|November 2, 2009|
|Readers Want I-Teams; PRSA Revenues Decline|
|By Jack O'Dwyer|
|The hard-hit newspaper industry is probing readers for what they want. The answer: “Watchdog reporting.” Papers that can no longer afford it are funding “team” investigators like ProPublica, Center for Investigating Reporting, and Center for Public Integrity.|
A five-page article in the October Editor & Publisher details the scramble that newspapers are in to provide what many of them see as their main service—investigative reporting.
“The No. 1 thing readers tell us they want is watchdog reporting,” said Arizona Republic editor Randy Lovely.
But such reporting can be so expensive and time-consuming, involving lawsuits for information and chasing reluctant sources, that papers including the New York Times, Washington Post, Chicago Tribune and Los Angeles Times are buying in-depth pieces from the non-profit ProPublica, New York.
The NYT magazine’s cover story Aug. 30 on Hurricane Katrina’s impact on a New Orleans hospital was written by ProPublica, which has grown to 19 reporters since its founding in January 2008.
It took two years to assemble and cost $400,000, said E&P.
The Newark Star-Ledger, which has lost a third of its news staff, has used six ProPublica stories or packages.
E&P details the carnage at big dailies (Boston Globe editorial staff down 35% to 352 reporters; Cleveland Plain Dealer down 70 reporters; Atlanta Journal-Constitution down 55 to 180; Sacramento Bee down 85 to 175, and Charlotte Observer down 80 to 170.
Besides the national investigative services, there are local operations where top-flight reporters are finding jobs including The Rocky Mountain Investigative News Network; New England Center for Investigative Reporting, and Investigative Reporting Workshop.
Readers will follow media that dig out the facts even though story subjects put up resistance.
We’re hoping the new board of the PR Society, to be headed by Gary McCormick of the Scripps organization, one of the great names in journalism, will look deeply into the Society's and clear up the record on several counts.
PRS should have an investigative task force, a “truth squad” that would probe any charges of wrongful behavior and assure members and others that the Society has a squeaky clean record.
A prime candidate for investigation is the $197,247 cost of re-writing the Code of Ethics in 1999-2000.
This is an astounding figure for what was basically a re-write that removed the Code’s enforcement mechanism (judicial panels that heard charges and made recommendations to the board).
Staff costs were $62,958. This is the equivalent of one staffer working full time on the re-write for a year. No way!
Then we have $67,477 for “overhead” allocation for the two years. That seems excessive. Whose costs were these really?
Another big item is “travel,” meaning some actual airline and other travel costs but also meals and hotels. This totaled $29,313 for the two years. How much was meals for the staff and volunteers who were on the Ethics Board then headed by Bob Frause (pictured)?
Frause again became head of the EB again in 2008 when Gail Baker suddenly quite as chair in March after two months. That ought to be investigated also.
Frause is to be elected Nov. 7 as North Pacific director on the PRS board.
Another ethics re-write expense that needs looking into is $32,984 in 1999 for “professional fees.” PRS apparently paid this amount to some outside consulting firm that gave the latest skinny on ethics. We’d like to know the name of that firm and just what it did.
Why Philadelphia Yet Again?!
A new topic needing investigation is why is Philadelphia again scheduled for the national conference (2013) when it was just there in 2007?!
Skipped over is New York which drew a record 4,000 attendees in 2004 and which loses the least amount of money (because there’s no need to provide travel, room and board expenses for the 35 and more staffers who go to the conference).
There are some standbys that need probing by the PRS “Truth Squad Task Force” and that includes the copying and sale of authors’ works without their permission that went on for more than 15 years till we outed it in 1993. We have a box full of evidence for the task force.
The Society is now promising a “multi-year, multi-level” advocacy effort called “The Business Case for PR.”
But it should get its own house in order and clean its own flag before it starts waving it around.
Poor Financial Reporting at PRSA
The PR Society, supposedly the world leader in PR ethics, shows its true colors when it comes to reporting its finances.
Only last week did it finally report the first three quarters. The first half should have been reported no later than August.
Instead of separately reporting Q3, which showed a 45.1% decline in revenues to $1,639,309, PRS and treasurer Tom Eppes (pictured) lumped it in with the non-reported first half and said revenues were down only 26.3% to $6,604,585. Forcing reporters and others to subtract six-month figures from nine-months to get the quarter is bush league financial reporting.
A couple of days after the income statement and balance sheets were posted in the members’ area of the PRS website, Eppes posts on the PRSAY section of the PRS site (instead of page one of the PRS site) that Q3 was really not down $1.3M because of a “significant timing difference.”
In 2008, explained Eppes, PRS had recognized nearly $1.1M in revenue from the conference that took place Oct. 25-28 that year.
However, since the 2009 conference is in November, the revenue is “deferred until that time,” Eppes further explained.
We loved seeing that word “deferred.” Since both October and November are in the fourth quarter, why was the conference revenue booked as cash last year and as deferred revenue this year? The 2009 conference is only about two weeks later.
We think that outside CPA firm PKF put its foot down and said stop booking revenues for future services as cash.
If PKF told PRS to defer half of the $3.8M in nine months dues or $1.9M since they are also unearned, that would drop the Society’s claimed “unrestricted net assets” from $2.4M to about $500,000.
The Financial Accounting Standards Board urges direct cash flow statement instead of indirect, which PRS uses.
Delegates Don’t Get Financials
Eppes, in a three-page report to Assembly delegates (oddly without the balance sheet or income statement), talks repeatedly about the “reserves” of PRS when only banks can have “reserves.” Unrestricted net assets are not reserves.
What shows the financial condition of organizations like PRS is total cash/investments and receivables vs. annual expenses. Organizations try to have cash/receivables equal to six months of expenses, a goal that PRS has also set for itself.
It is claiming unrestricted net assets equal to 19% of costs but that’s only because it disregards the accounting practices of the AMA, ABA, AICPA, ASAE, IABC and numerous other organizations.
In PRS’s case, payables of $462,409 as of Sept. 30 about cancel out receivables of $459,361. Cash of $1.4M and investments of $2.86M (including 52% in equities which is far too much and 13% below the original value of $2M), total $4.2M.
With dues income down 9.4% and PRS having to resort to a hefty price cut (letting “hardship” cases pay $110 less), the Society must do more to trim costs.
Three staffers have been dismissed, says the Eppes report, but payroll costs actually grew to $4,037,229 for the nine months, the only one of 12 categories of expenses with a rise.
Eppes says expenses were cut $1,159,000 but when we deduct 2009 expenses of $7,477,485 from the 2008 expenses of $8,284,876, we get only $807,391.
The reworked website of PRS now leaves out the names of all staffers except seven of the top ones so we can’t check to see who left.
Registration income is down mostly for the tutorial programs of PRS and its interest sections, reported Eppes. The former is “tracking behind budget $144,000 (165.9%)” while the later is down “$40,000 (56.6%),” says his statement to delegates.
And one more thing. The Eppes report on PRSAY is headlined “Surplus for ’09.”
He predicts that PRS will “slightly grow its reserve” for all of 2009 via cost-cutting and marketing its programs.
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