Edition, June 14, 2000, Page 1
F-H ARE FINALISTS FOR WSJ
Wall Street Journal has narrowed down its search for a PR
firm to handle its $500K account to Shandwick International
Shandwick has been handling the paper's website, WSJ.com,
but the paper has not had its own PR firm. Richard Tofel,
VP of CC, Dow Jones, parent of the WSJ, and Vickee Adams,
director of CC for the WSJ, are overseeing the selection
process. Adams said the second and final presentations will
take place later this month.
RESIGNS AS PRSA CFO
CFO Joseph Cussick has resigned his post after six years
as of the end of June.
who is in his 60s, will start his own financial advice firm.
PRSA has asked Deloitte & Touche to do a special study of
Reports were that increased supervision of the finances
by the board led to Cussick quitting. D&T has thus far refused
to sign the 1999 audit. Treasurer Joann Killeen is meeting
with D&T this week but otherwise had no immediate comment.
Steve Pisinski ordered the release of the unaudited figures
of PRSA last week after waiting two months for D&T to sign
The figures show that PRSA had a 281% jump in payables as
of Dec. 31, 1999 to $880,379 and that receivables jumped
51% to $544,097.
deferred dues account, representing services owed to members
in the future, was drawn down to $198,746 from $350,309
even though membership increased to 19,623 in 1999 from
18,512 in 1998.
account was $941,767 in 1991 when PRSA had 15,276 members.
Most other associations, including the American Society
of Assn. Executives, have deferred dues equal to about half
of total dues. Cash and investments fell to $1.26M at the
end of 1999 from $1.55M a year earlier.
Nominations to Be Secret
said members will not be able to learn this year who is
running for the nominations although 1997 president Debra
Miller and others had called for open nominations. Kathy
Lewton is in line to be chair, Killeen to be chair-elect
and Deanna Pelfrey to be treasurer. A nominating study committee
headed by Jack Felton was formed in March but has issued
and COO Ray Gaulke, it was revealed, has four-and-a-half
years to go on a five-year contract.
FARA ACCOUNT LEAVES B-M
Brazilian aircraft maker, ended its tie with Burson-Marsteller
April 30, the last day of the six month Foreign Agents Registration
Act reporting period. The account generated $912,406 in
fees/expenses or 78% of B-M's FARA total.
spent $1,544,369 at B-M in the previous six months.
were helping Brazil to handle a dispute with the World Trade
Organization and promoting the launch of a new jet airplane.
departing B-M on April 30 was the Finland Bureau. Remaining
FARA clients are the King Faisal Foundaiton ($91,456 in
the latest period) and the Royal Norwegian Consulate General
QUICKLY QUIT BOARD OF WEB FIRM
did a quick flip-flop recently concerning a web investment
it made. Zero.Net,
San Francisco incubator firm, said in April that OMC made
a "significant" investment in it. OMC CEO John
Wren warmly endorsed Z.N and joined the board, according
to a release April 26 by Z.N and Fleishman-Hillard, an OMC
PR firm. But Wren now says that less than 4% of Z.N was
purchased and that he quit the board.
He said OMC was drawn to Z.N because its CEO is Jake Weinstock,
28--year-old son of Davis Weinstock, a principal of the
OMC PR firm Clark & Weinstock. Davis Weinstock is on
the board of Z.N.
Wren said he quit when he found OMC could only buy 4% of
Z.N and not 10% as promised.
Z.N was sued May 23 by a Massachusetts web firm that charges
Z.N stole its business plan and 18 of its employees. The
firm, Biz2Net, is refusing to pay back $2 million that it
borrowed from Z.N.
"Invested in Jake"
OMC basically "invested in Jake," Wren told this
NL. The New York Observer's Christopher Byron, writing June
12 about Z.N and one of its owners, Andrew Evans, said Evans
was using young Weinstock as "a way to give his ragtag
Internet incubator some legitimacy on Wall Street."
Byron, who had an "extended interview" with Evans,
said Evans told young Weinstock, who was hired this year,
that Z.N would go public and its principals would receive
valuable stock options.
