Edition, April 26, 2000, Page 1
GROUP SHUTS DOWN
sustained losses, the Alden Group, a New York-based PR firm,
was closed down March 31.
Adjustment Assocs., Hasbrouck Heights, N.J., which was retained
by Alden, said the agency made "this difficult decision
to prevent further losses and to preserve its assets so
as to maximize distributions to its creditors."
of filing for bankruptcy, ACL is offering to pay creditors
21% of what the firm owes.
Sheridan of ACL said this is "much more desirable than
that which could be anticipated in a lengthy and costly
was founded in 1969. Laura Baddish, VP/partner, could
not be reached for comment. She joined the firm in
1995 from Lee Laino Assocs.
KING FRANCHISES HIRE PR FIRM
Franchise Assn., which represents Burger King's franchise
owners, has hired a PR firm, lawyers and accountants to
put together a proposal to buy the company from Diageo plc.
Jones News Service did not identify the PR firm involved
with the NFA.
News reported April 10 that Diageo, which is the world's
largest liquor company, has rejected the NFA's offer to
sell its Miami-based Burger King division.
Brouse, a retired Wisconsin banking association executive,
has established the Sport Utility Vehicle Owners Assn.
wants to attract industry support and make the association
a for-profit concern that refutes misinformation about sport
utility vehicles and lobbies for them in Washington, D.C.
NFO RUSH TO COMPLETE DEAL
and NFO Worldwide rushed to complete IPG's biggest acquisition
deal, involving the purchase of 24 million NFO shares for
about $500 million of IPG stock and assumption of $175M
in NFO debt, went through on April 20 on an "accelerated
purchase is 2.8 times as large as IPG's previous biggest
buy, the $240M acquisition of Shandwick in 1998.
will issue about 13.2 million new shares, bringing the total
outstanding to 304M. IPG feels the additional shares will
be "non-dilutive" because it expects NFO to add
$19M in net income for calendar 2000, which would cover
the earnings-per-share needed for the new shares.
earned $1.13 per share in 1999. Its current price/earnings
ratio is 34.
Stock Fell Below Break Point
deal appeared in danger of being cancelled last week because
IPG's stock dropped $5 below $44, the point at which NFO
had the right to pull out. Some NFO stockholders were urging
it to do that.
had plummeted from $58 in December 1999 when the deal was
announced to $38 or so April 17.
said IPG needed to be in the "mid-$40s"
or there would be too much dilution of IPG stock.
Worldwide, a conglomerate itself of dozens of research companies
operating under many different brand names, lost $6.2M in
1999 on sales of $457M. Its stock had plummeted in the last
quarter of 1998 from $21 to $5.50.
company (possibly WPP Group) recently bid $27.50 a share
for NFO but this was rejected. NFO, founded in Toledo and
where 600 of its employees are based, was owned by publisher
Robert Maxwell from 1988-91. He sold it back to NFO executives
for $37M. NFO had a profit of $14.5M on sales of $275M in
Boosted NFO Revenues
were up 66% from 1998 largely because of the acquisition
of Infratest Burke, Munich research firm that had $165M
in revenues in 1998. NFO paid $151M including assumption
of $28M in debt.
CEO William Lipner conceded to the Toledo Blade in January
that problems with the U.S. financial services unit influenced
the decision to sell although he said that was not the deciding
factor. (continued on page 7)
Cox, currently head of corporate practice
at GCI Group, is returning to Hill and Knowlton, New York,
as director of client development...Ranny
Cooper, political strategist and a newly
appointed executive at BSMG Worldwide, received the New
York Women in Communication PR Matrix Award...Tiffany
& Co. has selected Jackson Spalding
for event planning and media relations in Atlanta. Other
client wins include LightNetworks, voice, data, Internet
telecommunications; InsiderAdvantage. com; Merrill-Hall
New Media, and Hines, for Overton Park mixed-use community
Edition, April 26, 2000, Page 2
JOURNALISTS BASH PUBLICISTS
Post has joined the growing list of media outlets that have
published negative stories about high-tech publicists.
