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Tim Dyson, CEO of publicly-held NextFifteen, owner of Text
100 ($45 million in 2004 fees) and Bite Communications, said
on his blog that he does not believe the Sarbanes-Oxley Act
has made it too dangerous for ad conglomerates to reveal revenue
and staff totals.
Tim Dyson |
Holding companies including Omnicom, WPP Group, Interpublic,
Publicis and Havas have withheld such figures for three years
on the ground that if anything is misleading in such figures
their executives could face millions in fines and jail terms.
The conglomerates have said that they operate in many countries
and that differing accounting rules make it virtually impossible
to satisfy the strict rules of SOX.
NextFifteen, which operates in about 25 countries, has not
been deterred by SOX considerations in reporting revenues
and staff totals of Text 100.
CPAs have said that staff and payroll totals could be reported
because they are “compilations” and not subject
to differing interpretations. Such totals are not covered
by GAAP or SOX, they said.
Dyson, writing in his blog, siliconvalleypr.blogspot.com,
criticized the conglomerates for putting their PR revenues
"under one line"in their annual reports.
"We no longer have any meaningful tables,"he said,
adding: "Am I the only one that thinks this is bad for
our industry?"
Twenty-one of the 25 biggest PR operations ranked in 2001
by the O’Dwyer Co. withdrew from the rankings. All are
owned by the conglomerates.
Says the blog: "I believe it would benefit the industry
to make public the performances of all the significant PR
businesses that operate in the industry. Clients and staff
would benefit by seeing which firms really were growing. Agencies
would benefit by being able to see how well they were performing
relative to their competitors."
Dyson
Studied SOX
The NextFifteen CEO says he studied SOX and can't seem to
follow the "logic trail" given by the conglomerates
in withholding their numbers.
"Having trawled through the various key sections of
the Act such as 302, 404 and 409, I can't see any good reason
why an agency’s revenues should not be reported,"
he said.
He noted companies are supposed to have good internal controls
so that each subsidiary accurately reports its numbers. These
results are also used to ensure proper apportioning of bonuses
and as such are "very likely recorded with great accuracy,"
he said.
Concluded Dyson: "I'm willing to have someone tell me
why SOX really does require WPP et all to report agency fees
as one big number instead of breaking them out by agency but
until someone does, I'll continue to hold the view that SOX
has provided a fig leaf for holding companies to hide behind.
Am I the only one who’d like to see that fig leaf removed?"
CPRF Took
Over But Abandoned Rankings
The Council of PR Firms, funded mostly by ad conglomerate
PR firms ($50K yearly dues for those with $85M+ in fees) was
formed in 1999 partly to take over rankings that were being
done by the O’Dwyer Co., PR Week and The Holmes
Report.
The CPRF said the multiple rankings were burdensome to the
PR firms and causing confusion.
CPRF rules allowed CEOs or CFOs at the PR firms to attest
to their own figures. Documents such as top pages of income
tax returns and copies of W-3s (total of
W-2s) were not collected. Account lists were not required.
Many of the big firms that were members of the CPRF only submitted
ranking information to the CPRF, which then distributed it
to the press.
CPRF rules allowed PR firms to count paid advertising as
PR fees.
The Council, which had about 130 members at its peak, mailed
ranking forms to 5,000 PR firms throughout the U.S.
Revenue totals of the big ad agency-owned PR firms ballooned
in 1999-2000 with the dot-com boom and good business conditions.
When conditions changed after 9/11, many large and small PR
firms had significant revenue declines. A number of firms
besides the conglomerate firms declined to report any figures
for 2002.
When the conglomerates announced they would no longer provide
any figures of their PR or ad agencies, the CPRF announced
it would no longer collect any revenue or staff statements.
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