Evans and his wife, Ann, served six-month prison terms in
the 1980s on charges of giving false reasons for obtaining
a $500,000+ bank loan.
on page 7)
Edition, June 14, 2000, Page 2
LEAVES NAPS; OPENS NEW FIRM
York, daughter of Ron Levy, founder of North American Precis
Syndicate, on of PR's largest service firms with 136 employees
and seven offices, has succeeded her father as NAPS president.
instead of continuing his lawsuit for control of the company,
has opened Episodic PR Assistants at 300 E. 40th St., a
firm that will be in competition with NAPS.
him as EVP is Galina Grunin, who was EVP and operations
manager of NAPS, handling programming, clippings and reports.
said that in 1990 he put 400,000 shares of NAPS into his
daughter's name "to save her taxes" and that she
recently exercised an option and took control of the company
against his wishes. He had selected Grunin as the future
president of NAPS.
(212/682-2432) is offering a 15% discount to agencies using
its services and two distributions for the price of one
until Labor Day.
INSIDER' IS BARRED AS A SPEAKER
S. Wigand, the tobacco industry whistle-blower, was dismissed
as a speaker at a "youth summit" for an anti-smoking conference
after he told an account supervisor for the Nixon Group,
which hired him, that he planned to go beyond the parameters
of his speaking contract.
Miami-based PR firm had been retained by the New York State
Health Department to handle the conference. The PR firm
has been involved in arranging similar anti-smoking youth
summits for health departments in Florida, Washington and
160 teenagers were invited to the New York event, which
was held June 2 at a resort in Catskill, N.Y. Among those
attending the event was Gov. Pataki's health commissioner,
Dr. Antonia C. Novello.
Coulter, an A/S in Nixon's Tallahassee office, said Wigand,
who was under contract to only make comments about his role
as portrayed in the movie, "The Insider," told him shortly
before the meeting began that he planned to criticize New
York Gov. George Pataki, who recently vetoed a bill that
would have imposed fire safety standards on cigarettes.
said he informed a health department official about his
conversation with Wigand.
Signor, who is the health department's PR director, said
he was also told by Wigand that he was going to give some
political comments. Coulter said a "joint decision" was
made to cancel Wigand's speech. Coulter
said Wigand was taken to Albany for a flight back to Atlanta,
where he works for the Centers for Disease Control.
said Wigand will be paid his $2,000 speech fee. Wigand told
The New York Times, which covered his dismissal,
that he could not believe that "somebody tells me I can't
speak about what is factually true."
NAMES BBDO & PORTER NOVELLI
the Internet partner of the Financial Times, has named BBDO
New York to spearhead an integrated marketing program that
will use on and offline advertising, direct mail, promotions,
PR, and special events.
program will start in September and is expected to be supported
by an estimated $15 millino budget, spread over the last
four months of the year.
Novelli will implement PR programs and handle media relations
as well as staging of special events.
firms are member of the Omnicom Group.
PR PROS JUMP TO DOT-COM COS.
companies have put pressure on many PR firms to work harder
at retaining their Hispanic talent or risk losing them to
competitors that even offer equity in the company as a perk,
reports Manny Ruiz, who is co-founder of Porter Novelli's
U.S. Hispanic market practice and its media relations director.
a recent poll of 10 South Florida firms, Ruiz said 80% of
the respondents stated that 50% or more of their work was
percent also responded that they had had a U.S. Hispanic
dedicated practice for three or more years, he said.
competing for Hispanic-related accounts, Ruiz said 50% of
the respondents said they competed against Hispanic ad agencies,
30% said they competed against national PR firms and 20%
said they faced competion from local firms.
PR SPECIALIST GIVES ADVICE
Bork Jr., whose Washington, D.C.-based PR firm specializes
in litigation communications, said the No. 1 thing to avoid
with the media is never say "no comment."
a killer in public perception," said Bork, who is a
a company is sued, 40% of those polled think the corporate
defendant must be guilty. But that number goes up to 60%
if the company says 'no comment' about the litigation,"
Bork told The Washington Business Journal.
advises a high-profile defendant to tell its story "clearly,
in context and to enough people that you move opinion to
your side of the ledger."
litigation is telling a persuasive story to a judge and
a jury, then litigation communication is making sure that
story is heard, understood and remembered outside of the
courtroom by those critical to your company," said
chairman/CEO of Young & Rubicam, which is being acquired
by WPP Group, registered with the SEC on June 1 to sell
300,000 Y&R shares for about $16.3 million. He intends
to step down from Y&R following a transition period.