Kurtz, who covers the media beat, writes in the Post's April
17 edition that "the relentless hyping of Internet
companies is driving them (reporters) nuts."
preposterous," Alan Webber, editor of Fast Company
magazine told Kurtz. "The same firm can target
us and bombard 10 or so different people with the same pitch."
overwhelming," said Adam Lashinsky, a columnist for
TheStreet.com. "It just doesn't stop. I
almost never get a quality idea for a column from a PR person."
said most of what he is pitched is "total garbage."
Silicon Valley reporters are invited to endless parties
and top executives are made available to them day or night.
separates the new breed of cyberflacks is that, given the
crazed environment of Wall Street, billions of dollars are
riding on their ability to score with influential journalists,"
whose firm Alexander Ogilvy will accept stock as part of
its fee, told Kurtz her firm has 90 clients, and more than
1,600 companies inquired about AO's rates/services during
who was dubbed "the most powerful woman in the technology
industry" by New York magazine (www.newyorkmag.com),
said the reason the noise level is so high is because so
many people are writing about technology.
PRO IS ARRESTED IN NEW JERSEY
C. Vaillancourt, former corporate VP of PA for the Grand
Union Co., was arrested April 17 by federal authorities
in New Jersey.
arrest complaint alleges Vaillancourt, who is a member of
PRSA, had embezzled $2.15 million from the financially troubled
supermarket chain, which is based in Wayne, N.J.
who had lost his job during a round of executive layoffs,
had been employed by the company for 29 years.
says Vaillancourt set up three bogus PR firms to submit
fake invoices to Grand Union for PR work never performed
between Sept. 1991 and Nov. 1999.
officials said they uncovered the scam after laying off
Vaillancourt and more than 35 other executives Feb. 17.
reported the alleged theft to the U.S. Attorney's Office,
along with suspicions that he may flee the country.
Record said Vaillancourt was arrested as he and his wife
planned to leave their Park Ridge, N.J., townhouse to fly
to Rio de Janeiro that same night.
who searched Vaillancourt's house reported finding plane
tickets, $55,000 in cash, seven fur coats, Rolex watches,
and several registered guns.
a former reporter for the now defunct Newark Evening News,
also is an attorney.
attorney Robert B. Reed denied the embezzlement charge and
said Vaillancourt had no intention of fleeing the country.
PR PROS RATE REPORTERS
80 of the 535 congressional press secretaries who responded
to George magazine's poll, said their first choice for a
one-on-one interview would be Tim Russert, host of NBC's
"Meet the Press," topping Peter Jennings, Tom
Brokaw, Ted Koppel, and Jim Lehrer.
boss had time for just one appearance on a cable talk show,
40% chose "Larry King Live," followed by "Crossfire"
(17%); Tim Russert (17%); "Hardball with Chris Matthews"
(11%); "The O*Reilly Factor" (6%); "Hannity
and Colmes" (5%), "Rivera Live" (2%), and
none of these (2%).
percent picked David Broder as their first choice of newspaper
columnists, beating George Will, Al Hunt, Mary McGrory,
William Safire, and Maureen Dowd.
findings, compiled by Princeton Survey Research Assocs.,
are reported in the May George under the headline: "Flacks
LOOKS ON BRIGHT SIDE OF MARKET
"Wall Street bloodbath" earlier this week, Ted
Pincus, chairman of Financial Relations Board/BSMG, Chicago,
sent a memo to the CEOs of 500 IR clients, calling for a
boost in morale.
large segment of the corporate communications industry has
never experienced a major sell-off," Pincus wrote.
"Many of us here at FRB have weathered five over the
last four decades. With these knocks, and living with the
Street every day, we've learned a few lessons."
recommendations for dealing with the recent "carnage":
at bay. Remember why you are public. Don't fight
the big picture. If your stock is way down you may
suddenly be a value story. Exploit new technologies
to get your message across.
Are "Fool's Gold"
chairman/CEO of Middleberg + Assocs., called many dot-com
companies "fool*s gold," adding that his firm
takes on traditional companies looking to build their brands
online, like Encyclopaedia Brittanica, a recent Middleberg
that his firm never took more than 20% of payment in options
was, is, and always will be king," he said.
