B-M REPORTS 1999 REVENUE OF $275M

Burson-Marsteller, New York, reported its worldwide revenue reached $275 million in 1999, up six percent from 1998.

The B-M global key client relationship strategy--coupled with dramatic gains in new business from technology and Internet-related companies--added to revenue growth, it said.

The firm currently handles more than 85 Internet companies.

"Our U.S. operations--with strong revenue growth in 1999--continue to be the engine driving our worldwide company," said Christopher Komisarjevsky, president/CEO, B-M Worldwide. "Looking ahead, I am very positive about each of our regions: Europe is getting stronger and stronger, Asia Pacific is recovering well from the economic pressures of the past few years, and our single-brand network in Latin and South America is unmatched."

CHASE MANHATTAN TAPS KETCHUM

The Chase Manhattan Corp., New York, has selected Ketchum to serve as its corporate PR agency of record after receiving pitches from eight agencies.

Ketchum, a unit of Omnicom Group, will work on a range of assignments, including a major initiative to increase public understanding of Chase’s capabilities for companies creating value in the new economy, according to Frederick Hill, EVP, Chase corporate marketing and communications. He said Ketchum’s capabilities in New York, San Francisco and Silicon Valley set it apart from the rest of the firms pitching Chase’s business.

"This opportunity to serve Chase is one of the most exciting assignments related to this new economy," said David Drobis, CEO of Ketchum. "It will leverage the investments in our global corporate and technology practices and in training programs that foster collaboration."

Y&R ACQUIRES RL&M

Young & Rubicam acquired Robinson Lerer & Montgomery, New York, 130-person firm handling corporate and financial PR including mergers and acquisitions.

Chairman/CEO Linda Robinson and vice chairman Walter Montgomery are remaining with the firm with Robinson also becoming a Y&R vice chairman.

Kenneth Lerer, the third owner, has joined client America Online as SVP of PR/IR. He gave up his title as president/COO of RL&M but continues to be an owner.

RL&M ranked fifth among IR firms handling M&As in 1999, according to The Daily Deal. It worked on two deals worth $88 billion. Clients include Oxygen Media, Revlon and Texaco.

APR PASS RATE HITS 35-YEAR LOW

The pass rate of those taking the "Universal Accreditation" exam of PRSA and eight other PR groups in the fall of 1999 hit an all-time low--46%.

Only 89 of the 193 PR people taking the test passed it. The previous low pass rate for the test, created by PRSA in 1965, was 52% in the fall of 1998.

The 406 people taking the test in all of 1999 (57.3% passing it), was fewer than the 457 who took it in 1989, when PRSA had about 5,000 fewer members. PRSA members pay $275 and members of other groups, $385. Almost all of those taking the test are PRSA members. PRSA is spending $635,875 on APR this year (net cost of $475,075).

The test has not materially changed for 15 years and a new version suitable for PRSA members and members of the other groups is being prepared. The highest pass rate in recent years was in 1992 when 346 of 422 passed it (81.9%).

Gary Gerard left Deloitte & Touche after five years. He was national director of marketing and communications, a title taken by David Crutcher, who was in charge of Tri-State marketing...Black & Decker and PR counselor David Olsen and his firm, Market Builders, filed notice they will appeal the Baltimore court decision awarding $3 million to Phyllis Brotman and her firm, Image Dynamics (Jan. 19 NL)...

STUDY: WEBSITES LACK CREDIBILITY

The 6th annual Middleberg/Ross Cyberspace Study found journalists distrust the information on websites.

"With so much information posted on the Internet--often without editing or fact checking, credibility of information has emerged as a significant issue," according to New York PR counselor Don Middleberg

He and Steven Ross, a Columbia University journalism professor, have co-authored the study for the past six years.

This year, they solicited the opinions of managing and business editors at 1,509 daily newspapers and managing editors at 2,500 out of 15,000 magazines.  The response rate was approximately 10%.  For the first time, representatives from computer-focused publications were included.

When asked to rank the various types of online sources on a five-point scale from "not credible" to "highly credible," only trade associations were seen as more credible than not credible, including those sites supported by nonprofit/public interest groups and activists.

