The company has signed deals with Prodigy Services Co., Amtrak and credit card issuer MBNA America Bank NA to distribute its card as a value-added premium to customers. A similar deal with The New York Times, struck in January, has netted Transmedia 64,000 new cardholders, about half of whom have already used it for discounts.
Cellular One has so far found 4,500 takers from a mailing to its 250,000 San Francisco customers, and Comcast, a Philadelphia cable system, has netted Transmedia another 3,500 cardholders.
"A long time ago, we made up our minds we could not get a cardholder base with direct advertising," said Melvin Chasen, chairman and founder of the North Miami, Fla.-based company.
Instead, Transmedia has handed out cards, with first year's feewaived, to law and accounting firms, New York public TV donors, the New York police department and other groups. About two-thirds of those have paid $50 to renew their cards in the second year, Mr. Chasen said.
"It's in their best interest to give the card away for free," said Mark Mutkoski, an analyst at Ladenburg, Thalmann & Co., New York. "Once you start using this card, it's habit forming."
Transmedia now has 300,000 cardholders, up 52.3% from Sept. 30, and is accepted at 3,400 restaurants. (The first-year-free offer will be shortened to six months effective July 1.)
"It's a nice way to reward long-term subscribers to the Times and also to demonstrate to restaurants the kind of traffic building we can contribute to," said a spokesman for the newspaper.
Marketers pay Transmedia no fees but pick up promotional costs.
Prodigy in May began offering Transmedia cards to 700,000 subscribers who live within 20 miles of a Transmedia restaurant and can enroll instantly, online. Amtrak Express, the on-board magazine distributed by the railroad, will bind in a free Transmedia card offer in 270,000 copies carried on its East Coast routes beginning in July. MBNA, a Newark, Del.-based bank, recently began testing the Transmedia card as a premium offer to 75,000 of its basic MasterCard holders in markets outside New York.
Transmedia fronts cash to restaurant owners for advertising and operating expenses, and is repaid with food and beverage credits, which it effectively sells to cardholders at a 25% discount. Customers sign Transmedia charge slips, which are billed through a designated MasterCard, Visa or Discover account, and the discount appears as a credit on the monthly card statement.
The service, started in New York in 1984, has expanded briskly in the past two years into a combination of company-owned markets-including New York, New Jersey, Boston, Philadelphia and Miami-and franchises, granted for Los Angeles, San Francisco, Chicago, Washington and others.
Separate licensing agreements in the U.K. and Australia have extended the program overseas.
Transmedia, hatched by Mr. Chasen and Hank Seiden, a longtime agency executive, started as a media barter business, trading restaurants radio airtime for food credits.
It then transformed into a media placement agency, laying out cash for ads in New York Magazine while earning 15% commissions.