Edition, June 21, 2000, Page 1
OF UNION CAMP TO HAWTHORN
Thomas G. Lambrix, 51, former senior VP, communications
and PA at Union Camp, joined The Hawthorn Group, Alexandria,
Va., as EVP.
Hawthorn, which has 53 employees, handles PA and corporate
communications. It has a number of accounts in energy, healthcare
Lambrix, who was on the policy committee of Union Camp,
will head the firm's regulated industry energy practice.
He headed internal and external PR, government relations,
advertising and community relations for the $4.5 billion
paper and forest products company, which was acquired by
International Paper Co. last year. Before joining Union
Camp in 1992, he was with Phillips Petroleum Co. 10 years.
WEB INVESTMENT EXAMINED
Questions about Zero.Net, in which Omnicom has an investment
and on whose board OMC CEO John Wren briefly served, are
raised in a new column by Bloomberg's Christopher Byron.
The column says that Z.N., a holding company controlled
by Andrew Evans, gained control of almost all the public
shares of Envision Development Corp., an Internet stock
with a capitalization of $403 million but only $2.29M in
revenues for the year ended Jan. 29.
The stock trades at about $47 a share but the firm has no
earnings and no operating cash flow. It has about $3.6M
in cash from an IPO last year.
The Byron column says that Envision's stock went from $6
a share last October to $75 in May while other high-tech
stocks were crashing and this raised questions "about
whether a free and open market in the company's shares actually
Byron claims that recent filings about the purchase of stock
in Envision, raise questions about the amounts and prices
paid for the Envision shares.
The financial writer, whose column goes to 180,000 investment
pros via Bloomberg, was unable to reach Wren for his column.
Wren joined and abruptly quit the board of Z.N. Also not
available at press time were Z.N. board member Davis Weinstock,
of Clark & Weinstock, OMC-owned PR firm, nor his son,
Jake, who is CEO of Z.N. A press release said OMC made a
"significant" investment in Z.N. but this turned
out to be less than 4% and was cited as the reason Wren
quit the Z.N. board.
TO KRATZ & JENSEN
AirPrime, Santa Clara, Calif., maker of advanced modem cards,
to Kratz & Jensen, New York, for national PR campaign.
K&J said the account is worth $1 million in billings.
AirPrime's modem cards will provide faster wireless transmission
of data across worldwide networks.
Other recent wins include IBM, Kiwilogic (language recognition
software), and Omi-Choice. com, consumer advice website.
Reports that the firm has held merger talks with Euro RSCG,
owner of Creamer Dickson Basford and Middleberg +Assocs.,
could not be confirmed.
TO GET NO $$ FROM PRSA
Although the PRSA Foundation "pledged" $1 million
to the "Kids in a Drug-Free Society" campaign
last fall (9/22/99 NL) and the 2000 plan of PRSA called
on PRSA to raise $600,000 to support the KIDS drive, KIDS
now says it will receive no funds directly from either group.
Ron Sconyers, who heads KIDS, which got $2.6M from the Robert
Wood Johnson Foundation, said, "No PRSA or PRSA Foundation
operating funds have been or will be used to fund KIDS.
KIDS will be sustained by grants, sponsorships and donations."
Jean Farinelli, president of the Foundation, could not be
reached for comment.
DISAPPOINTED WITH PRSA
The decision of PRSA leaders to delay any reform in the
nominating process until next year has "disappointed"
1997 president Debra Miller and others who in March called
on the Society to open PRSA's website to candidates.
Miller said, "I am disappointed that PRSA was unable
to have open nominations this year and I seriously hope
that it will consider it next year."
Said Philadelphia chapter board member Rene Henry: "We
have the technology, let's use it."
PRSA/New York president-elect Robert Weintraub blasted national
leadership for blocking his proposal for an Assembly financial
oversight committee. Chicago counselor Herb Kraus, calling
for open nominations, said he was "astounded"
by the "ongoing problems of the ingrown national leadership."
Miller, who was the 1999 nominating committee chair, in
early March asked the task force on nomina-
on page 7)
Edition, June 21, 2000, Page 2
OFFERS RESULTS-BASED CONTRACTS
Hill and Knowlton's Washington, D.C., office is offering
results-based contracts and "on time, on budget"
guarantees to its clients.
