At PBS Outlet, Investment Advisers Pay to Be on TV

Times Staff Writer

Calling himself the Practical Economist, a salesman named Fred Chapin Marsh II peered into the television camera and directed viewers to put down their morning newspapers and cups of coffee.

“Listen to this, ‘cause this is important. I would suggest that the cellular licensing opportunity, as an investment, very well could be the only investment you need to make,” Marsh said one day last month, in the hope of attracting more customers to his San Rafael investment company.

Marsh was not appearing during some late night movie amid commercials for amazing machines that chop vegetables. Instead, he was on non-commercial station KCSM, a member of the Public Broadcasting System.

Like other PBS affiliates, KCSM is nonprofit and according to its license cannot run commercials that advertise specific products. It receives federal tax money--roughly $300,000 this year from the government-sponsored Corporation for Public Broadcasting--and airs educational programming, including local community college courses, and highbrow shows such as “Masterpiece Theatre.”


But for two hours each workday morning, KCSM transmits what may be a unique show for public television--one in which Marsh and other investment counselors pay $30 a minute for air time to pitch their latest service. The show is “Stock Market Today,” which mixes business news and interviews with paying “guests.”

Now in its sixth year, “Stock Market Today” has raised concern among law enforcement authorities because of some past guests. At least two companies whose salesmen appeared regularly on the show have gone bankrupt in the past two years, and the owners of the two firms are in prison because of their financial dealings.

“Maybe I misunderstand the nature of the (non-commercial) stations, but it seems to me they ought to be more public interest-oriented and take greater pains to ensure that the public is protected,” said John Booker, a lawyer for the state Department of Corporations, which took actions against the two companies whose two owners are now in prison.

“In my opinion, it would be prudent for the television station to at least make inquiries whether or not any of the people have had actions against them,” said Booker, whose department enforces state securities law.

But in airing “Stock Market Today,” KCSM exerts no control over the show’s content. The station turns over that responsibility to an investment company, Financial Horizons, which pays KCSM roughly $100,000 a year.

An announcement shown roughly each half-hour during the broadcast says that Financial Horizons underwrites “Stock Market Today.” But the company does more than underwrite. Financial Horizons produces “Stock Market Today,” finds the guests, collects their money and pays the salaries of the hosts who read the news and interview guests, said Robert Gray, an owner of Financial Horizons and producer of the show.

The guests include salesmen from national firms such as Paine Webber, who discuss stocks or mutual funds, and smaller local firms, whose salesmen sell or have sold everything from speculative precious metals options to tax shelters in greenhouses.

“Our criteria is this: We do not think it appropriate for us to sit in judgment. If it is an aggressive, speculative investment, we want that fact made known,” Gray said. He said that he had tried to check the background of guests several years ago but that regulatory agencies were uncooperative.


Gray said the total amount of money that Financial Horizons collects from guests is minimal, but he would not disclose figures. Gray did say he invites some non-paying guests, including Internal Revenue Service representatives.

Besides providing air time, Financial Horizons broadcasts a phone number that viewers may call if they want more information about an investment. Phone answerers obtain the names, addresses and phone numbers of viewers who call and turn them over to the companies. The companies in turn mail out sales brochures.

“Do they (the paying guests) derive some commercial benefit? I’m sure they do. . . . It is just a mutually beneficial relationship,” Gray said.

KCSM is licensed to the College of San Mateo, a state-funded community college. The station tries to stay afloat in a competitive Bay Area market of six PBS affiliates, including San Francisco-based KQED, one of the system’s most successful.


College of San Mateo administrators believe that KCSM adds prestige to the campus and brings students to the college, which in turn increases the money that the community college receives from the state.

Unaware of Payments

KCSM General Manager Michael Kimball said the show provides “an important service, and I wouldn’t have it on the air if I didn’t.” But Kimball also said he would rather have the show funded by viewer subscriptions or other public sources. Under the current arrangement, the station, in effect, is “working for Financial Horizons,” he said. In an interview at the station, Kimball said he was unaware that guests pay to appear on the show.

“We have a contract with Financial Horizons to provide our facilities to produce a program that is their program,” Kimball said. “The means that they use to finance it is their business.”


As Kimball sees it, KCSM has little choice but to continue its relationship with Financial Horizons. Like other public television stations, KCSM has money problems, and “Stock Market Today” is “a significant revenue producer,” Kimball said, adding that it accounts for about 9% of its budget.

The program’s viewership is not known; it is not reported in A. C. Nielsen Co. ratings. But regular guests say the show’s audience is tailor-made for them because people who do tune in generally are interested in investing.

One PBS executive is openly critical of the show, suggesting that KCSM’s arrangement to air “Stock Market Today” breaches a basic PBS tenet--a written policy that PBS “will not allow editorial control to be exercised by program funders.”