Paul Krupin gives press releases all the credit for making
"Chicken Soup for the Soul" the best-selling book
send out releases to solicit stories for use in the book,"
said Krupin. The one-page release offers people a
$300 prize if their story is selected.
said the releases have been run in thousands of newspapers
across the country.
Soup series occupy numbers 1, 2 and 3 on The New York Times
Best Seller list.
Edition, April 26, 2000, Page 3
WINNER IN ISUZU'S LIBEL SUIT
Los Angeles jury ruled April 6 that Consumer Reports made
false statements in an article and at a news conference
in which it said Isuzu Trooper was unsafe to drive.
publisherConsumers Uniondoes not have to pay
any monetary damages because the jury either found the false
statements were not made maliciously or had not damaged
verdict, which libel specialists said allowed both sides
to claim a share of victory, may have bruised Consumer Reports'
reputation as a fair evaluator of products.
H. Karpatkin, president of Consumers Union, which publishes
the magazine, said it had not lost its credibility.
said the magazine's 4.3 million readers "trust us"
to be honest. "They don't trust us to be perfect."
the jury had punished the Mt. Vernon, N.Y.-based Consumers
Union, it could have had a chilling effect on the publication
of negative reviews, according to some newspaper editorials.
had claimed Consumer Reports rigged the tests that showed
the Trooper to be more prone to rollover than other sport
PLAYS DOWN BAD AFFECTS OF MOVIE
Gas & Electric, which is the latest corporate villian
in the movies, has been dealing with the adverse affect
of the movie "Erin Brockovich." The movie, which
stars Dan Klores & Assocs.' new client, Julia Roberts,
is packing them in at theaters across the country.
of Hinkley, Calif., sued the utility, charging a coverup,
and won a settlement of $333 million in 1996, the largest
settlement ever paid in a direct-action lawsuit by a company.
chairman Bob Glynn Jr. has advised employees of the San
Francisco-based energy company to keep the movie in perspective.
his March 10 memo to employees, Glynn said: "'Based
on a true story' doesn't mean that everything in the story
is clear, in retrospect, that our company should have handled
some things differently at the time. And I wish that
it had," wrote Glynn, who joined PG&E in 1964.
may be uncomfortable at the adverse publicity directed at
the company because of this movie," he concluded in
the memo, "but it should serve as a reminder to all
of us to be diligent in protecting the environment in everything
that we do for PG&E."
Pruett, VP/corp. comms., said the company took the approach
that it was a movie, not a documentary.
also denied reports PG&E hired a PR firm to spy on the
production of the film.
Washington Post has introduced KidsPost,
a new daily weekday page for young readers.
will explain the news to 9 to 13-year-olds and write about
things that interest them.
may submit information to the Kids- Post at The Washington
Post, 1150 15th st. NW, Washington, DC 20071; fax: 202/496-3780;
editor-in-chief Elaine Richardson is leaving after the September
issue to become president of Yaddo, the 107-year-old artists'
colony in Saratoga Springs, N.Y.
Lawyer Media, which is based in New York,
has begun publishing Florida Lawyer.
new statewide monthly magazine, which is targeting 79,000
attorneys, will focus on industry news coverage, and analysis
of business and management issues impacting law firms, ranging
from new business development and compensation, to office
technology and marketing.
Lawyer, ALM's 21st publication, will complement The Daily
Business Review, the company's daily legal and business
paper covering Miami-Dade, Broward and Palm Beach counties.
TV Network and Conde
Nast's Mademoiselle magazine will start
a weekly broadcast featuring editors and experts from the
show, to debut in October, will be seen on CTN's network
reaching 1,600 college campuses.
