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Turning Discount Coupons Into Heaps Of Dollars


Cover Story: ENTERTAINMENT PUBLISHING

TURNING DISCOUNT COUPONS INTO HEAPS OF DOLLARS

Good times or bad, people always want to squirrel away a few extra bucks. Hardly an earth-shattering observation, you say. Yet that philosophy has helped Entertainment Publishing Corp. evolve from an idea sketched on a kitchen table to an $85 million coupon-book business.

Entertainment is America's largest publisher of discount-coupon books, which offer up to 50% off list price on a broad range of leisure pursuits such as dining and sporting events. Most coupons are marketed through a network of 65,000 charities, corporations, and schools, where they help raise about $20 million in charitable income annually.

The publishing house's success comes from the dovetailing of different interests. Here's how it works: Entertainment recruits merchants to sell their wares and services in its coupon books. Merchants whose products are featured in the guides gladly offer a break on the price in exchange for the extra business that the books typically generate. Meanwhile, charities and other organizations sell the guides for $25 to $35 each and get a 20% commission on all coupon-book sales. At the same time, they save Entertainment the overhead of setting up a vast distribution network. Entertainment, of course, pockets the other 80% of the coupon-book sales, less printing and other costs. Hughes L. Potiker, Entertainment's president and chairman, started the business with his wife, Sheila, back in 1962. The attorney thought it would be a nice sideline to generate a little extra income. But from its modest start in the Detroit area, the Troy (Mich.) company has blossomed into an international operation with 600 employees in 125 cities. Last year, earnings doubled, to $9 million on $85.5 million in sales. Says Potiker: "We've surpassed even our own expectations."

BOOKS OF PERKS. To fuel this growth, the Potikers--Sheila is executive vice-president and corporate secretary--have been expanding. Since 1970, they have added an average of six new markets a year, ranging from the U. S. to Canada and Europe. In addition, the company also publishes custom-designed coupon books for such corporations as Amoco Corp. and Exxon Corp., which offer them as employee perks. Entertainment also publishes several travel-related discount books. According to a 1990 survey, the average customer is 47, married, and has a median household income of $54,430.

The industry does have its critics. Consumer advocates question whether charities receive a sufficient payback for selling products such as discount books. But so far, few seem to be complaining about Entertainment. Almost 80% of the groups that sell its books each year come back for more. William Blair & Co. expects the company to generate 16% compounded annual earnings growth over the next three years. And such sweet returns can hardly be discounted.Noreen Seebacher in Troy, Mich.


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