As of April 14, he held 1,178,017 shares.
83, a publicist, died May 19 in Washington, D.C. In the
early years of TV, Brott, who retired in 1992, was publicist
and announcer for "Meet the Press."... Irving
Rudd, 82, who handled publicity for the Brooklyn
Dodgers, Yonkers Raceway, Nathan's Famous and Muhammad Ali,
died June 2.
Edition, June 14, 2000, Page 3
CITED IN DRUG REPORTS
A new study about reports of medicines in newspapers and
on TV should make publicists for pharmaceutical companies
The findings, which appear in the June issue of The New
England Journal of Medicine, show media reports about new
drugs often leave out essential information such as drugs'
risks and cost, and frequently quote experts without disclosing
their financial ties to the pharmaceutical industry.
The study also found most of the reports did not provide
enough quantitative information to allow readers or viewers
to assess the drugs' likelihood of preventing certain diseases.
Instead, news reports tended to overstate the possible benefits.
Side Effects Ignored
half the stories were totally silent on side effects,"
said Ray Moynihan, an Australian journalist who initiated
the study during a fellowship at Harvard Medical School.
we're seeing here is the media behaving too often like a
cheering squad rather than the skeptics that we want them
to be," he said.
The study was conducted by researchers from Harvard, the
University of Newcastle in Australia and the University
of California at San Francisco, who used databases to select
news reports on three drugs' Fosamax, Pravahol, and aspirin.
A total of 180 newspaper stories and 27 TV news reports,
which were published or aired between 1994 and 1998 in 36
U.S. newspapers, or on TV networks, were analyzed.
Of 207 news stories, fewer than half mentioned risks or
side effects of the drugs, and only 30% mentioned the medicines'
Forty percent of the stories did not provide any guarantee
information to back up assertions of a drug's benefit. Of
those that did, 83% reported only the relative benefit and
not the absolute benefit.
Reporting the relative benefit tends to make a study's results
sound more dramatic.
For example, most stories about a study on Fosamax (also
known as alendronate) stated the drug lowered the frequency
of hip fractures caused by osteoporosis by 50% (the relative
benefit) but did not explain that such fractures occurred
in 1% of patients who took the drug versus 2% of patients
who did not.
CBS reporter described the 50% reduction in fractures as
"almost miraculous," the study noted.
The anlysis also found that when news reports cited experts,
such individuals often had financial connections to the
maker of the drug under discussion that were not revealed
in the story.
For example, 85 stories mentioned experts or studies that
had received funding from the manufacturer of the relevant
drug, but only 33% of them disclosed such ties.
NEWSWEEK RAPS CONDE NAST'S NEW MAG
Newsweek has criticized Conde Nast's new women?s fashion
magazine, Lucky, for blurring the line between advertising
Critics said the magazine is more like a catalog than a
magazine. The 202-page test issue, which was published last
month, was crammed with merchandise of every description.
If Conde Nast sells enough, it is expected to launch Lucky
in the fall.
may thrill shoppers, but for some in the magazine business,
Lucky is the most egregious example yet of a trend
in which magazines are becoming glorified catalogs,"
reports Newsweek's Alisha Davis and David Noonan
in the June 12 issue.
One ad executive said he foresees a flood of titles catering
to every imaginable market---including men and teens, and
Susan Ungaro, editor-in-chief of Family Circle, worries
that these "magalogs" will erode reader trust.
is all picks, no pans--- and she (Ungaro) fears that inevitably
magazines will try to share in the profits from the sale
of goods in their pages," Newsweek said.
Edition, June 14, 2000, Page 4
MAGS NEED MORE ARTICLES
Fortune's June 12 edition says Internet magazines are so
packed with ads that publishers are 'spending lavishly'
to expand their editorial staffs. The magazine said Business
2.0, which had 408 pages in its June 13 number, the
first bimonthly issue, hopes to nearly double its 72-person
Fortune said Eric Hellweg, a senior editor for 2.0,
recently sent an e-mail to journalists around the country
that invited them to apply for jobs.