Sites seen as least credible were message boards and chat groups.

Despite the lack of credibility, most journalists continue to use Web or Usenet forum postings as sources for an article, especially if the information is confirmed elsewhere.

Seventeen percent say they would consider doing so in the future, even if not confirmed by a source.

Magazine reporters are much more likely to use forum postings as sources than reporters from newspapers.

MOST COS. OPEN CALLS TO INVESTORS

A survey for the National Investor Relations Institute, Vienna, Va., shows a major increase in corporations opening their analyst conference calls to individual investors and the media.

NIRI president/CEO Louis M. Thompson Jr. said "The most astounding finding is that 48% of the companies that conduct conference calls are now Webcasting them over the Internet, real time.  This wasn’t the case just a year ago."

The survey shows of the 83% of companies that currently conduct conference calls, 82% allow individual investors real-time access as compared to 29% in a survey conducted nearly two years ago.

Seventy-four percent of the media have access to their calls, compared to 14% as reported in the prior survey.

The number of companies providing open access is expected to increase this year to 90% for individuals and 86% for the media.

The study, which was conducted by the Rivell Research Group, Westport, Conn., between Feb. 3 and 16, surveyed 225 senior IR officers by phone, representing about 10% of the companies in NIRI’s membership.

LIQUIDATION PLAN FOR PAC/WEST FILED

Stephen F. Tobia Jr., and his wife Maureen who are president and VP, respectively, of the former Los Angeles-based Pacific/West Communications, will use the $2.3 million of their arbitration award to pay off creditors of the bankrupt PR firm.

Their plan will be considered at a confirmation hearing, which is scheduled for April 10 at 2 p.m. in the U.S. Bankruptcy Court, Los Angeles.

The Tobias, who opened Pac/West in 1982, filed a voluntary Chapter 11 bankruptcy petition in 1998, claiming it was precipitated by a downward turn in its client base following a dispute with the California Dept. of Transporation, a major client.

The Tobias had filed a lawsuit in Feb. 1997 against Caltrans, seeking $10 million in damages for breach of contract and defamation.

Last November an arbitrator ordered Caltrans to pay Pac/West approximately $2.1 million, and on Feb. 14, 2000, Caltrans issued a warrant to Pac/West for $2,301,521.43 in total satisfaction of the judgment.

Under the liquidation plan, the Tobias will make lump sum payments, totaling about $2 million, to its secured creditors, including a payment of $1.8 million to the firm’s attorneys, and to pay off a loan of $180,000 made by Stephen's brother.

Stephen is seeking $50,000 as compensation for assisting counsel both prior to and during the course of the Caltrans action.

The plan will provide the Tobias with more than they would otherwise get should Pac/West be liquidated in Chapter 7, the attorneys said.

Tobia said the reopening of Pac/West is on hold.

Both he and his wife are undergoing treatment for post-traumatic stress resulting from the ordeal.

DEATHS __________________________

Joseph J. Lipper, who was VP/PR of Aerojet-General Corp. during the days of the Apollo moon landings, died Feb. 13, a day after his 80th birthday. Lipper is survived by his wife of 48 years, Donna, and four children.  His daughter Donna Lucas is president/CEO of the Nelson Communications Group, Sacramento... James Adshead Jr., 76, a retired PR executive of the DuPont Co., died Jan. 12.  

NEWS BRIEFS _______________________

Bozell New York’s PR director Kathleen Ruane is helping her husband Peter Ruane, a former NYPD lieutenant, in his bid to win the Democratic nomination for a New York Senate seat. Ruane is running against Hillary Clinton.

Sallie Gaines, a reporter and editor for The Chicago Tribune since 1977, has joined Hill and Knowlton’s media relations practice in Chicago as a senior managing director.

Jack Bergen, who heads the Council of PR Firms, said six firms have joined in the last month, and not in the last year as reported in the March 1 NL.  Bergen said 80 firms had joined the CPRF in 1999.

