California DMV television ads make millions for Connecticut company that dominates US market

Hundreds of flat-screen televisions in California DMV offices - the type that show customer appointment numbers - have helped one company pocket millions of dollars in recent years while facing no competition.

The extent of the company's revenue and reach was revealed through a series of recently released public records, and separate lobbying documents that show how the company helped craft the law that allowed it to corner the market.

The Motor Vehicle Network, a Connecticut-based private company founded about 25 years ago, provides flat-screen television screens at DMV offices across California. Those screens display customer queue numbers, as well as public service announcements. But they also display commercial advertising, and the Motor Vehicle Network keeps every penny of that advertising revenue.

At the Santa Rosa DMV office, the company's televisions show advertisements for Cream's Salvage, Postmates and Santa Rosa Junior College, among others.

DMV spokesman Jaime Garza said the setup, which has generated millions in revenue for the company, according to the records, is a win-win. The DMV gets free TVs without spending taxpayer money. The Motor Vehicle Network gets access to some of the California DMV's 30 million annual customers, half of whom spend at least 30 minutes in the office, according to state documents advertising the contract for services.

“It doesn't cost us a dime,” Garza said. “They cover the cost and pay us rent. If we had to put all of that in there, it would have cost us millions and millions of dollars. We're saving a lot of money.”

The Motor Vehicle Network pays $100 per month for the right to advertise in any given California DMV office. It has televisions in 83 offices across the state, according to DMV documents.

Founded by a former ABC executive, the Motor Vehicle Network offers the same service in 24 states and more than 1,000 DMV offices nationwide. At least in California, it has been unopposed in three separate bids to provide services. Since mid-2015, when the company was first required by contract to report its monthly advertising revenue to the state, it has earned at least $150,000 per month during most months, meaning the company's California operation has earned at least $7.5 million in the past four years, based on a chart provided in response to a records request.

Compliant legislature

Before October 2007, such a setup - a public-private partnership involving vendor-provided TVs at DMV locations - wasn't legally possible in California. But the Motor Vehicle Network began laying the groundwork for that to change in January that same year when it contracted with a California lobbyist to lean on lawmakers.

The company paid its lobbyist $21,500 and ushered a bill it sponsored, Assembly Bill 07-1139, authored by then-Assemblyman Bill Emmerson, R-Riverside, through the Legislature to the desk of then-Gov. Arnold Schwarzenegger. The law he signed law allowed the DMV to enter into a contract with a private vendor to set up message display systems. Emmerson, who later served in the state Senate, doesn't appear to have received campaign donations from anyone connected to the Motor Vehicle Network.

The bill sailed through the Legislature despite concerns detailed in an Assembly Committee analysis.

“This bill continues a trend of commercialization of governmental services which, while troubling or at least annoying to some as become widespread and largely accepted by the public,” according to the committee's analysis. “In addition, it provides a modest revenue source to enhance public services that may otherwise be significantly underfunded.”

Scott Savage, president of Motor Vehicle Network, said in a Oct. 14 phone interview that lobbying was the cost of doing business, and he estimated that about half of the 24 states in which his company does business required a change to existing laws to pave the way for his company's business. Savage wasn't aware of any other company doing this kind of work - particularly at the scale of his firm.

In 2011, four years after the authorizing legislation became law, the DMV went looking for a message display system for DMV field offices, soliciting proposals from companies that could do the work.

“The DMV envisions a dynamic and scalable solution that allows for multiple uses,” according to the request for proposals seeking a private partner for the 2011 pilot.

The DMV sought a solution that would provide DMV-related news and information, provide public safety messages, post live AMBER alerts and show advertisements “in the best interests of the motoring public,” so long as those advertisements didn't include alcohol, tobacco, firearms, politics, religion or DMV-regulated services.

The only company to respond was the Motor Vehicle Network.

It brought to that response more than 20 years of experience performing exactly the type of service the DMV was looking for.

It could create a closed-circuit system capable of playing commercials and DMV-related content. It would allow DMV officials to review commercials and it agreed to the starting rental rate of $50 per month for each of 25 DMV offices around the state.

The company offered letters of reference from top transportation officials in Connecticut, Florida, Massachusetts, Mississippi, North Carolina and Wisconsin.

“Our department has found MVN to not only provide us with the product/service we requested, but they have gone beyond our expectations in regards to forming a relationship with us and sharing an expertise that no doubt comes through their experience in the field,” said Larry Daniel, facility manager for the North Carolina DMV.

The Motor Vehicle Network's reach grew from 25 California offices to 31 to, eventually, 83 during the course of a relationship now spanning nearly a decade.

No state rent hike in 5 years

The growth in California has matched the company's expansion nationwide since its inception in 1988. To extend its reach, it has had to change laws in about half of the states in which it now operates. The contract language is similar each time.

“It's the same in every state we work in,” Savage said. “It's a great public-private partnership that we have in states. It's a win-win all the way around.”

The Motor Vehicle Network is the brainchild of former President Richard Savage, who spent 22 years with the American Broadcasting Company, serving as president of ABC-TV spot sales and as vice president of the ABC Television Network. Richard Savage's relationship to Scott Savage is unknown.

Other executives listed in company documents are President Scott Savage, a former account executive for a group of New York-area radio stations; Brad Savage, relationship unknown, former program director for a North Carolina radio station; Murray Michaels, another former ABC employee; and Ben Erling, former outdoor advertising company owner.

The company shows a workforce of 11 to 50 employees on its LinkedIn page. It typically hires an employee or two to sell advertising in each state where it operates.

Among the firm's local clients, SRJC is one of the few public entities running advertisements in DMV offices. Its ads show up on televisions inside the Santa Rosa and Petaluma DMV. The college pays $8,550 per year for ads at each location, SRJC records show. In Santa Rosa, that gets the college four, 30-second ads each hour. In Petaluma, the college also gets a billboard-style display twice per hour and a logo displayed twice per hour.

Although the Motor Vehicle Network promised in its bid that it creates all sponsored messages with its “in house production department,” Santa Rosa Junior College produces its own commercials, spokeswoman Erin Bricker said via email.

The Motor Vehicle Network owns and maintains the TV screens, and the company has to run all advertising spots by DMV officials.

“The vendor ensures that proposed advertising content is consistent with the professionalism, integrity, public safety mission and law enforcement responsibility of the DMV,” Garza said. “Advertising content includes a disclaimer statement that the ads do not constitute an endorsement by the DMV or State of California.”

By 2014, the California DMV began asking for more. It doubled the rent from $50 to $100 per office, and asked for weekly, monthly and annual reports on advertising revenue, percentage of advertising and total downtime for the system. The rent hasn't changed since then, records show.

The Press Democrat requested all monthly reports for revenue and was given one sheet of paper with a line graph showing revenue and operating costs from January 2012 through July 2019.

A request for clarification as to whether the California DMV ever received the required monthly reports was not answered.

The DMV took more than a month delivering the two records requests, and charged The Press Democrat nearly $200 for documents related to the department's relationship with the company.

The line graph shows sharp revenue growth in mid-2015, after which it rarely dipped below $150,000. Expenses only surpassed revenue in handful of months since January 2012.

During the life of the three contracts, the Motor Vehicle Network's system has worked as expected 99.9% of the time, according to the DMV records.

You can reach Staff Writer Tyler Silvy at 707-526-8667 or at tyler.silvy@pressdemocrat.com. On Twitter @tylersilvy.