Video Project Presents a Lesson in Brand-Name Protection

As entertainment companies increasingly focus on branding their products to stand out in a crowded and competitive marketplace, Time Warner’s venerable Time Life division may have just received a lesson in the dangers of letting a brand name out of its control.

For the first--and possibly last--time, the media giant sold the right to use the Time Life imprint to an outside company, for a high-visibility video project. Now, that company--Patient Education Media Inc.--has laid off virtually all its workers and is considering a bankruptcy filing, according to an attorney representing former contributors to the project.

The Time Life Medical video series was announced with great fanfare in late 1994. When the videos hit retail stores last year, commercials for the videos aired heavily on network TV, featuring former U.S. Surgeon General C. Everett Koop. Koop spoke in authoritative tones about the series of 30 half-hour videos, narrated by widely known personalities, such as Linda Ellerbee, and exploring health issues ranging from breast cancer to depression.

According to Competitive Media Reporting, a New York firm that tracks media spending, the company spent $14.3 million from January to October 1996 on advertising. Now, the videos, which originally retailed for $19.95 each at about 20,000 drug and grocery stores nationwide, are being sold at discount stores for as little as $1. The commercials are no longer running, and Time Life has pulled the plug on its involvement.

Many of those who saw the commercials and even some people working for Time Life Medical assumed the $500-million Time Life organization and its $18-billion parent Time Warner were behind the business.

In fact, the project was dreamed up by ex-adman Keith Green, whose Old Lyme, Conn.-based company Tucker/Green develops product ideas, then seeks partners to finance them.

The plan was to leverage the respected names of Time Life and Koop to help create a multimedia health-information empire that would sell videos to consumers and repackage the information to sell to health-care professionals via HMOs and other companies. The idea of getting in on the burgeoning health-care business when the U.S. has an affluent population entering middle-age sounded like a no-brainer.

The resulting venture, Patient Education Media, produced videos under the name Time Life Medical and was co-financed by Time Life and Tucker/Green. It licensed the Time Life name for the series and appointed Koop the medical director of Time Life Medical, further adding credibility in the eyes of consumers.

In the wake of weak sales and apparent over-aggressive spending and expansion, Time Life terminated the licensing agreement in December. Stripped of the Time Life name, Patient Education Media apparently has laid off its 50 or so employees--and owes many of its former workers money, according to those writers.

PEM Chief Financial Officer Joel Cohen said this week that he could not comment. Several calls to Tucker/Green, whose answering machine message also identified it as an office of Time Life Medical, went unreturned. A Time Life spokesman said that the company had only a “minority interest” in the project and that the person responsible for licensing the name of Time Life to PEM has since left Time Warner.

Frank Clancy, a freelance writer who worked on contract for the project, says he is owed several thousand dollars for his work.

“I’ve been burned before by start-ups, and I absolutely would have been more careful if I’d realized I wasn’t working for Time Life,” said Clancy. “Time Life has to realize that licensing its name like this isn’t like Disney licensing Goofy to a T-shirt company. This is a serious contract with people.”

Lynn O’Shaughnessy, another freelancer, who claims to be owed about $3,000, agreed.

“I thought I was working for a division of Time Life. They had offices in Time’s buildings, and our assignment letter had a big, official-looking Time Life Medical logo,” said O’Shaughnessy, a former Los Angeles Times writer who says she knows at least 10 others who are owed as much as her.

Former Time Life Medical Managing Editor Alex Gramling confirmed that he and other PEM employees were abruptly given their last paychecks and let go in late December, but maintains that freelancers were told upfront that PEM, not Time Life, was behind the project.

The situation may be an embarrassment for Koop, who is arguably a well-respected and recognized brand name in his own right these days: Two years ago, Business Week called him a “health-education conglomerate.”

Koop, 80, was said to be traveling when contacted for this article and did not return calls. But sources who worked on the project said that Koop had had high hopes that the video series would be part of his lasting legacy to the public and that he tried in vain to persuade Time Life not to pull out of the project when it began to flounder.

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John Lister, the president of New York-based Lister Butler, which consults on brand identity, said, “Time Life is a strong brand, and I think it will transcend this specific problem. . . . This is probably a warning to Time Life that they really have to evaluate all aspects of something carefully before they lend their name.”

In this case, the problem appears to have been not the product itself, which was developed at a reported cost of $20 million with the input of physicians from the Yale University School of Medicine. Rather, an aggressive business plan may have overestimated consumer and ancillary market demand for the material. Projected sales for the first two years had been pegged at more than $50 million. That would translate to about 2.5 million videos.

The company originally planned a 75-volume series.

Another source of money that Patient Education Media apparently counted on was IBM, which contracted with the company to turn the video series into articles that would be updated for IBM’s proprietary HealthVillage Internet service. IBM, in turn, would sell the service to health-care organizations to help provide patient education.

A former worker on the project, who requested anonymity, said she was told that IBM had not paid Patient Education Media the full $2 million that it planned to commit to the project.

An IBM representative would say only that PEM had delivered “three or four” of the promised articles and that IBM expected to get the rest in the near future. He said IBM was fulfilling its end of the contract.

Buffalo, N.Y.-based attorney Sallie Randolph, who specializes in author representation, said former Time Life Medical writers may file suit against PEM and Time Life. “We’re hoping Time Warner will just do the right thing and pay these writers, but [the writers] are exploring other alternatives,” Randolph said.

Marc Richards, an attorney with the New York firm of Reid & Priest who specializes in bankruptcy, is representing PEM. Richards did not return calls seeking comment, but Randolph said she was told that PEM would probably file for bankruptcy within 30 days.