NYFWA HAS $372,000 STASHED AWAY

The 350-member New York Financial Writers’ Assn. started 2000 with a total cash balance of $372,800, according to the just-released treasurer’s report.

Most of the money in the treasury is raised through the sale of tickets and ads for the annual Follies Show and Spring dinner.  The bulk of the tickets and ads are bought by PR firms and corporate PR departments.

At the annual meeting, which was held Jan. 26, a new slate of active and associate member officers were elected, with Dan Bases of Reuters moving up to president.

George Auerbach, a retired PR consultant, Alan Goldsand, a publicist, and Thomas Mariam, an IR pro, were reelected associate representatives.

The minutes of the meeting show Sally Heinemann, who is chair of the active nominating committee, suggested a "fusion" slate in light of the two competing slates that were offered.

Her committee’s slate had removed Susan Rodetis as a VP candidate because she works parttime for Paine Webber.

Heinemann said the bylaws disallow anyone to participate as an active member if they work for a non-media company.

Her fusion slate, which was rejected, nominated Rodetis as treasurer, her current position, instead of VP, which puts her in line to move up as president.

Myron Kandel objected, saying Rodetis’ work in no way fell under the category of PR or investment counsel.

Rodetis, who was at the meeting, had no comment when given an opportunity to speak.

Kandel’s alternative slate, with Rodetis as VP, got 69 votes to top the active slate, which got 20 votes.

Executive Secretary Challenged

Another dispute erupted when Irene Weissman raised objections to having an executive secretary who lives outside of the New York area.

Weissman said the current secretary, Joyce Spartonos, who lives in Arizona, had missed several Follies rehearsals, was late for the Follies show and could not get in for the annual meeting because of severe weather conditions.

Weissman also questioned the cost of the 800 phone number. Robert Yafie said the Association had handled the phone bill when Spartonos was living on Long Island.

Claudia Deutsch wanted to know what, if anything, was not getting done because Spartonos is in Arizona.  There was no response to her question.

STUDY SHOWS RISE IN NON-PROGRAM TIME

Clutter in network programming rose to record-high levels in 1999, according to a report put out by the American Assn. of Advertising Agencies and the Assn. of National Advertisers.

The study, which defines clutter as "all non-programming content," reveals non-programming time on network TV during the primetime period increased 59 seconds to hit an all-time high of 16.43 minutes per hour over the previous year.

The increase is a major source of concern for ad people, who believe there is a direct correlation between the increase in clutter and a diminishment in the effectiveness of ads.

Daytime continues to reign as the most cluttered and most commercial-laden network daypart, with 16.52 commercial minutes per hour, an increase of 54 seconds per hour from the same period a year ago.

The report said certain broadcast and cable networks are allocating more time to public service announcements (PSAs), a trend that started in 1998.

The report said ABC aired the most PSAs among the networks during primetime, daytime and early morning hours, followed by CBS and NBC.

TBS, TNN, TNT, and CNBC gave the most time to PSAs among the cable networks.

The report places no negative stigma on time donated or allocated to the delivery of PSAs.

MUTUAL FUNDS TO MOVE H.Q.s TO N.Y.

Mutual Funds magazine is relocating to Time Inc.’s worldwide headquarters in New York.

The magazine’s move from Deerfield Beach, Fla., is expected to be complete by June.

Time acquired MF and a stable of seven investment newsletters in late 1998 from the Institute of Econometric Research.

John Curran is managing editor.

IER’s first bureau will remain in Deerfield Beach, and the bureau will continue to produce IER’s newsletters.

The first issue of Sports Illustrated for Women, which will be published every other month, went on newsstands this week.

Sandra Bailey, editor, claims the magazine, which is targeted to women ages 18-34, is the only magazine that covers the full spectrum of women's sports through the eyes and spirit of real athletes.

Articles will focus on training routines, nutrition and health, fashion and beauty.

The cover of the premier March/April issue features tennis superstar Anna Kournikova.

EDITOR OF READER’S DIGEST RESIGNS

Christopher P. Willcox, 53, has resigned as editor-in-chief of Reader’s Digest.