“I don’t think you ought to be able to buy your way onto television, whether it be commercial or non-commercial, on the editorial side,” said Anthony S. Tiano, president and general manager of PBS affiliate KQED in San Francisco.


Tiano called KCSM’s “Stock Market Today” program an “aberration” among public broadcasting stations and warned that if such programming did became common, PBS could lose support in Congress and state legislatures, which appropriate more than $300 million yearly to public television.

Executives in PBS headquarters in Arlington, Va., were unfamiliar with the broadcast but noted that PBS has little control over fund raising by local stations.

“It comes down to this: There are marketplace forces at work. There is leverage from other stations, peer pressure,” said Steven M. Bass, a PBS official who advises stations about fund raising.

Questions about fund-raising practices are becoming increasingly common. PBS affiliates are turning to more aggressive ways of raising money, as state and federal government funding of PBS declines. The Federal Communications Commission aided that trend in 1984 by relaxing regulations regarding fund raising by non-commercial stations.


Charles W. Kelley, chief of the FCC enforcement division for mass media, said he had never seen “Stock Market Today” and was not certain whether it complies with FCC regulations for non-commercial stations.

“I’ve never heard about such an arrangement on a non-commercial station, and the existence of one is somewhat troublesome,” Kelley said when he was asked by The Times about the broadcast.

On the air, meanwhile, Practical Economist Marsh tells of “exquisite opportunities"--how a $10,000 investment in cellular telephone license lotteries could reap up to $100,000 a year in coming years. He does note that people should put their money down only if they can afford to lose.

In his literature, Marsh provides more details about cellular phones, and an offer to take a cruise of San Francisco Bay on a chartered boat for $100--"refundable if you become a client.” At the back of a brochure, a paragraph says that Marsh was sued by the Securities and Exchange Commission but blames the action on a “palace revolt” of former employees, whom Marsh is suing.


Although it is not mentioned in Marsh’s disclosure, the SEC accused him of “schemes and artifices to defraud” investors by underestimating profits that his companies would make on investments he sold and converting some of the money to his own use. As part of a settlement in June, 1985, the SEC revoked his license to sell securities and barred him from associating with securities dealers for at least five years. Marsh admitted no wrongdoing in settling the case. His current enterprise does not require a securities license.

Like Marsh, other guests--including those from national investment firms--said they viewed the appearances on KCSM as a good and inexpensive way to advertise.

“Sure, that’s the way it works. You give a donation and you get to appear on the program,” said Bill Martin of Paine Webber, a regular on “Stock Market Today” for several years.

“It’s a way,” Martin added, “to expose yourself to the public. . . . There is enough interest that develops that we continue to underwrite it.”


Another regular, Jeff Rodman of Dean Witter Reynolds, called the program “very good for me--very good, indeed.” He and Martin said they were concerned about some investments that have been offered on the show. But Rodman added that “making a buck keeps strange bedfellows.”

One such guest was Charles Michael Fisher of Tabb Associates of San Mateo, a program regular until earlier this year. While he was appearing on the show, Fisher was on probation stemming from a guilty plea in 1981 to federal mail fraud charges in Los Angeles. He was charged earlier this year with violating the probation by selling tax shelters in solar energy, greenhouses and computer software without a license. A federal judge sentenced him to three years in prison for the probation violation.

Known From TV Appearances

Assistant U.S. Atty. Ralph F. Hirschmann of Los Angeles said in a court document that “a significant number, if not all, of the individuals” who invested with Fisher heard about him from his television appearances. Besides “Stock Market Today,” Fisher also appeared on a similar show on a commercial San Jose station that airs business news and charges $500 for a half-hour of air time.


Another company, First International Trading Corp., whose salesmen appeared regularly on KCSM and the San Jose station, also ran into trouble. FITC was founded in 1983 by Michael Anthony and Ronald McIntosh after their release from the federal prison in Lompoc. Anthony was serving a sentence for bank embezzlement and McIntosh for wire fraud.

Although Anthony and McIntosh did not appear on the air, their salesmen were television regulars until last year, when the company was forced out of business by local, state and federal authorities. FITC also advertised in other media, and by February, 1985, when the company was shut down, 2,500 investors nationally had paid $18 million for metals options only to find that the money had not been invested.

Anthony, McIntosh and 10 salesmen have been convicted or pleaded guilty to criminal charges stemming from the scheme. Anthony was sentenced to three years in prison and McIntosh to four years.

“Investor after investor told me, ‘We saw it on television; we thought it was legitimate,’ ” said San Francisco Assistant District Atty. Jerry P. Coleman, who helped prosecute the case.


Coleman called the KCSM appearances especially “curious,” noting that PBS affiliates generally do not air commercials. “And these were flat-out commercials. They were certainly viewed that way by the company.”