Edition, April 26, 2000, Page 4
WANTS EMBARGO PACTS STOPPED
Pegoraro, who covers technology news for The Washington
Post, said he frequently gets requests from PR pros to sign
a "non-disclosure agreement" no matter how trivial
the alleged news item.
the Post's policy forbids him from signing NDAs, Pegoraro
said other technology journalists including some freelance
contributors for the Post*s tech sectionoften sign
NDAs to get access to a product before it's announced, so
that they can be ready with a review on the day the gadget
shows up in the stores.
many of them are also a little annoyed with the industry's
fetish for secrecy," Pegoraro wrote in his "Logging
On" column that ran in the April 14 edition of the
said Sony's PR staff recently asked him to sign an NDA before
they would show him a new line of laptops. By signing Sony's
NDA, a reporter makes a promise to "embargo, safeguard
and hold in confidence, and to neither directly nor indirectly
publish, disclose or use by any means whatsoever" the
news until Sony makes the actual product announcement.
difference between an NDA and a verbal embargo is that "I
could be sued for breaking one," said Pegoraro.
Sony's instance, Pegoraro told the PR person he could not
sign the agreement, but that "'We probably wouldn't
rip up the front page to report on Sony's new hardware unless
say, the company were to announce it was ditching Windows
for Linux or the Mac OS."
said that was fine, excusing her NDA request as: `We do
that because it's policy, that's all.'"
the demonstration, Pegoraro said he was not sure what he
was not supposed to reveal.
Wagner, a senior editor for InternetWeek, a trade magazine,
told him NDA requests are a "waste of my time."
said a PR person sent him an E-mail saying she has a client
with "revolutionary" new technology that will
"raise the bar" in its technology area.
response was "Great, what is it? She said she
couldn't tell me."
Stachell, a freelance writer, said it would be hard to prove
a reporter broke an NDA agreement.
said some NDA contracts attempt to bind reporters for terms
that outlast the announcement in question.
said the NDA which Epson requested last February for a photo-printer
briefing required reporters to keep product details secret
even if Epson elected never to sell these printers.
be happy to to see this whole custom go away," said
BAG GIVEAWAY GETS NEWS COVERAGE
and more fashion firms are giving away products to people
who have the power of influence by word of mouth, according
to Women's Wear Daily.
the recipients of the giveaways are editors, stylists, artists
and deejays, WWD said.
paper said the marketing/PR tactic, which is often called
seeding, is considered an "extremely cost-effective
way to build buzz and win credible endorsements."
said Prada recently scored a bullseye when The New York
Times ran a half-page photo essay of women on the streets
of Paris and New York carrying its new bowling bag.
editors attending the Milan shows in February received the
canvas and leather bags as a gift from the company.
Gabriel, the Times' fashion news editor, told WWD he was
not aware that most of the bags photographed in his "On
the Street" feature that ran April 2 were given to
editors as gifts.
bags will retail for about $700 when they become available
to the public in June.
Bernstein, 56, former reporter for The Washington
Post, was hired as executive editor of Voter.com, which
will offer political news, campaign information, primary
results and information from advocacy groups.
B. Feaver was promoted to executive editor
and VP of washingtonpost.com. Feaver, a former business
editor of The Washington Post, oversees the 24-hour news
cycle of the website.
Dunlavey was named senior Washington, D.C.,
editor for ABC News. He will supervise Washington news coverage
and coordinate the bureau's editorial product for all ABC
Schroeder, 35, Car and Driver's senior tech
editor, was recently killed while test-driving a Mercedes-Benz
automobile on a closed circuit track.
Jennings, editor of Automobile magazine, said it was the
first time in more than 50 years that a journalist for a
major car magazine in the U.S. has been killed in a test-drive
Cantwell, 27, previously senior editor at
BtoB, formerly Business Marketing, to Automotive News as
a reporter covering marketing and media.
Pener was named entertainment editor of
Details and Phoebe Eaton, previously features editor at
New York magazine, was named executive editor.
Ward, previously features editor for The
New York Post, has joined Talk magazine as executive editor.
The magazine is moving to West 20th st. from West
Edition, April 26, 2000, Page 7
from page 1)
messages on Yahoo have been critical of the merger, pointing
out IPG's declining stock. NFO will be sold "one way
or another," said one message.
told the Blade that he and fellow executives want to sell
to IPG because they believe there will be a consolidation
of ad and marketing firms.
you're at the beginning of this cycle, you're going to lead
and get the highest value for your business," he told
were up 14% for the first nine months of 1999 and a positive
statement was made by the company about most of its operations.