His resignation follows the recent appointment of Eric Schrier as editor-in-chief of all Reader’s Digest products.

Schrier and the magazine’s senior staff will direct operations until a replacement is named.

MEDIA BRIEFS _________________________

The New York Times Co. has put seven daily and non-daily newspapers, and nine telephone directories, up for sale.

The dailies being sold are Santa Barbara (Calif.) News-Press, Opelousas (La.) Daily World; Palatka (Fla.) Daily News, and Lake City (Fla.) Reporter.

The non-daily papers, all in Florida, being sold are: Sebring/Avon Park News-Sun; Fernandina Beach News-Leader, and Marco Island Eagle.

In total, the papers and directories being sold account for approximately $52.7 million, or 2% of the company’s 1999 revenues.

Thomson Corp., which owns 55 daily newspapers in Canada and the U.S., is selling all but one of its more than 130 daily and weekly papers.

The combined circulation of Thomson’s daily papers exceeds 1 million, including The Globe and Mail, the company’s Toronto flagship and the only paper Thomson will keep.

Thomson chairman/CEO, Richard Harrington, said newspapers no longer fit in the company’s longterm strategy of electronic delivery of information, which comprises the bulk of Thomson’s $6.3 billion in 1999 revenue.

The Journal Register Co., Trenton, N.J., has put five daily newspapers in Ohio and Illinois and a chain of weeklies in Missouri up for sale.

The Ohio papers are: The News-Herald in Lake County, The Lorain Morning Journal, The Dover-New Philadelphia Times Reporter, and The Massillon Independent.

The Missouri and Illinois papers include the Suburban Newspapers of Greater St. Louis and The Alton (Ill.) Telegraph.

GLOBAL WEB NEWSPAPER TO BE LAUNCHED

Canadian Mick McFadden, a former automotive engineer who is based in London, Ontario, is starting a worldwide daily newspaper on the Internet.

Called CityByCity.com, McFadden said the site will offer local news, weather, sports, classified ads and a chat room for "every city in the world."

He has already created a separate website for every city in North America for classified ads.

McFadden plans to hire more than 15,000 reporters, editors and photographers across North America and 44,000 worldwide.

He said he has hired about 2,200 editorial staffers, covering news in about 674 different cities, including New York, and about 25 other cities in the state.

McFadden, who founded Request International Corp., six months ago, is also exploring the possibility of entering into partnerships with local newspapers to supply news and classified ads.

He believes his Web paper will eventually replace local newspapers.

"This is the future of local news, and it’s here now.  If someone is too busy to browse through the paper, then they can have specific sections, or even specific articles E-mailed to them or buy products by entering a list of keywords specific to their interests," said McFadden, who sees a large market for local classified ads.

Subscribers will be charged an annual flat fee of $40 to get E-mail delivery of news off the website.

Prospective journalists can apply for jobs at CityByCity.com.  McFadden’s phone number is 519/686-2777; E-mail: [email protected].

INTERNET TRAFFIC INCREASES REPORTED

Times Company Digital, the Internet division of The New York Times Co., reported an increase in traffic on all three of its largest websites.

The results for January 2000 vs. January 1999 were as follows:

• Page views (number of individual Web pages viewed during a particular period of time) rose 47% at NYTimes.com; 118.7% at Boston.com, and 57.6% at NYToday.com.

• Sessions (total number of visits to a site) grew 39.1% at NYTimes.com; 51% at Boston.com, and 167.3% at NYToday.com.

• NYTimes.com achieved a home/work reach of 3.4% (Source: Media Metrix).

Michael Short, previously Boston bureau chief, AP, has been named executive editor, TelekomNet’s publishing division, Boston.

Jim Windolf, who is executive editor of The New York Observer, a weekly paper, is joining Vanity Fair as senior articles editor.

He replaces Ned Zeman, who was named contributing editor.

INVESTORS LIKE WSJ, BIZ BOOKS, ARs

The Wall Street Journal, Forbes, Fortune, Business Week and annual reports rank high among investors in terms of credibility, according to a survey by Columbia University for the PRSA Foundation.

