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Internet Edition, April 26, 2000, Page 1


Citing sustained losses, the Alden Group, a New York-based PR firm, was closed down March 31.

ACL 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."

Instead of filing for bankruptcy, ACL is offering to pay creditors 21% of what the firm owes.

Peter Sheridan of ACL said this is "much more desirable than that which could be anticipated in a lengthy and costly bankruptcy."

Alden was founded in 1969.  Laura Baddish, VP/partner, could not be reached for comment.  She joined the firm in 1995 from Lee Laino Assocs.


National 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.

Dow Jones News Service did not identify the PR firm involved with the NFA.

Bloomberg 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.


William Brouse, a retired Wisconsin banking association executive, has established the Sport Utility Vehicle Owners Assn.

Brouse 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.


Interpublic and NFO Worldwide rushed to complete IPG's biggest acquisition last week.

The 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 basis."

This purchase is 2.8 times as large as IPG's previous biggest buy, the $240M acquisition of Shandwick in 1998.

IPG 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.

IPG earned $1.13 per share in 1999. Its current price/earnings ratio is 34.

IPG Stock Fell Below Break Point

The 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.

IPG had plummeted from $58 in December 1999 when the deal was announced to $38 or so April 17.

Analysts said IPG needed to be in the "mid-$40’s" or there would be too much dilution of IPG stock.

NFO 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.

Another 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 1998.

Merger Boosted NFO Revenues

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.

NFO 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)

Jim 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 development.

Internet Edition, April 26, 2000, Page 2


The Washington Post has joined the growing list of media outlets that have published negative stories about high-tech publicists.

Howard 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."

"It's 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."

"It's overwhelming," said Adam Lashinsky, a columnist for  "It just doesn't stop.  I almost never get a quality idea for a column from a PR person."

Lashinsky said most of what he is pitched is "total garbage."

Kurtz said Silicon Valley reporters are invited to endless parties and top executives are made available to them day or night.

"What 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," said Kurtz.

Pam Alexander, 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 1999.

Alexander, who was dubbed "the most powerful woman in the technology industry" by New York magazine (, said the reason the noise level is so high is because so many people are writing about technology.


Donald C. Vaillancourt, former corporate VP of PA for the Grand Union Co., was arrested April 17 by federal authorities in New Jersey.

A federal 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.

Vaillancourt, who had lost his job during a round of executive layoffs, had been employed by the company for 29 years.

The complaint 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.

Company officials said they uncovered the scam after laying off Vaillancourt and more than 35 other executives Feb. 17.

Grand Union reported the alleged theft to the U.S. Attorney's Office, along with suspicions that he may flee the country.

The Bergen 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.

Agents who searched Vaillancourt's house reported finding plane tickets, $55,000 in cash, seven fur coats, Rolex watches, and several registered guns.

Vaillancourt, a former reporter for the now defunct Newark Evening News, also is an attorney.

Defense attorney Robert B. Reed denied the embezzlement charge and said Vaillancourt had no intention of fleeing the country.


More than 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.

If their 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%).

Thirty-five percent picked David Broder as their first choice of newspaper columnists, beating George Will, Al Hunt, Mary McGrory, William Safire, and Maureen Dowd.

The survey findings, compiled by Princeton Survey Research Assocs., are reported in the May George under the headline: "Flacks Rate Hacks."


Amid the "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.

"A 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."

Among his recommendations for dealing with the recent "carnage":

Keep emotions 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.

Dot-coms Are "Fool's Gold"

Don Middleberg, 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 win.

He added that his firm never took more than 20% of payment in options or securities.

"Cash was, is, and always will be king," he said.

Book publicist Paul Krupin gives press releases all the credit for making "Chicken Soup for the Soul" the best-selling book series.

"We 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.

Krupin said the releases have been run in thousands of newspapers across the country.

The Chicken Soup series occupy numbers 1, 2 and 3 on The New York Times Best Seller list.

Internet Edition, April 26, 2000, Page 3


A 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.

The publisher—Consumers Union—does not have to pay any monetary damages because the jury either found the false statements were not made maliciously or had not damaged Isuzu.

The 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.

Rhonda H. Karpatkin, president of Consumers Union, which publishes the magazine, said it had not lost its credibility.

She said the magazine's 4.3 million readers "trust us" to be honest.  "They don't trust us to be perfect."

If 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.

Isuzu had claimed Consumer Reports rigged the tests that showed the Trooper to be more prone to rollover than other sport utility vehicles.


Pacific 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.

Residents 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.

PG&E chairman Bob Glynn Jr. has advised employees of the San Francisco-based energy company to keep the movie in perspective.

In his March 10 memo to employees, Glynn said: "'Based on a true story' doesn't mean that everything in the story is true."

"It 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.

"We 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."

Greg Pruett, VP/corp. comms., said the company took the approach that it was a movie, not a documentary.

He also denied reports PG&E hired a PR firm to spy on the production of the film.

MEDIA BRIEFS _______________________

The Washington Post has introduced KidsPost, a new daily weekday page for young readers.

It will explain the news to 9 to 13-year-olds and write about things that interest them.

Publicists may submit information to the Kids- Post at The Washington Post, 1150 15th st. NW, Washington, DC 20071; fax: 202/496-3780; [email protected].

Elle's 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.

American Lawyer Media, which is based in New York, has begun publishing Florida Lawyer.

The 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.

Florida 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.

College TV Network and Conde Nast's Mademoiselle magazine will start a weekly broadcast featuring editors and experts from the magazine.