"We're in the midst of a hiring frenzy," said
Hellweg, who is looking for everything from editorial assistants
to executive editors, for the magazine and the magazine's
San Francisco-based 2.0 has a bureau in New York and it
is opening bureaus in Los Angeles, D.C., Boston, and possibly
Austin. It also plans to start five editions in Europe,
Asia, and Latin America this year. "What's true for
Business 2.0 is true for virtually every magazine
covering this space, including Fast Company, the
Industry Standard, Red Herring, and Upside,"
as examples are the 360-page June issue of Upside,
which Fortune noted was larger than the June issues
of GQ (278 pages) and Vanity Fair (246 pages);
Fast Company's 418 page June number; Red Herring's
new biweekly edition; Industry Standard, which publishes
as many as 360 pages every week, and Time Inc.'s eCompany
Now, which was launched this month with a 302-page issue.
said Red Herring has doubled its editorial staff
in the past year to 100, hiring writers away from The
Wall Street Journal, Wired and Forbes with high
salaries and stock options.
magazine also opened bureaus in Boston, Washington, D.C.,
and London. Also recruiting journalists is line56,
which is scheduled to launch this summer.
PUBLICIST BERATES ADVERTISING
North, who owns a PR firm in Ojai, Calif., is pitching business
editors on running a press release that berates advertising.
"People are tired of obnoxious advertising," states
North in his pitch letter.
"Too many businesses are wasting or losing money because
of ineffective advertising and promotion," according
to North, who handled "Project Blue Bird," a national
campaign to help blue bird survival and population recovery.
PR FIRM STRESSES MEDIA RELATIONSHIPS
Relationships with media are vital to PR success, according
to DeFrancesco/Goodfriend. The Chicago-based PR firm said
the media do not interview or quote someone because they
have "more knowledge, expertise or clout."
Rather, the reason is "they or their PR departments
or agencies, have worked to build relationships with media."
D/G offers these seven tips for establishing a relationship
1. Develop a list of reporters who deal with information
you know and the media that reach audiences you want to
Learn what the media need or want;
3. Send a letter and packet of useful background
information about your company and the industry in which
4. Visit the media most important to you;
5. Ask editors to visit you;
6. When you read a story on which you have useful
information, contact the media on your list to talk about
the subject, and
7. Make time to respond by providing numbers where
you can be reached day, night and weekends.
TV EDITOR OFFERS VNR PLACEMENT
Melinda McIntire, managing editor at KGO-TV in San Francisco,
told a DWJ Television seminar last month that 10 to 15%
of the station's news comes from VNRs.
Here some of her recommendations:
--Product placement should be subtle; commercials are a
-- Give the story a timely news peg; "Don't overwhelm
viewers with too much information;"
--Tie into a current trend, study or event whenever possible;
---Use real people in VNRs; "Provide enough B-roll
to support what they say;"
expert is helpful; Diversity is important;
--Include graphics; Soundbite should be no longer than 12
--Offer satellite interviews when possible;
--Send faxes; For national tours, have local angle.
Advertising Age has hired Jon
Fine, a freelance writer, to replace Ann
Marie Kerwin as publishing beat reporter. Kerwin
was promoted to New York bureau chief in February.
'The Payoff Years,' a new talk radio program, has
named Carol Abaya,
whose column, "The Sandwich Generation," appears
in newspapers, as senior lifestyle editor.
The show, which is targeted at listeners who are over 45,
focuses on finance, fitness, and fun, as well as aging and
elder/parent care issues.
on-air segments are hosted by veteran broadcasters, including
Ralph Saviano and Bill
Bresnan. The show airs on Sundays on WEVD-AM
(N.Y.-N.J. region) from 8 a.m. to 9 a.m. and on WPEN-AM
(Pa.-N.J. area) from 9 a.m. to 10 a.m; and daily on WAXY-AM
in Florida from 2 p.m. to 3 p.m.
The program's managers are based in Marlboro, N.J. at 732/780-9200.
