Taking TV to the Cash Register
To see Michael Stern's mark on the world, walk into your nearest Wal-Mart or Costco or Best Buy or Albertson's. Raise your eyes to the video screens advertising the store's wares, and you'll be viewing the outcome of his entrepreneurial skills, Premier Retail Networks, Inc. (PRN), which Inc. called "the biggest TV network you've never heard of." With 250 million viewers monthly, it ranks behind only ABC, CBS, Fox, and NBC in audience reach.
Not bad for a vagabond who, at 26, had a hard time visualizing a career beyond ski bum. His godfather, a partner at McKinsey & Company, advised him to go to business school and, "with your personality," go into brand management. He did exactly that but only briefly. "I hated it! I was just an awful fit as a little man in a big company," he says. "But at Tuck, almost by osmosis, you learn that you can do big things." The first big thing was a fast-food restaurant concept that opened a few stores and sold 200 franchises by the time he sold the company six years later.
With MTV the phenomenon of the moment, Stern conceived of interactive video advertising kiosks in stores. His invention—capitalized by mortgaging his house—didn't take off, but the concept morphed into in-store televisions advertising products on nearby shelves. Stern says the system "makes three people happy: the consumer, who's getting information to make an informed decision; the retailer, who's moving product; and the vendor, who's delivering a controlled message to shoppers as they're making purchasing decisions." He also established a pricing structure, charging vendors and splitting that take with retailers, giving them another profit center. Realizing that the operation needed more money and experience, he brought in a seasoned CEO and then went to work as executive vice president of business development. "I didn't need to be boss. I just needed to make the business work," he says.
The turning point came in Stern's 1996 pitch to Wal-Mart, when he said, "I was in a Wal-Mart the other day, at the TV wall, and I saw a Sears ad playing on Channel 7. How do you guys feel about advertising Sears in your stores?" Wal-Mart promptly signed on and has become by far PRN's largest and most important retailer. Stern, who commuted twice a month to Wal-Mart's headquarters in Arkansas, says of the company, "They're brutally tough and incredibly honorable."
Today, PRN—with 6,300 retail outlets, more than 200 advertisers, and 270 employees—owns about 80 percent of the in-store network industry. Two years ago, it was purchased by Thomson S.A., a Paris-based media technology giant, for $285 million, "which put me in a good mood for quite a while," says Stern, who owned a "tiny slice" of the company.
Stern's job has gone global, too: he's now in charge of extending the retail reach of PRN and other Thomson electronic video services from Shanghai to Mumbai to Buenos Aires to Moscow. At his request, he's based in Paris. After decades of eating breakfast and lunch at his desk and having work at his elbow all weekend, he's slowing his pace, taking cooking classes, and adjusting to the customary eight weeks of French vacation. "It's good to work really, really hard—and it's also good to work hard at not working," he says with a chuckle.