NFO suddenly announced in December that it would have after-tax
charges of $15-$20M to cover a write-down of financial services
Reuters item said the client base had shrunk due to consolidation
in that industry. NFO said on March 1, 2000 that the financial
business was "permanently impaired" and took a
stock, which was $9.62 in April 1999 and close to that for
most of the year, jumped to nearly $25 on news of the IPG
deal in late 1999. It hit a 52-week high of $25.68 on April
only spent $515M in stock and cash for all 55 of its acquisitions
in 1998. The firm refuses to identify the 55 firms it purchased.
has its h.q. in Greenwich, Conn., but only employs about
40 there including chairman, CEO and president William Lipner,
and CFO Patrick Healy.
has been expressed on the Yahoo message board by a couple
of NFO shareholders.
have complained about the loss of the alleged cash offer
of $27.50 a share while their IPG shares are now worth only
about $21. NFO has pointed out that the "all-cash"
deal had "significant" strings attached to it.
NFO had rejected the offer.
Yahoo posting April 19, complaining about the suddenness
of the IPG/NFO closing, said: "When I worked in investor
relations, we would have FIRED someone who didn't mail out
a proxy package until six calendar days before a meeting
(postage stamped 12th<D> of April)."
whole thing was rigged from bow to stern. The 'improved'
offer didn't seem to help much, just penalized us more if
we rejected IPG. Failing to send out the revised proxy packages
on time just rigged things further. Nice going, NFO execs.
I expect the exodus will start any day now."
posting said, "It was this deal or nothing."
did we get for six bucks?" asked one NFO message (the
difference between the alleged $27.50 offer and the $21).
participant on the message board offered:
know what bucks rhymes with."
another message said NFO was stuck with whatever IPG was
willing to pay for it. One question was why did IPG stock
go down three points on Monday, April 17, when the market
itself was up.
MEMBERS ASK FOR OPEN NOMINATIONS
replying to a poll being conducted by a special task force
on the Societys nomination process are leaning towards
having an open process, said Jack Felton, chair of the task
He is also
president of the Institute for PR, a non-profit educational
group that broke away from PRSA ten years ago on the issue
said he has a pile of faxes and E-mails four inches high
on the subject and that replies are "running to members
knowing who the candidates are."
used to be public but the process went behind closed doors
about five years ago.
of the secrecy escalated last year with one nominated director
refusing to take the nomination because he said there was
too much politicking by insiders.
he said, had no idea of what was going on and had no chance
to voice their own opinions.
has gotten so secret that few members show up to be nominated,
he said. Sometimes there is only one or even no candidates
for the ten district director posts.
hopes to publish a summary of replies in a couple of weeks.
were the six members of the task force besides Felton and
PRSA president Steve Pisinski: James Arnold, of James E.
Arnold Consultants, New York; Michael Bardin, Scripps Health,
San Diego; Rebecca Madeira, Pepsi-Cola, Purchase, N.Y.;
John Paluszek, Ketchum PA, New York; Marion Pinsdorf, Ph.D.,
PR professor, Fordham University, N.Y., and Cheryl Procter,
Home Box Office, Rosemont, Ill.
Morris is searching for a VP of CC and a
director of media relations via Jean Cardwell of Cardwell
Enterprises, Chicago. Other Cardwell searches are for Raytheon,
Boston, dir. of strategic employee comms.; Childrens
Hospital of Phila., media rels.; Koch Indus., dir., Texas
comms.; Conoco/ Houston, speechwriter, and A.T. Kearney,
manager, practice PR.
Home Depot named Imre & Assocs., Towson,
Md., for PR for stores in Maryland, Washington, D.C., Northern
Virginia, Delaware and S.E. Pennsylvania.
AND RUBIN LEAVE THINK TANKS
the American Enterprise Institutes spokesman, has
joined Edelman PR Worldwides Washington, D.C., office.