Abaya can be reached in Wickatunk, N.J. 732/536-6215.
Melina G. Bellows, previously
a senior editor at Ladies' Home Journal, where she
was in charge of celebrity cover stories, profiles and Hollywood
trend features, was named editor of Washington, D.C.-based
National Geographic World, a magazine for children
eight to 14.
31, a field producer in New York for 'Pure Oxygen,'
which covers issues of importance to women and appears on
Oxygen cable TV, and Christopher
B. Huntington, 39, the senior editorial producer
of 'Moneyline News Hour' on Cable News Network
in New York, were married June 3.
Takeda, who was VP for marketing and IR at Smart
Modular Technologies, was named COO of Digital Courier
Technologies, Park City, Utah
Emerge, the Washington, D.C.-based magazine which
covered black culture and politics has suspended publication.
Emerge was launched in late 1989 by Wilmer
Ames Jr., a former Time reporter, with
backing from Time Inc. and Black Entertainment Television,
which later took control.
Bill Curry, who is president of the American Society of
Magazine Editors, is editor of Emerge.
Individual Investor, a magazine published by Jonathan
Steinberg, who is the husband of CNBC's financial
news reporter Maria Bartiromo,
is trying to raise $6 million to keep the magazine going,
according to Crain's New York Business.
CNNfn, CNN's financial news network, will expand
its programming to 24 hours from 18 on weekdays starting
June 20. The network's new weekday morning show, "Market
Call," also debuted June 7, with Rhonda
Schaffler, senior CNN correspondent, as anchor.
The program will cover the first hour and a half of trading
after the 9:30 a.m. opening on the New York Stock Exchange.
Alan Chernoff, previouisly
a correspondent for CNBC, will contribute reports.
also plans to begin producing another new show about mutual
funds in the coming weeks.
Computer Reseller News has changed its name to CRN,
and is transforming itself into a publication with added
editorial content that focuses on e-business and e-business
The 18-year-old publication, which will retain its traditional
reseller/hardware readership, has also changed from a tabloid
to a 10" by 12" trim size weekly newsmagazine format. CRN
is published in Manhasset, N.Y. Elliott
Markowitz is editor (516/733-8677) and Kelly
Damore is sr. executive editor (781/839-1272).
Edition, June 14, 2000, Page 7
QUIT WEB BOARD (cont'd from page one)
said that to his knowledge Evans was neither an officer
nor a director of Z.N at the time OMC made the investment
Jake Weinstock, who was married June 3, is on his honeymoon,
according to his father, and could not be reached for comment.
The younger Weinstock has a B.A. in international business
from the University of Pennsylvania and helped found Gold's
Gym in Moscow five years ago. He still has an interest in
it. Following graduation, he also worked for Ernst &
C&W, which specializes in corporate positioning, political
strategy, and financial PR, does not reveal the size of
its staff, its fees or its clients. Davis Weinstock confirmed
that one client is Microsoft, handled by C&W's Washington,
Evans is Friend of Gates
Evans is described in an article in the June 12 New York
Observer by Christopher Byron (read
story) as a longtime close friend of William Gates,
co-founder of Microsoft and the richest individual in the
Gates, according to the Byron article, which examines the
numerous financial interests of Evans, became the godfather
to all three of Evans' children.
Gates, says the article, came to the sentencing hearing
after Evans pleaded guilty to the charges.
Evans, who was a stockbroker, allegedly took out a $500,000+
loan from a Seattle bank saying it was for real estate purposes
when it was needed to meet minimum capital requirements
for an investment firm owned by Evans and his wife. Evans
helped manage Gates' stock portfolio for several years although
this activity has ceased, the article further states.
The Byron article says "a contact in San Francisco"
introduced young Weinstock to Evans in April and that Evans
promised Weinstock he would become CEO of Z.N. Davis Weinstock
said his son has extensive business experience and that
he served in other positions in Z.N before becoming CEO.
Evans Has Numerous Investments
The Observer article details numerous private and
public investments of Evans.
He is an owner of the publicly held Envision Development
Corp., an "umbrella" entity for various Internet
companies; Perfumania, a chain of perfume stores, and Dominion,
an investment vehicle.
