In this Issue:  Snapshots in Outsourcing — Outsourcing Study Update — Consolidation and Shakeouts

Best Practices — "Invite yourself to the party." Karen Rogers, Baltimore Gas & Electric, Speaking at the ITVA Management Masters Seminar on the future of corporate media management.

SNAPSHOTS IN OUTSOURCING

When the insource/outsource study was designed in early 1996, it was not easy to identify many commercial production companies that were making formal out-sourcing overtures to corporate clients. That picture is beginning to change as more and more large contract producers (as Tom Hope defines them) are finding some real growth opportunities as outsource providers.

Curtis, Inc. of Cincinnati, known primarily as a tape duplicator has taken over media operations for a local GE division and has made outsource proposals to at least one other large company we know of (outside of Ohio).

In Columbus, Mills/James Productions has taken over the operations at a local hospital and is actively seeking more clients.

That's not to say this phenomenon is restricted to Ohio, only that these are two cases we can confirm.

Outsourcing of entire production functions is only part of the picture. Since the new IRS guidelines on subcontractors were issued in 1994, more and more companies are turning to Contract Labor Providers or personnel agencies to handle free-lance staffing needs.

Gogolak Communications Group in Milwaukee and Crewstar of Boston are two companies that come to mind. More than just paymasters or temporary employment agencies, they also actively select and manage the part time and full time free-lance professional staff for their client companies.

We're working on a couple of more detailed outsourcing stories to appear in future issues.

OUTSOURCING STUDY UPDATE

Our landmark benchmarking study Communications Media Management-Insource or Outsource, Making the Right Choice, was honored with the Distinguished Achievement Award at the Communications Media Management Association (CMMA) Professional Development Conference in Pittsburgh this past May.

As we reported at that time, outsourcing continues to be a key strategy for a growing number of corporations. However, the media departments and production companies benchmarked in the study remain at the "head of the class." Their best practices, which are the key findings of this study, set standards to strive for.

Procter & Gamble, as example, has added several people to their Photo/Graphics staff so far this year and will soon be adding more. In addition they are planning to move to a new, multi-million dollar facility.

Convergent Media Systems has added BMW's distance learning network to their roster of clients for turnkey production and management outsourcing services.

CONSOLIDATION & SHAKEOUTS

While outsourcing is of concern to many media managers, implementing best practices can leverage the value of outsourcing, lead to effective cosourcing or reinforce insourcing. However, mergers and acquisitions often result in reorganizations over which a manager can have little control. Consolidation or elimination of media production groups often follows, along with a shakeout of services and staff.

Pacific Telephone (PacTel) is a pioneer in video production and distance learning. Their San Ramon and San Francisco studios serve over 70 BTV receive sites. An independent communications audit earlier this year gave television and the network very high marks.

When Pacific Telesis was acquired by SBC (formerly Southwestern Bell) on April 1, 1997, SBC said they intended for PacTel to operate independently.

Perhaps demands for ROI and increased shareowner value were overwhelming, however, for on May 1, SBC directed PacTel's Corporate TV department to shut down operations immediately. After some discussion the shutdown was postponed until after a key July 2 broadcast. The staff was allowed to apply for any remaining jobs. Management of the BTV and videoconferencing networks may be moved to St. Louis.

SBC shut down its own internal video facility several years ago and now outsources virtually all media production. Apparently they have no BTV network similar to the one operated by PacTel.

Additional fallout from the merger was cancellation of all of PacTel's interactive cable TV ventures.