Post said Wallaces "lively personal life has
provided grist" for a weekly column called "The
also reported Cheryl Rubin, who was PR director at the Heritage
Foundation, is getting married and moving to Grass Valley,
Edition, April 26, 2000, Page 8
biggest acquisition by far is interesting not just from
a financial viewpoint but also from the way PR
for it has been handled.
a conglomerate of hundreds of ad agencies, suppliers and
PR firms (600+ offices in all) has bought NFO Worldwide,
a conglomerate of scores of research firms.
owe much of their growth to acquisitions. Business Week,
in writing about another ad conglomerate, Omnicom, referred
to it as a "federation" of "fiefdoms."
huge systems are not like Starbucks, whose units all have
the same name and culture, but more like systems of supermarkets,
mid-sized stores and even delicatessens that are operated
under their original names by the founding "moms and
pops." These founders are not only individualistic
and creative, but capitalists in their own right. Their
customers are also often longtime friends.
does not just purchase big companies, as some might think.
It bought 55 firms in 1999, most of which it refuses to
stock market has not been too approving of the IPG/NFO "marriage"
of two vast collections of companies operating under numerous
different brand names. There were signs last week that it
was even a "shotgun" wedding.
(IPG) stock had lost one-third of its value since the proposed
deal was announced Dec. 20, falling from $58 to as low as
$38 and chipping $5 billion from its capitalization of $16.8B.
had the right to pull out when IPG sank below $44. We quoted
analysts last week as saying the deal would be too dilutive
for IPG with its stock below $40. The deal went through
on an "accelerated" schedule, causing some NFO
stockholders to howl.
Stock Collapsed in Late 1998
stock had collapsed in late 1998, falling from $21 in the
second quarter to $5.50 in the fourth in a bull market.
It could be its numerous acquisitions were the cause. In
the mid-'90s, it spent $333M on 17 acquisitions. One of
its 1997 acquisitions was the MBL Group, which itself was
made up of 19 companies with 27 offices in 17 countries.
November 1998 NFO bought Infratest Burke of Germany for
$151M. Bear in mind that NFOs revenues were $457M
in 1999 and it was $175M in debt. This shows how important
acquisitions are to NFOs growth and what NFO has spent
that anyone is publicizing this. The April 20 IPG release
announcing the purchase brags that NFO gained 66% in revenues
in 1999 but fails to say 90% of this growth came from Infratest
is a fascinating case study but we learned almost nothing
about it from IPG releases. It was sold by its Toledo, Ohio,
owners to the U.K. firm of AGB for $18M in 1982. Troubled
publishing baron Robert Maxwell owned it from 1988-91. He
sold it back to NFO executives in 1991 for $37M. Maxwell
later either committed suicide or fell off his yacht.
of this huge deal has been light. The initial announcement
was made during the December holiday period and the closing
of the deal last week came during another holiday period.
The final release was most uninformative, not even giving
the number of NFO shares involved. The IPG shares NFO holders
are getting are now worth about $21 per NFO share, just
what NFOs stock was in January, 1998.
with no PR or IR, is the parent of ad agencies that handle
numerous famous brands and "super brands" such
as Coca-Cola, whose hardball marketing tactics are well
rough-and-tumble business tactics of the retail super brands
include buying up all the best mom-and-pop retail locations
in a town or building "monster" stores of 300,000
sq. ft. that soon send all the local competitors to the
showers. Microsoft just got nailed for antitrust violations
for going overboard on market domination. Soda companies
love to get the right to sell only their products in entire
the flow of information is standard practice for the hypercapitalists
and marketing generals and their ad agencies and PR firms.
Thus we did not expect either IPG nor NFO to shower us with
information such as company histories, press clippings,
financial reports, and other background needed to place
this story in context. No PR pro was there to assist us
from either company. We couldnt even get the annual
report from NFO. There was an almost complete lack of response
to our questions until we started reporting that analysts
doubted the deal would go through. However, materials were
available via the Internet, including SEC documents; statistics
and analysis from popular financial websites; our own sources,
and message boards such as Yahoo. But numerous questions
remain unanswered. Wed say companies that want to
kill or downplay stories by non-cooperation with the press
are often successful in this goal.