The "National Credibility Index" shows that corporate information is highly believable when it takes the form of a story in a financial or business newspaper or is provided by an industry expert, professional financial planner or "a stockbroker you know."

Annual reports got the highest score for overall credibility--82 out of 100. However, only 8% of those in the survey said they read the reports.

Low ratings were given to different forms of company advertising and solicitations.

National business papers such as the Wall Street Journal topped all media at 81, ahead of Forbes or Fortune (77), and also specialized investing magazines (73).

TV business news got a mean rating of 56 and local daily papers, 61, the same as investment advisory newsletters.

The research found that giving easy access to investment information does not assure credibility.

When asked to name sources for advice on investment decisions, respondents identified websites more than other outlets, even though they also felt online sources to be among the least believable.

Twenty-six percent said the Internet was their most frequent stop, compared with 24% citing professional advisors and 15% naming personal sources as well as personal research.

Jean Farinelli, president of the Foundation, said, "Clearly, the web had become the medium of choice for seeking out investment information today, though it has yet to become the medium of credibility."

Chief financial officers were rated highest in credibility at 70, below consumer advocates and university professors, but above CEOs and company presidents, both of whom received ratings of 65. CEOs ranked below more personalized sources such as a friend in the business (68).

IABC SHRINKS FINANCIAL REPORT

The International Assn. of Business Communicators, acting on the advice of its new outside CPA firm, Deloitte & Touche, sharply reduced the amount of information in its financial report to members.

Expense line items were cut from 22 to eight and revenue items from 12 to seven.

The IABC said it is reporting "broad categories" rather than "detailed activity lists" in order to "better display performance in IABC’s major business components."

Gone are separate expense totals for the executive board ($210,806 in 1998); leader services ($150,464 in 1998); contribution to IABC Foundation ($202,670); information technology ($287,580); annual conference ($635,225) and Communication World/Worldbook ($488,765).

The new expense categories include membership, $1.1 million; conferences, seminars and awards, $1.3M; general/administrative, $856,006; "other," $548,955; information/publications, $498,479, and Communication World/Worldbook, $623,440.

Revenue categories include conferences, seminars & awards ($1.7M); dues/fees, $2.1M, and information/publications ($582,455).

Also not broken out are accreditation costs ($38,681 in 1998) and revenues ($10,245).

The group had a deficit of $339,987 in 1999 on income of $4,845,061 after a loss of $107,116 in 1998 on income of $4,574,778.

Cash at year end (Sept. 30) was $1,879,195 vs. $1,882,864 and net assets were $519,150 vs. $860,755. Included in 1999 are the Foundation’s cash of $91,938 and net assets of $101,405.

David Seifert, manager of strategic communications development at Hallmark Cards in Kansas City, Mo., and chair of the IABC, said the group is investing in web  services, international, and "life-long learning" and planned to have a deficit. He said the intention was not to withhold financial data from members and that it would be given to anyone who asked for it.

Seifert said Foundation financials have been combined with IABC’s as advised by D&T and that this is allowable under criteria of the Financial Accounting Standards Board. Because of the combination, only 1999 was reported. Two-years of results will be reported next year.

Sherm Smith, IABC CFO, said a partner at Grant Thornton left the firm, and IABC, which had used GT five years, decided to pick a new firm. D&T, which has a large non-profit practice, won in a competitive race that included other majors, he said.

Deferred Dues at $1.3M

The IABC has a deferred dues account of $1,370,799 to acknowledge that it has not yet delivered services to members who have paid dues a year in advance. IABC has had "anniversary" billing since 1987 (members pay dues each year on the month they joined) in order to spread income more evenly over a year’s time.

Accounts payable were $348,727 at Sept. 30, 1999 and were partially offset by $124,991 in accounts receivable ($38,600 allowed for doubtful accounts).

IABC also had accrued expenses of $237,846.

MPA COMMITS $10M TO POSTAL REFORM

Magazine Publishers of America has committed to a $10 million campaign to fight the Postal Service’s proposed 15% postal increase.

The association is currently shopping for a Washington, D.C.-based PR and PA firm to help with the initiative.