Evans, who controlled Maritime Capital Partners, used it
to invest in New World Coffee. Byron's article says SEC
filings raise questions as to whether all stock sales and
purchases of entities controlled by Evans took place via
stock exchanges as required.
Envision Development, trading at $66 per share, on April
7 paid 1.4 million shares (supposedly worth $98 million)
to Sundog Technologies for QVtech, an e-mail security firm.
But Sundog remains publicly traded at two cents a share,
meaning the 1.4M shares are not, "in reality, worth
anything at all," writes Byron.
The April 26 release, via PR Newswire, had Wren saying:
"We believe Zero.Net's business strategy, which focuses
on Internet infrastructure and technology within the business-to-business
marketplace, addresses the fastest growing part of the new
economy. We look forward to assisting Zero.Net in the pursuit
of this strategy."
The release, with contacts listed as Stan Ades for Z.N and
Rebecca Weiss of Fleishman-Hillard/ New York, had Z.N announcing
that the Communicade unit of OMC had made a "significant
equity investment" in Z.N and that Wren "has joined
the Z.N board of directors effective immediately."
There is no known release announcing Wren's resignation.
Jake Weinstock was quoted as saying:
"We're extremely pleased that a strategic investor
with the global reach of Omnicom has chosen Z.N as a strategic
and investment partner. Having their financial support and
professional guidance will be a strong driver for our continued
growth. Not only will Z.N profit from our relationship with
OMC, but our Internet companies will also be able to easily
access the depth of expertise offered by the world's largest
provider of marketing communications and advertising services."
The release said Z.N joined Communicade's interactive division,
which owns part of dot-com companies such as Agency.com,
Organic, Razorfish, Red Sky Interactive, Nuforia, L90 and
Z.N was said to have investments in more than 25 Internet
companies and also to have offices in New York, London and
Tokyo. Z.N's companies, among other things, were said to
offer "cutting-edge software tools," "state-of-the-art
networking," "strategic guidance," "innovative
technologies," and "dynamic infrastructure solutions."
COLUMN ALSO ON BLOOMBERG
Christopher Byron's financial news column for The New
York Observer will run each Wednesday on Bloomberg News,
which is distributed worldwide to investment firms and 350
newspapers and magazines.
It will also be on the web at www.bloomberg.com/columns.
Byron, who continues to have a daily financial news show
on MSNBC, will also be a regular guest on Bloomberg TV and
radio. Besides a large audience among the general public,
Bloomberg is used by 180,000+ financial professionals worldwide.
"Chris Byron is the closest thing to a guardian angel
an investor can have," said Matthew Winkler, editor-in-chief
of Bloomberg News.
Bloomberg also described Byron as "the financial journalist
who cuts through corporate hype to get to the bottom line."
Byron's "Back of the Envelope" column has run
in the Observer for five years and has "exposed swindlers
and con artists from Wall Street to Silicon Valley,"
said the Bloomberg announcement.
Has Huge Audience
Bloomberg has eight million radio listeners and an estimated
173 million homes receive Bloomberg TV. The 350+ publications
receiving Bloomberg have an estimated 50 million readers.
A total of 6.9 million unique visitors log onto the Bloomberg
website each month. Bloomberg Radio is syndicated through
more than 200 affiliates worldwide.
Byron, author of three books, including "The Fanciest
Dive," has worked for Forbes and Time
and has been a contributing editor to Esquire, Playboy,
Men's Health and Worth. He wrote "The Bottom
Line" column for New York magazine from 1989-94.
His new book, "Delete Your Broker.Com: Using the Internet
to Beat the Pros on Wall Street," will be published
in January 2001 by Simon & Schuster.
who is retiring, has resigned as outside administrator of
the Publicity Club of New York. She also handled Women Executives
Edition, June 14, 2000, Page 8
about two chronic stonewallers and disbelievers in the free
flow of information --Omnicom and PRSA-- are in this issue.
present a good example for others not to follow.
OMC's CEO John Wren, who has publicly stated he likes to
keep a low profile, has been drawn into what has become
an embarrassing personal endorsement of a dot-com company
If the company was so great, as Wren's initial endorsement
said it was, why did he withdraw from its board so quickly?
