthy-Renker executives declined comment.

Revlon’s Dolly Parton cosmetics infomercial predated Perelman’s investment in Guthy-Renker and was produced by Tyee Productions. However, Guthy-Renker distributed the Parton infomercial for Revlon and continues to provide ongoing support services.

Renker said other MacAndrews & Forbes properties — from Marvel Entertainment to Coleman Co. — could lend themselves to infomercials.

“We’re in discussions with Revlon about some technological breakthroughs in cosmetics and hair care they’ve made that could be launched through infomercials,” said Renker.

“The product mix under that umbrella lends itself to some unique opportunities both for transactional television and infomercials,” he added. “We may have a greater incentive going forward to create breakthrough infomercials.”

Two of Guthy-Renker’s most successful infomercials have been “Principal Secret,” for Victoria Principal, which reportedly has sold $80 million worth of products, and “Personal Power” — motivational tapes — for Tony Robbins, which has done about $125 million.

But Guthy-Renker really sees transactional television as its destiny. “We make infomercials successfully, but we know the business is changing dramatically,” said Vandebunt. “Working with New World is very exciting because it allows us to plan for the future. By tying in with New World and then Fox, we hopefully have the ability to stay ahead of the curve and evolve. The evolution will be transactional television.”

Fox’s Grant declined to say whether the network would buy transactional shows produced by Guthy-Renker.

“When something like this happens, it does open up opportunities,” he said. “I think transactional television will grow because the catalog business is so huge, there’s no reason why the TV version can’t get a bigger share of it. The wave of the future is high-quality programming, where transactions are incidental.”

Renker pointed out that even if Fox decided not to do transactional programming or use its services, Guthy-Renker could still air its shows on the New World stations and syndicate them through Genesis Entertainment, a syndication company owned by New World. “We are designing a transactional shopping show to air once a week or daily that would market a variety of products, specifically designed for television viewers,” said Renker.

Guthy-Renker will sift through products to create “best of” offerings in proven television direct response categories. The entertainment facet will come from guests connected with the products. In addition, there will be sweepstakes, raffles, special discounts and one-time-only offers.

But not everyone thinks Guthy-Renker is up to the task. “Every infomercial that’s come out of Guthy-Renker has utilized an outside producer,” said one infomercials expert. “They could handle the back end, but as far as the creative stuff and the conceptualizing, they’re not program creators.”

But Jeff Glickman, president of First Class Marketing, who has worked with Guthy-Renker as a consultant, said the company is known for bringing in producers and talent and getting the best work out of them.

“Fox itself has the ability to create entertaining programming and excellent products,” Glickman said. “Where they’re going to enjoy the association the most is from the direct response experience of Guthy-Renker. They can look at a product and positioning and give input. The major failure of transactional shows to date has been that the networks limited the direct response component.”