A decision should be made within the next month, said Mary McGeachy, VP of corporate communications at MPA.

The ax taken to the IABC financial report (page 7) is a major disappointment.

IABC leaders, mindful of the $800K debt that was piled up in the mid-1980s, have been open about the group’s finances. But, acting on the advice of its new "Big Five" CPA firm, Deloitte & Touche, it has chopped income/expense line items from 34 to 15.

Members no longer get to know what is being spent on the board and other leadership activities; what the annual conference and seminars make or don’t make, and ditto for awards, publications, accreditation, information resources, etc.

There is a new expense category called "other" that totaled $548K in 1999. Who knows what’s in that?

Criteria of the Financial Accounting Standards Board are cited, as though FASB recommended this. FASB allows things. We can’t imagine it advising non-profits to reduce information to members.

But the IABC atrocity provides a chance to look at financial reporting of non-profits in general.
Imagine not being able to learn the final score of a football game for five months because the refs had to look at all the plays in videotape, analyze players’ blood, etc. Who would be interested by then?

The IABC report is arriving five months after the close of the year. If it was in trouble and unable to deliver paid-for services, members wouldn't be finding out until now. There is an instant score available--net assets. IABC’s net assets tumbled from $860K to $519K. Major companies often report results two weeks after the close of the year on an unaudited basis so there’s no need for this delay.

IABC should be setting new standards of disclosure and not taking its cue from CPAs, who have been under heavy criticism for years. Business Week Oct. 5, 1998 had 17 pages on companies "fudging numbers" and CPAs "turning a blind eye." Forbes on Dec. 14, 1998 had a seven-page cover story on The Hustling of X-Rated (tax) Shelters. A Deloitte & Touche letter pitching tax shelters and asking part of the savings was featured. Criticism by the SEC’s Arthur Levitt and others continues.

IABC should be describing the makeup of various boxcar figures such as accounts receivable and payable. We need to know how old these are and their nature. The standard audit is nearly useless to the layperson. The reports are a visual disaster, with numbers placed far away from the category and no dot leaders provided. A ruler is needed to connect the category with the proper dollar figure. Income categories may not match expense categories or change from report to report.  Much data is simply left out. Rent, but not square footage, is given.

IABC should post the entire revamped audit report on its website. It’s interesting, even hilarious, to see what little use information-stingy associations are making of the web--a cheap, instant way to communicate. PRSA is budgeting only $60K out of a $9.2M budget for its website in 2000. An ex-PRSA president said PRSA should conduct its nominations and elections this year via the web. All members would vote, not just the Assembly. Bios of candidates, platforms, etc., would be on web.

The barebones IABC audit recalls a similar move by PRSA and Ernst & Young in 1991.  Functional expenses (27 types of spending broken out 12 possible ways, or about 250 expense amounts), were removed from the audit. Treasurer Joe Vecchione said it was "a better way" and was advised by E&Y.  Complaints brought the chart back in 1992. But removed were nine important categories including expenses of the board and leadership; districts; members’ directory, and legal, insurance & audit.

Comparison of the IABC and PRSA statements shows that some very odd things are going on in accounting these days. IABC, with nearly $5M in revenues vs. $8M for PRSA, has $1.9M in cash but only reports $519K in net assets. PRSA, with $1.6M in cash, reports net assets of $1.85M. IABC acknowledges liabilities of $1.37M for services owed to members who have paid a year in advance while PRSA acknowledges only $350K. Standard practice is that revenues are recognized when earned, which is what IABC is doing. PRSA is booking most of its dues and "subscription" revenue right away although dues invoices say that $25 is for Tactics and $24 for Strategist, which are delivered over a year’s time. Chair Steve Pisinski answers that "many accountants believe deferred revenue, especially in the case of membership organizations, is the equivalent to capital, net worth, or in the case of non-profits, unrestricted net assets and are not in reality a liability." Deferred revenue has no effect on a group’s ability to provide future service to members, he says. "That ability resides in the financial strength of its balance sheet, liquidity, and the prospect to grow and prosper as a viable organization," he added.