Fri, Feb 09, 2001 EST
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Subscription Runs Out
By Keith J. Kelly   N.Y. Post
Dick Clark and Ed McMahon - you may already be losers.

Actually, there is little doubt that the aging icons and pitchmen for American Family Enterprises are toast.

Once one of the nation's biggest sellers of magazine subscriptions, it sold more than 30 million subscriptions annually via the stamp sheet sweepstakes. But embattled American Family has been under legal fire for years and last September said it was getting out of that business altogether.

Now it is laying off 85 percent of its 100-person staff.

"We got out of the sweepstakes business in September and found we did not need a large staff," said AFE spokesman Richard Tauberman. "The company is still test-marketing new techniques for direct marketing subscriptions without sweepstakes," he added. But that will require only a "core crew" at the Newark, N.J., headquarters.

And the company's two most famous pitchmen are also being pitched in the shakeup.

"Dick Clark and Ed McMahon will no longer be associated with the company," confirmed Tauberman.

Clark became an American icon by hosting the popular teen show "American Bandstand" in the 1950s and '60s and now is the TV host for New Year's Eve in Times Square. McMahon was the affable sidekick of former "Tonight Show" host Johnny Carson.

Consumers did not have to subscribe to magazines to be eligible to win the $10 million grand prize or any of the smaller prizes. But many erroneously thought that buying numerous subscriptions to magazines increased their chances of winning. The fine print informed them otherwise, but many overlooked it.

The company once cranked out more than $20 million per year in profits for its joint venture owners, Time Inc. and Chicago's wealthy Pritzker family of Hyatt Hotel fame.

Time Inc.-owned titles, from Time to People to Sports Illustrated, benefited from the subscriptions bonanza as did many other non-Time Inc. titles that the company also hawked.

But sweepstakes responses began to fall off drastically nationwide for some reason in the mid-1990s for both American Family and its principal rival, Publishers Clearinghouse. When the language on the sweepstakes offers was changed to become more enticing to consumers, watchdog groups said the sweepsstakes firms had stepped over the line into deception.

In 1999, American Family was forced to pay $33 million to settle class action suits plus another $6.9 million to settle suits with 40 states' attorneys general.

In October 1999, the company filed for protection from creditors under Chapter 11 of the bankruptcy code. At the time, the company said it was taking the action so that it could "compete successfully over the long term."

But that has proven difficult. Time Inc. was forced to buy out the Pritzker family at the end of last year.

Some industry observers doubt the company will be able to make any kind of comeback.

"They are basically done," said Dan Capell, publisher of Capell Circulation Report. "They were probably one of the most honest and reputable mail-order companies in America, but they were hurt by all the bad publicity."

The company has filed a reorganization plan with the Federal Bankruptcy Court in Newark, N.J., and is awaiting final approval. Bankruptcy attorney Steve DiCarmine did not return a call by presstime.

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