Broadcast Noose

Denver's Journal Graphics did a killer business last year thanks to the world's fascination with the O.J. Simpson murder trial. But it took just one computer glitch this past summer for the local television transcription firm to lose two-thirds of its business and be forced to lay off thirty employees. Today the jury is out on one of the Denver business world's most unexpected success stories.

Cable News Network and National Public Radio, two of the company's biggest clients, signed on with a rival transcription service after a software failure rendered Journal Graphics unable to provide transcripts of programs on both networks. And the same competitor who made off with the CNN and NPR contracts is now targeting Journal Graphics' deal with ABC television.

Over the past two decades Journal Graphics' timely and accurate performance has helped it become the premier transcription service in the nation, selling an estimated 30,000 broadcast transcripts every month from TV news shows, government hearings and court cases. Last year the firm hired a whole team of new transcribers to provide inquiring minds with word-for-word accounts of the Juice's glove-fitting session, Johnnie Cochran's views on race relations and other Hallmark moments in Judge Lance Ito's courtroom.

The deals CNN and NPR cut with Journal Graphics were marriages of convenience. The networks paid the Denver firm to prepare transcripts of popular programs such as Crossfire and All Things Considered, which the news organizations could then peddle to the public, either through the mail or by computer via the Lexis-Nexis database. And the networks were willing to pay handsomely for the privilege: Journal Graphics' contract with CNN alone was worth nearly half a million dollars per year.

Under normal circumstances, Journal Graphics is able to deliver a complete program transcript an hour after a show airs. However, an August 13 software problem that interrupted its delivery system was the beginning of the company's current woes.

The August computer glitch rendered Journal Graphics unable to deliver transcripts of CNN and NPR programs to individuals and databases within the expected time frame. Even though Journal Graphics immediately employed three full-time troubleshooters to remedy the situation, it was almost a month before the company was able to close the gap opened by the system failure. That was all the time it took for a Washington, D.C.-based company called the Federal Document Clearing House (FDCH) to get its foot in the door.

Journal Graphics founder and majority owner James Smith points out that his company's problem was "a matter of delivery, not quality." However, CNN (which has employed Journal Graphics for the past five years) felt the problem was serious enough to warrant terminating its contract. It gave Smith two months' notice on September 13. NPR, which was also unhappy about the delays, gave Smith just six hours' notice on October 31, catching the company completely off guard. The suddenness of NPR's move is evidenced by the fact that more than a week after its bailout, Journal Graphics' recorded telephone greeting still advertises the company as the provider of NPR transcriptions.

"I respect both networks' reasons [for terminating their business with Journal Graphics]," says Smith, "but NPR should have given us more warning. At least CNN trusted us enough to tell us early and figured that we were honorable enough to maintain our standards until the end of our contract. NPR obviously didn't."

Smith says both networks indicated that they left Journal Graphics solely because of the August 13 mishap. But NPR spokeswoman Cathy Scott says the radio service changed partners primarily because of an overall plan to bolster its transcription services. NPR wanted its transcripts available 24 hours a day, seven days a week, and Scott says FDCH provided the network with the best bid for that job.

When asked why NPR didn't give Journal Graphics more than six hours' warning, Scott says that "in business, you always want to negotiate from a position of strength. So in this case, we didn't want to tell Journal Graphics that we were going to go with another company until the deal was done." Scott estimates that NPR began negotiations with FDCH in September--right around the time Journal Graphics was solving its technical difficulties.

But NPR's decision to leave Journal Graphics is confounding to Smith. Up to the point that NPR gave his company notice, he says, the network hadn't expressed any dissatisfaction with its performance. "NPR told us we were doing a great job the whole time they were negotiating with FDCH," says Smith. "We had weekly feedback meetings with them, and in each of the last four meetings, they told us we were doing a superb job. They even canceled a few recent meetings because they said there were no problems to talk about."

But though NPR and CNN weren't complaining to Journal Graphics, Pam Wartner, a product manager at Lexis/ Nexis (which stores almost all of Journal Graphics' network transcripts), was voicing bitter criticisms of the Denver company's service. However, Smith says that the manager directed her complaints to the networks, not to Journal Graphics.

"The only way we heard about the complaints was from the networks," says Smith. "CNN sent us several faxes that Pam Wartner sent them regarding missing transcripts. But not once did she call us to let us know about the problems, and she didn't return any of our phone calls. I find that peculiar."

Smith says that when his employees checked out Wartner's faxes regarding missing transcripts, they found that many of them weren't missing at all. "Eighty-five percent of the things she said were missing were actually there when we logged on," he insists, adding that he believes Wartner was conducting her searches using the wrong data prompts.

A spokesman at Lexis/Nexis's Ohio headquarters said Wartner was out of the office last week and was unavailable for comment.

After FDCH landed Journal Graphics' CNN contract, Smith says he offered to sell the Washington firm his CNN operation, which included banks of television monitors and word-processing equipment. However, after touring the Journal Graphics office, FDCH decided to open up its own CNN transcription headquarters in Maryland--using some of the employees laid off by Journal Graphics. Smith says FDCH is now going after ABC. If the firm succeeds, it would represent a crippling blow for Journal Graphics, whose only remaining network contract would be with the Public Broadcasting System.

An FDCH spokesman says the company does not want to comment officially on the recent deal or the reasons behind it. But an FDCH employee suggests there may be nothing more to NPR and CNN's decision than the fact that his company's new high-tech facility is set up to provide quicker transcription of the networks' programming.

Meanwhile, Journal Graphics faces another dilemma: finding someone to lease the entire second floor of its Grant Street headquarters, which lies empty after last week's layoffs.

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