Why was a false press release put out by Zero.Net and an
OMC PR firm (Fleishman-Hillard) saying that a "significant"
investment had been made by OMC in Zero.Net when no such
investment was ever made?
Wren, by his own admittance, says he was drawn to Zero.Net
because the son of one of the principals of an OMC PR firm
(Jake Weinstock, son of Davis Weinstock of Clark & Weinstock)
was its CEO. The 28-year-old Jake Weinstock led Wren "down
the garden path," as the saying goes. He certainly
had a meteoric career at Zero.Net.
Did OMC ever make a thorough study of Zero.Net and its owners?
The latter company is now involved in a lawsuit and we won't
presume to judge whether it is guilty of anything or not.
But readers who want to read the entire 47-page suit can
find it on the www.odwyerpr.com
website. We will post the Zero.Net reply when that becomes
There is a possibility that SEC rules have been broken.
At the least, a false release was circulated via PR Newswire
that OMC had made a "significant" investment in
Zero.Net. Now would be a good time for Wren, Davis and Jake
Weinstock, and others to hold a press conference and answer
OMC, as is well known, employs neither an IR nor a PR person.
This NL has been given the cold shoulder by OMC for years
while security analysts get the royal treatment. Evidence
is that other reporters have also been shunned by OMC since
not one reporter except us has attended any of the three
last annual meetings of OMC.
chickens have come home to roost at PRSA, the biggest national
organization of PR pros which has not had a PR pro on staff
for nine months.
It owed $880,379 to suppliers as of Dec. 31, 1999, a huge
281% jump from a year earlier. Its current liabilities,
as we figure them, exceed its current assets. When an organization
is not paying its bills, as PRSA was not last December,
it is insolvent. What are the payables now? Treasurer Joann
Killeen won't say. She is meeting with Deloitte & Touche
this week and hopes to have some answers.
Actually, Killeen and chair Steve Pisinski knew or should
have known of the payables situation the first week of January
2000 and should have revealed this to the membership instead
of waiting until June.
The current crisis, which included the sudden resignation
of CFO Joe Cussick (annoyed out of his job by board questions
about PRSA's finances, sources said), also involves the
refusal of D&T to sign off on the PRSA audit. It's a
big warning signal when a CPA won't do this. D&T is
acting as the CFO and has also been hired to do a special
study of PRSA's fiances.
This does not impress us since D&T is the firm that
gutted IABC's financial report to members earlier this year.
Most likely the D&T study will take many months and
members won't see a word of it. Auditors report to the board,
not the membership of an organization.
"Outed" PRSA Financials
deserves credit for publishing the unaudited financials
of PRSA when D&T refused to sign off. Killeen says the
figures that show PRSA makes money on Tactics and Strategist
(revenues of $1.38M and expenses of $1.24M) are false because
the revenues include $502,500 of dues. But she has been
powerless to do anything about this (as have all the treasurers
before her). She needs the publicly expressed help of chair-elect
Kathy Lewton and board members like Maria Russell, Mitch
Head, Sandra Longcrier and Stephen Shivinsky, who have jobs
at well-known institutions or companies.
deferred dues acknowledged as a liability by PRSA (a pathetic
$198,746, down from $350,309) is also a false item on the
financial report. This should really be $1.7M or about half
of dues income of $3.38M. The Amer. Medical Assn., Amer.
Bar Assn., Amer. Marketing Assn. and Amer. Society of Assn.
Executives all defer large amounts of their dues. The ASAE
by example recommends this. Income shouldn't be booked until
earned. NIRI does not do this but is reconsidering it since
'revenue recognition' is a big current issue in IR.
PRSA COO Ray Gaulke, it is now known, has four-and-a-half
years to go on a contract that pays well over $250,000
a year. The previous top four officers gave this unprecedented
five-year contract to the 66-year-old former ad executive
without full board approval, sources indicate.
Worst of all, members are not going to be allowed to
see who, if anyone, is running against Killeen for chair-elect
and Deanna Pelfrey, secretary and the expected candidate
for treasurer. The inner clique has decreed that those running
for nomination (tantamount to election) will do so in secrecy
for another year.