The show, to debut in October, will be seen on CTN's network reaching 1,600 college campuses.

Internet Edition, April 26, 2000, Page 4


Rob 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.

While the Post's policy forbids him from signing NDAs, Pegoraro said other technology journalists— including some freelance contributors for the Post*s tech section—often 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.

"But 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 Post.

Pegoraro 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.

The difference between an NDA and a verbal embargo is that "I could be sued for breaking one," said Pegoraro.

In 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."

"She said that was fine, excusing her NDA request as: `We do that because it's policy, that's all.'"

After the demonstration, Pegoraro said he was not sure what he was not supposed to reveal.

"Waste of Time"

Mitch Wagner, a senior editor for InternetWeek, a trade magazine, told him NDA requests are a "waste of my time."

Wagner 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.

Wagner's response was "Great, what is it?  She said she couldn't tell me."

Stephen Stachell, a freelance writer, said it would be hard to prove a reporter broke an NDA agreement.

Pegoraro said some NDA contracts attempt to bind reporters for terms that outlast the announcement in question.

He 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.

"I'd be happy to to see this whole custom go away," said Pegoraro.  


More 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.

Among the recipients of the giveaways are editors, stylists, artists and deejays, WWD said.

The 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."

WWD 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.

Key editors attending the Milan shows in February received the canvas and leather bags as a gift from the company.

Trip 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.

The bags will retail for about $700 when they become available to the public in June.

PEOPLE ______________________________

Carl Bernstein, 56, former reporter for The Washington Post, was hired as executive editor of, which will offer political news, campaign information, primary results and information from advocacy groups.

Douglas B. Feaver was promoted to executive editor and VP of  Feaver, a former business editor of The Washington Post, oversees the 24-hour news cycle of the website.

Dennis 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 News programs.

Don Schroeder, 35, Car and Driver's senior tech editor, was recently killed while test-driving a Mercedes-Benz automobile on a closed circuit track.

Jean 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 accident.

Julie Cantwell, 27, previously senior editor at BtoB, formerly Business Marketing, to Automotive News as a reporter covering marketing and media.

Degen Pener was named entertainment editor of Details and Phoebe Eaton, previously features editor at New York magazine, was named executive editor.

Vicky 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 57th st.

Internet Edition, April 26, 2000, Page 7

(continued from page 1)

Some 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.

Lipner 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.

"If you're at the beginning of this cycle, you're going to lead and get the highest value for your business," he told the Blade.

Revenues were up 14% for the first nine months of 1999 and a positive statement was made by the company about most of its operations.

But NFO suddenly announced in December that it would have after-tax charges of $15-$20M to cover a write-down of financial services assets.

A 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 $17M write-off.

NFO 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 6, 2000.

IPG 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.

NFO has its h.q. in Greenwich, Conn., but only employs about 40 there including chairman, CEO and president William Lipner, and CFO Patrick Healy.

Some Shareholders Angry

Anger has been expressed on the Yahoo message board by a couple of NFO shareholders.

They 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.

A 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)."

Continued the posting:

"The 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."

Another posting said, "It was this deal or nothing."

"What did we get for six bucks?" asked one NFO message (the difference between the alleged $27.50 offer and the $21).

Another participant on the message board offered:

"You know what bucks rhymes with."

Still 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.


PRSA members replying to a poll being conducted by a special task force on the Society’s nomination process are leaning towards having an open process, said Jack Felton, chair of the task force.

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 of accreditation.

Felton 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."

Candidates used to be public but the process went behind closed doors about five years ago.

Criticism 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.

Members, he said, had no idea of what was going on and had no chance to voice their own opinions.

The process 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.

Felton hopes to publish a summary of replies in a couple of weeks.

Announced 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.

Philip 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.; Children’s Hospital of Phila., media rels.; Koch Indus., dir., Texas comms.; Conoco/ Houston, speechwriter, and A.T. Kearney, manager, practice PR.

The Home Depot named Imre & Assocs., Towson, Md., for PR for stores in Maryland, Washington, D.C., Northern Virginia, Delaware and S.E. Pennsylvania.


David Wallace, the American Enterprise Institute’s spokesman, has joined Edelman PR Worldwide’s Washington, D.C., office.

The Washington Post said Wallace’s "lively personal life has provided grist" for a weekly column called "The Ideas Industry."

The Post also reported Cheryl Rubin, who was PR director at the Heritage Foundation, is getting married and moving to Grass Valley, Calif.

Internet Edition, April 26, 2000, Page 8

Interpublic’s biggest acquisition by far is interesting not just from a financial viewpoint but also from the way PR for it has been handled.

IPG, 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.

Both owe much of their growth to acquisitions. Business Week, in writing about another ad conglomerate, Omnicom, referred to it as a "federation" of "fiefdoms."

These 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.

IPG does not just purchase big companies, as some might think. It bought 55 firms in 1999, most of which it refuses to identify.

The 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.

Interpublic (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.

NFO 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.

NFO Stock Collapsed in Late 1998

NFO 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.

In November 1998 NFO bought Infratest Burke of Germany for $151M. Bear in mind that NFO’s revenues were $457M in 1999 and it was $175M in debt. This shows how important acquisitions are to NFO’s growth and what NFO has spent on them.

Not 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 Burke.

NFO 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.

Coverage 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 NFO’s stock was in January, 1998.

IPG, 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 known.

The 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 school systems.

Limiting 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 couldn’t 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. We’d say companies that want to kill or downplay stories by non-cooperation with the press are often successful in this goal.



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