Should the Dial Be Turned Off?

A new magazine raises questions about nonprofit status

First copies of the Dial, a slick new monthly about television, were winning rave reviews from charter subscribers this month. Billed as a program guide to public television, the Dial also features articles by first-class writers: Wilfrid Sheed on sports, Auberon Waugh on Alec Guinness, Stanley Kauffmann on acting. But the magazine was unexpectedly panned by the House of Representatives, then by the U.S. Postal Service. Reason: the Dial-- which will be sent to 650,000 PBS-TV supporters in New York, Chicago, Los Angeles and Washington, D.C., as part of their $25-minimum contribution--is bursting with ads, $580,000 worth in the first issue alone.

Such an impressive debut would normally be cause for bouquets. But the Dial is not just another magazine. It is published by the Public Broadcasting Service through a new nonprofit corporation, Public Broadcasting Communications Inc. If PBS stations continue to print advertising in the Dial, the House voted, they will lose their federal funding. Explained Maryland Republican Robert Bauman as he introduced the measure: "I do not believe that the Federal Government should be in the commercial publishing business."

The House decision followed months of controversy over PBS's ambitious plans to pack high-tone ads--Tiffany & Co., Cuisinart, Merrill Lynch--into its new nonprofit publication and use any "surplus" revenues, a euphemism for profits, for public-TV programming. Last July Washingtonian (circ. 101,000) magazine Publisher Philip Merrill asked the Federal Communications Commission to stop the Dial's four sponsoring stations --WNET in New York, KCET in Los Angeles, WETA in Washington, WTTW in Chicago--from giving the magazine free on-the-air promotion. The Dial, he argued, will compete against other magazines at an unfair advantage.

Don Erickson, Dial's editor, disagrees. "For years the Government has granted tax advantages to organizations that use their profits for socially useful purposes," says he. "And public television serves a useful purpose." Nonprofit publications are exempt from most taxes and save up to 50% on postal rates --a big edge over for-profit magazines, whose postal bills have increased some 450% since 1971. These concessions are enjoyed by an increasingly broad range of publications. Of the 35,000 periodicals regularly sent through the mails, 10,000 or so now get some nonprofit subsidies. They range from shoestring religious and labor newsletters to the prosperous National Geographic (circ. 10.4 million), from the National Geographic Society. Indeed, some of the nation's best-known publications are not for profit: Smithsonian (circ. 1.8 million), from the Smithsonian Institution; Natural History (circ. 478,000), from New York City's American Museum of Natural History; Mother Jones (circ. 222,000), from the Foundation for National Progress; Science (circ. 151,000) and Science 80 (estimated circ. 400,000), both from the American Association for the Advancement of Science. Other magazines have lately converted to nonprofit status when market forces threatened their existence. Ms. magazine (circ. 491,000) made the switch last year after convincing IRS and postal authorities that the monthly's role in combatting antifemale biases entitled it to federal support. Harper's (circ. 325,000) was saved from extinction this summer when it was bought by two nonprofit foundations. William Buckley's conservative National Review (circ. 86,000) and the liberal New Republic (circ. 75,000) have formed the Corporation for Maintaining Editorial Diversity to solicit tax-deductible contributions to help pay mailing costs. The two magazines will continue as for-profit enterprises.

Though few citizens would argue that nonprofit subsidies should be eliminated altogether, commercial publishers are not happy about them. Last March Entrepreneur Mortimer Zuckerman purchased the small Atlantic Monthly (circ. 337,000) only a few months before his main competitor, Harper's, went nonprofit. "How does the Government expect privately held magazines to survive?" asks Zuckerman. Geo, an expensively produced monthly introduced in the U.S. last year by West Germany's Gruner & Jahr, goes up against the nonprofit National Geographic, Natural History and Smithsonian. It is not easy. As a for-profit enterprise, Geo finds it must charge subscribers $3 a copy, vs. National Geographic's per-issue price of 790. Says Geo Editor in Chief Harold Kaplan of his nonprofit competitors: "They cover the same ground we do, sell a slew of ads, but pay no taxes. It's not a fair shake." Observes New Yorker President George Green: "Some of these [nonprofit] magazines are marketing themselves as advertising vehicles, rather than as sidelines of organizations. Dial was developed solely to sell advertising."

Indeed, the PBS marketing scheme emphasizes its subscribers' "upscale" incomes. "If you could advertise on public TV, would you?" PBS asked readers of Advertising Age. "You can't, of course. But you can reach these smart, rich and rabid public-TV fans through a powerful new advertising medium, the Dial."

As the flap over the Dial grew, the U.S. Postal Service at week's end retreated from its earlier decision to allow the Dial's sponsoring stations to use their cheap mailing privileges to distribute the magazine. Instead, Public Broadcasting Communications Inc. must now apply for its own nonprofit mail permit. Vows Dial Publisher Morton Bailey Jr.: "We're going to fight this thing to the very end. We're going to play hardball on this because we're right." As Bailey comes to the plate, however, he is likely to face some smoking fastballs.

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