In 1963, while still in his early thirties, Melvin Chasen founded his first company, Midway Enterprises Inc., in Colorado. Within five years, it had evolved into Pike's Peak Turf Club and by 1974 became Pike's Peak American Corporation. In the early 1980s, Chasen, with the help of ad agency executive Hank Seiden, entered the media barter industry. In media barter, companies buy up blocks of advertising from media outlets such as newspapers, radio, television and exchange them with companies for their excess merchandise or services. Often such companies will get an advertising equivalent to the wholesale price of their goods or services rather than having to settle for the heavily discounted price they would charge in a closeout sale.
To capitalize on the media barter idea, in 1983 Chasen renamed his business Transmedia Network and located it in New York City, where he began arranging advertising-for-services exchanges between radio stations and potential radio advertisers who needed ready cash. The majority of these companies were restaurants, which because of the dining industry's notoriously high turnover and thin profit margins were often unable to get loans from banks. Early on, Transmedia also operated as a media placement firm, earning 15 percent commissions on ad space purchased from such publications as New York
In 1983 Chasen introduced the Transmedia card through which restaurant goers could receive 25 percent off meals at restaurants that had bartered meals for blocks of advertising. Chasen soon discovered, however, that restaurants much preferred cash to advertising space, and despite his own tight cash reserves he began offering pure cash advances to restaurants that agreed to accept the Transmedia card. The change in strategy paid off immediately and cash-strapped restaurants began lining up for Transmedia loans.
The amount of money Transmedia loaned restaurants was based on their reputation and capital needs as well as the amount of time Chasen estimated it would take Transmedia's cardholders to "pay off" the loan through restaurant visits. In exchange for a $5,000 interest-free loan to a restaurant (the standard amount Transmedia loaned to a new restaurant), Transmedia received $10,000 in meal credits, which Chasen anticipated would be used up by Transmedia cardholders within six months. Since restaurants' actual cost for food and beverages ranged from only 30 to 40 percent of the cost charged to customers, Chasen's major obstacle was not in finding restaurants willing to participate, or investors willing to loan Transmedia capital, but in getting consumers to believe they could get 25 percent dining discounts without some "catch." When even ads offering to waive the $50 membership fee for new members failed to do the trick, Chasen began hawking the Transmedia card to teachers' unions, law and accounting firms, police departments, and other professional groups to widen Transmedia's member base.
Working in Transmedia's favor were the features that made its card an improvement over earlier incarnations of the discount dining concept; no coupons had to be clipped and presented, maitre d's and waiters did not have to be forewarned that the customer intended to pay with the Transmedia card (though large parties had to make reservations in advance through Transmedia), and there were no limits on dining times or menu choices. As a Transmedia executive later recalled to the Los Angeles Times, "We designed the card so that there would be no restrictions, no coupons, no negatives.”
In 1986, with revenues approaching $1 million, Chasen issued Transmedia shares in a public stock offering that infused $1 million of much-needed expansion capital into the business. By 1987, Transmedia had posted revenues of $1.8 million but suffered a net loss of $422,000. In July, Chasen reincorporated Transmedia (which, as an outgrowth of Chasen's earlier ventures, had been a Colorado corporation) in Delaware.
With his company now servicing New York, New Jersey, Connecticut, and Florida, Chasen offered 500,000 shares in a private placement stock offering in 1992 that generated close to $5 million in additional capital. In 1990 and 1991, a new entrant in the discount dining market, The Signature Group of Chicago, began negotiating with Transmedia for a joint licensing agreement in which the companies would honor each other's cards. Chasen allowed the talks to collapse, however, and the stage was set for Signature's entrance as a new player in the industry in June 1993. Already, in 1992, a fourth discount card service, A la Carte International Inc., had begun offering restaurant-goers a discount dining card plan. By 1993, the discount dining card market was ruled by Transmedia, Executive IGT (In Good Taste), and a new participant, Entertainment Publications. Each offered variations on the others' program, tweaking the discount card business model to strike the right balance with consumers.
In late 1993, Chasen began a policy of partnering Transmedia with selected U.S. companies in order to broaden the company's offerings beyond restaurant dining. Among the first to sign on was the New York Times, which allowed Transmedia customers to take advantage of the benefits of its "Times Card" discount and membership program through a co-branded Transmedia/Times card. Transmedia also absorbed the restaurants honoring the Times card into its own network. The program had produced 64,000 new Transmedia cardholders by mid-1994 and spawned a series of co-branding, "retail loyalty" deals with such direct mail catalog merchants as The Sharper Image and Jos. A. Bank Clothiers and eventually even cruise lines like Carnival
In January 1996, it struck a deal with Continental Airlines
and United Airlines
to allow cardholders to earn ten free miles for every $1 charged (versus the two to three miles earned by other charge cards).
In 1999, Transmedia acquired its chief rival, the Dining A La Card (DALC) business of Montgomery Ward
subsidiary The Signature Group. According to Forbes, the price was $35 million in cash and $6 million of Transmedia stock. Transmedia became the country's largest dining reward program, with more than two million members, via the DALC acquisition.
A new online venture, iDine.com Inc., was launched in May 2000. IDine.com allowed upscale restaurants to set designate off-peak times as discount periods. The site was limited to the Chicago area at first. Wolfgang Puck casual restaurants eventually signed up for the iDine program. The company was renamed iDine Rewards Network in 2002, reflecting the name of its new Internet-based restaurant rewards program.
Close Up of Vignette
Common Stock, specimen, late 1900’sPrinter: American Bank Note Company Dimensions:
8” (h) x 12” (w)State: NY-New York Subject Matter: Media Companies
| Direct Marketing
| Restaurants and Fast Food
| Specimen Pieces Vignette Topic(s): Female Subject
| Hemispheres Featured
| Skyline Scene Condition:
No fold lines, punch hole cancels in the signature areas and body, very crisp.