Media-Time Buyer Prospers by Trading for Companies’ Unused Goods, Services
To understand what Richard Manney does for a living, try to imagine an old-fashioned radio “swap” show conducted out of an opulent Manhattan office, involving millions of dollars in commodities--from industrial resins to dog food.
Manney is chief executive of The Mediators, a firm that buys media time and accepts payment from its clients in “alternate capital.”
Alternate capital is basically unused inventory. Manney’s firm buys media time and space for advertising and sells it to clients. Instead of cash, the clients often pay him in whatever goods or services their companies produce.
“Today, my clients are in an inventory-rich, cash-poor position,” Manney said. “All the major companies want to get more liquid.”
The Mediators was born in 1966, when Manning was buying television time for another company he owned and mulling the millions of dollars large consumer-goods manufacturers spent on television and radio time and newspaper space each year.
“I realized if I could go to the clients and secure their inventory as alternate capital, I could get big billings,” he said. “Came the recession of 1971, it all fell into my hands. Clients were cash poor, and overstocked. We said: ‘Hey fellows. give us your alternate capital. Save your cash.’ ”
Two recessions later, Manney says his firm does $400 million in business a year. Things have gotten far more complex since the simple swaps he contracted in the early days.
The Mediators now seems to trade almost anything for anything. Much of the advertising time Manning buys for his clients is purchased with goods--alternate capital he obtained from another client.
“A major computer company might give us computers, and we give them the advertising schedule they want. If a TV station needs computers, we give computers to the TV station in return for their unsold time.”
The Mediators offers clients goods from a laundry list that includes seats on 18 airlines, rooms in 68 hotels and nine cruise lines, office furniture, car rentals, courier services, watches, televisions and bikes.
There is also stainless steel, tin plate, industrial plastics, jet fuel and fertilizer. Manney said Third World countries often are reluctant to pay for U.S. advertising with hard currencies and are happy to use their commodities as alternate capital instead.
Right now, he said, his company is in the process of consummating an agreement with Jamaica in which The Mediators will buy all the air time for the Caribbean nation’s tourism ads. “In return, they’ll be giving us hotel and airline space,” he said.
Trading alternate capital has become such a common procedure on the international level that it is no longer difficult to explain to clients how it works.
Some cash-strapped Third World nations now are demanding that American companies buy their commodities in return for continued business, Manney said. Some of those commodities work their way back to The Mediators, which accepts them from the American companies in return for advertising time.
The business has gotten big enough that many of The Mediators’ transactions no longer involve advertising at all, Manney said.
“We sit down and say what do you want to buy? We hope the client needs advertising air time, because that’s the area where we shine. But we also can deliver telephone service, courier service, computers, incentive merchandise--a whole array of inventory and services he normally would buy.”
In order to avoid having to actually take delivery on $40-million worth of computers here or a cargo of fertilizer there, the Mediators makes sure the commodities are pre-sold before it agrees to buy them.
“Once or twice, our eyes got a little bigger than our stomach,” Manney said. The company once found itself stuck with $500,000 worth of nail polish in last year’s colors, he admitted. “It took us four or five months to sell it all.”