Dial M for Money

IRS okays nonprofit profits

When the Public Broadcasting stations in New York (WNET), Washington (WETA), Chicago (WTTW) and Los Angeles (KCET) launched the monthly television guide Dial (circ. 690,000) last September, praise from charter subscribers was all but overwhelmed by protests from other publishers. Reason: Dial, which is sent to supporters of sponsoring stations (now including WTVS Detroit) who contribute at least $25 a year, would compete for advertising with commercial magazines while enjoying Public Broadcasting's nonprofit advantages. Among those breaks: generous tax exemptions, lower postal rates, tax-deductible subscription fees and free promotion on PBS stations.* Publisher Philip Merrill, whose Washingtonian (circ. 103,300) was directly threatened by Dial, spearheaded a campaign to end this federal largesse.

Now Dial has won a decisive round in the battle: the Internal Revenue Service rejected a challenge from Merrill two weeks ago, ruling that Public Broadcasting Communications, Inc., which publishes Dial for the sponsoring stations, is a nonprofit, tax-exempt organization. Merrill had already lost a round with the Federal Communications Commission, which last month refused to prohibit PBS stations from promoting Dial on the air.

Still pending is Dial's appeal for second-class, not-for-profit mailing rates, which could save it $380,000 annually.

That would help considerably, since the magazine has to repay $1.75 million in start-up costs. Says unbowed Competitor Merrill: "They've got problems."

*Other nonprofit magazines include National Geographic, Ms., Mother Jones and Smithsonian.

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