The new system was unveiled by Torie Clarke, who was hired
last November as general manager.
Clarke believes the results-based contracts will establish
"stronger bonds" between H&K and its clients.
Clarke said the firm was "tackling head-on one of the
biggest complaints clients have about agencies -- busting
budgets and missing deadlines."
Under the contracts, H&K will base its compensation
for work on the success of projects it performs.
These types of contracts are increasingly employed in ad
Using similar criteria, H&K will calculate its payments
by objective, subjective or a combination of measures, whatever
each client and the agency find satisfactory.
For example, marketing clients can base their payment for
the firm on stock performance, brand recognition, or a significant
increase in product sales.
H&K has also agreed to reduce its fees by 15% if the
agency fails to deliver documents or material on time.
Similarly, any costs that exceed the agreed-upon budgets,
without the client's written approval, will be absorbed
SHUNS PRESS IN LAWSUIT
Kekst & Co. does not plan to pitch any stories about
the Warnaco Group, which was sued by Calvin Klein for alleged
federal trademark violations and breach of fiduciary duty
Lerer & Montgomery, which is handling PR for Calvin
Klein, has taken the opposite approach. The firm has been
aggressively pitching Klein for stories and guest appearances
on TV talk shows.
Robert Siegfried, a principal of Kekst, which has handled
Warnaco and its chairman/CEO Linda Wachner for the past
10 years, recently told Women's Wear Daily that he believes
it is inappropriate to seek press coverage while litigation
is going on. Siegfried told WWD that nobody at Kekst has
ever pitched stories about Wachner or Warnaco even in the
best of times.
Kekst has issued the following statement to any news organization
that has inquired about the lawsuit: "The complaint
is without merit, and we are confident that it will be clearly
shown to be just that in court. In our view, it is a desperate
attempt by Calvin Klein to cover up and distract focus from
the highly deteriorated business state of (Calvin Klein).
Throwing stones at Warnaco and Linda Wachner is not the
answer to CKI's problems, Calvin Klein's failed sale of
CKI or the positions Calvin Klein or CKI are in today."
Warnaco's statement was read out loud and reproduced on
the screen during Klein's recent hour-long interview on
the "Larry King Live" show. Klein discussed the
lawsuit for about 15 minutes.
Michael W. Kempner, CEO of MWW Group, told WWD Wachner needs
allies, and she appears not to have them, whether in the
fashion industry or on Wall Street, said Kempner.
PRINT ARs AREN'T DEAD
William Dunk, an IR advisor who publishes an "Annual
Report on Annual Reports," said people who believe
the print annual report is dead are wrong.
In an interview with David Rani The Raleigh (N.C.) News
& Observer, Dunk said the print annual report is "probably
as important as ever."
Dunk said the quality of annual reports is "beginning
to drop a little bit," which he attributes to an internal
development in corporations where the annual report has
"I'm going to call this a self-inflicted wound,"
said Dunk. "Whether companies like it or not, [the
annual report] still remains the document of record,"
According to a 1999 survey conducted by the National Investors
Relations Institute, 76% of the respondents reported they
now offer an online version of their annual reports, up
from 31% in 1996.
Diane Foster, IR director for Pall Corp., said its online
annual report was downloaded 5,500 times last year.
This translated to a savings of $32,000 worth of print material
that it would have otherwise sent out by request, Foster
PRO BECOMES A CREATIVE WRITER
Saul Bennett, formerly president of Robert Marston Marketing
Comms., has made poetry his "main passion" since
leaving the firm in 1996.
Bennett, who continues to do consulting work for corporations
and PR firms, is the subject of an article in Winter 2000
issue of The Ohio Journalist, published by the E.W. Scripps
School of Journalism at Ohio University.
Europe Ltd., has consolidated its UK and pan-European
PR programs with The Weber Group Europe. Weber already handles
Hitachi in North America and Hitachi Data Systems Europe.
