Company facing investigation over Lawrence infomercial

By Bill Kirk
bkirk@eagletribune.com

LAWRENCE — A controversial informercial paid for by the city is now being eyed as part of an ongoing investigation into the Florida company which produced it.

Known variously as Encore Television Group or Platinum Television Group, the company was paid $19,700 by the city to appear in "The Economic Report," a five-minute informercial hosted by Greg Gumbel. Under the agreement, the Lawrence ad would air 20 times across the country.

But two years ago, the Florida Attorney General's office cited the company for failing to deliver on its promise to put other similar informercials on the air and for making questionable claims linking these ads to major networks like CNN, Headline News and the Discovery Channel.

Since that time, the company has been operating under what's called an "Assurance of Voluntary Compliance (AVC)." The compliance order is short of an admission of guilt but spells out how the company is supposed to conduct its business in order to comply with state and federal statutes.

In all, the company paid $350,000 to the Attorney General's office as a result of the investigation and agreement, including $75,000 in restitution to the companies involved, $100,000 to the state of Florida for investigative costs, and another $175,000 for costs associated with ongoing and future enforcement initiatives.

With the controversy in Lawrence and Gumbel now suing the company — he claims he was told he would be doing introductions for legitimate news shows ­­— the Florida Attorney General's office is taking another look at Encore.

"We are looking at potential violations of the (Assurance of Voluntary Compliance) and are not able to give a legal opinion about whether something is definitively a violation until our review has been completed," according to a statement.

Officials at the company could not be reached for comment. The company's attorney declined to comment.

While Mayor Michael Sullivan and Economic Development Director Tom Schiavone stand by the $19,700 purchase, saying it's a valuable marketing tool that will give the city positive recognition, more controversy is arising.

A CNN spokesperson told The Eagle-Tribune they are again concerned about the association with "The Economic Report" and the network. Comcast is also questioning information Encore provides on its Web site about when the show supposedly airs.

And in Lawrence, City Council President Patrick Blanchette is looking at how this ad was paid for. Schiavone, who could not be reached for comment on this story, previously said it was paid for out of a budget the city has for marketing.

"The city has been in a fiscal crisis for some time, and I can't fathom the mayor and his acting economic development director issuing payment for a self-controlled commercial," Blanchette said. "I would like to see what account this money came out of and when it was paid. I would like to see all the sign-offs on this payment and agreement."

Schiavone said the money was spent on "production fees." One local videographer says the cost of such an ad is exorbitant.

"A five-minute video like that, I could do myself for $4,000 to $5,000," said Brian Norton of New Creations Video Productions in Nashua, N.H. "I wish I could get $20,000 for a video like that."

Norton, who has been in the business nearly 13 years, produces wedding and corporate videos.

"I don't know why they hired a Florida company when they could have used a local one," he said.

What about Lawrence?

The Eagle-Tribune confirmed through Comcast that the Lawrence infomercial appeared four times Portland, Ore., on Sunday, July 5, at 9:24 a.m., 9:54 a.m., 10:24 a.m. and 10:54 a.m.

"They said it would run 20 times in different markets," Schiavone said in an earlier interview. "They buy up the space, give us five or 10 days heads-up that they purchased the space, and that it will be running in that market."

Raxon Phoenix, the company contact given to Lawrence, told The Eagle-Tribune the ad has also run in Sarasota and Venice Beach, Fla. In an e-mail she sent to Lawrence, she lists her title as Traffic/Post Production Coordinator, presumably for Encore Television. Phoenix is also the author of a self-published book of erotic poetry, "Confessions of the Soul."

"There have been no further notifications," she said, referring to e-mails to Lawrence about when the ad will run again. "We are in the scheduling phase for the month of October."

An Internet search for the contact number Phoenix gave to this city results in several online bulletin boards with posters questioning the legitimacy of the services the company offers.

A Web site for "The Economic Report" has a listing of other air times indicating when and where the program is scheduled to run in local markets. According to the Web site, in Boston, "The Economic Report" infomercial — not necessarily the episode about Lawrence — was supposed to have run 21 times in different time slots on CNN Headline News from Oct. 1 through 4.

Comcast spokesman Marc Goodman said that is not true.

"This show has not appeared at all in the local market," he said, adding that it would never run on CNN Headline News anyway.

Chris Ellis, a spokesman for Spotlight, the advertising arm of Comcast, said he would be looking into claims on the infomercial's Web site that it was running in the Boston market.

Is it news or an ad?

While city officials were telling people, including The Eagle-Tribune, that the show was a program that "would appear on" CNN Headline News, among others, it is unclear exactly what Encore may have said to city officials.

But according to the company's own Web site, it looks like Encore/Platinum is trying very hard to make people think there is some kind of link between their videos and networks like CNN.

"The show airs during the day on a variety of well-known news networks," says the company's home page. The phrase "well-known news networks" is a link to another page on their Web site titled "Media Distribution." On that page there is a list of networks, with summaries about each one, including Discovery Channel, CNN Headline News, CNN and MSNBC.

According to the 2007 agreement with the Florida Attorney General, Platinum TV Group or Encore "shall not represent themselves to be any national news, cable or broadcast network, nor shall (they) represent that they are 'associated' with any such network."

The site, does have a disclaimer saying, in smaller, light-gray type: "'The Economic Report' and its national television show has no direct affiliation with the networks on which they air. 'The Economic Report' purchases the time through cable providers, networks, stations and/or other media sellers."

A spokeswoman for CNN, a national 24-hour news network, said categorically there is no link between the news channel and Encore or Platinum.

"CNN has no relationship with the advertiser," said Janine Iamunno of CNN Public Relations this week. "We are investigating the matter further with regard to misrepresentation of CNN and its relationship to these local advertisers, and will take appropriate action based upon our investigation."

Sullivan and Schiavone have said they knew it was an informercial. They said they also knew that the company making the video had to buy advertising time so that the infomercial could air on various cable stations around the country.

That information was not shared with too many other people.

Two of the interview subjects, restaurateur and real estate developer Sal Lupoli and Merrimack Valley Chamber of Commerce president Joe Bevilacqua, both said they were under the impression that the news crew that interviewed them was with CNN and that the show would be run as part of a CNN program called "The Economic Report."