It will now handle multiple divisions across a number of
International is putting its name on Women's Off-Road
Racing Champion Molly Morter's racecar, driving suit and
The 24-year-old Morter is an A/E in G/H's Chicago office.
S Simon Productions reports about one out of every four
broadcasters would have liked to interview a host, guest,
contestant or personality on a network television show during
last February's Sweeps period.
D S Simon surveyed more than 800 TV newsrooms in March.
The survey was targeted to assignment editors, morning and
midday show producers.
Edition, June 21, 2000, Page 3
LINKS TO COS. DRAW CRITICISM
Marcia Angell, M.D., who is retiring July 1 as editor of
the New England Journal of Medicine, said new restrictions
are needed to stop academic researchers from owning stock
in companies whose drugs they study.
Angell's editorial appeared in the May 18 issue of the Journal
with a new research report by Thomas Bodenheimer of the
University of San Francisco medical school, who found "academic-industry
drug trials have been tainted by the profit incentive."
Bodenheimer's article, which was based on interviews with
researchers and a review of several papers, concluded that
drug companies control research by delaying or preventing
publication of adverse results, limiting studies to areas
that would boost drug sales, and limiting access to the
complete data, while researchers see only a portion of continuing
report also said there is a "wide prevalence' of using
ghost writers, hired by the drug company or contract research
organization to write the report. Academic researchers then
ask to review the article and then claim authorship.
said "academic medicine has become interwined with
the pharmaceutical and biotechnology industries" in
a variety of ways.
said researchers get grant support, and also serve as consultants,
advisory board members, paid speakers, and "allow themselves
to be plied with expensive gifts and trips to luxurious
Jeffrey M. Drazen, M.D., will replace Angell July 1 as editor-in-chief.
POSES PROBLEM FOR HEALTH WEBS
"The problem with seeking health information on the
web is knowing whom to trust," said Craig Stoltz in
a report that appeared in The Washington Post?s May 16 "Health"
Stoltz, who is editor of the weekly section, said he and
his staff writers found "a murky world" for consumers,
where it was "hard to tell who is providing the information,
how good it is and what the provider?s ulterior motive might
InteliHealth.com, which is one of the Internet's most
popular and well-regarded health sites, does not "clearly
identify" Aetna U.S. Healthcare as the owner.
"You won't find a reference to Aetna on the home page,
in the `About Us' area or even in the press releases,"
The report contained a detailed review of these sites: Webmd.com,
While material from commercial web operations is often slicker
and more accessible, "it's rarely as dependable as
the information offered by government agencies, universities
and non-profit groups," the report said.
Among the most "dependable places to turn for information"
said the report.
John O'Sullivan, 58,
who has been an editorial consultant to Hollinger International,
which publishes the National Post in Toronto, and The Chicago
Sun-Times, was named editor-in-chief of United Press International,
based in Washington, D.C.
55, Washington, D.C.-based correspondent for ABC News since
1980, is leaving in July to start a communications consulting
firm in Silicon Valley. His firm will advise Internet firms
how to communicate with clients and the public.
Sherman has replaced Lynn
Koffey as Forbes.com's mutual funds/personal
Goldbacher, previously personal finance editor
of USA Today, was named editor of the "Money"
section, replacing Beth Belton,
D. Story, previously features editor at Vogue,
was named editor-in-chief of Departures, a travel magazine
published by American Express. Story replaces Gary
Walther, now at Expedia Travel, which is owned
Hindell, a BBC reporter, and Peter
McKillop, who is Asia-Pacific VP/corporate communications
at J.P. Morgan Bank, based in Tokyo, got married late last
Pearstine was given a new three-year contract
as Time Inc.'s editor-in-chief.
Edition, June 21, 2000, Page 4
PINPOINTS ONLINE OPINION MAKERS
A Roper Starch Worldwide study of 2,014 Internet users has
identified a group of about nine million opinion makers,
who have influence on more people and topics than other
which commissioned the study, has labeled the group as "E-fluentials."
B-M estimates one influential online person has an impact
on the attitudes and behavior of approximately eight people.
the old economy-or the offline world-one person was generally
thought to have an impact on the attitudes and behavior
of approximately two people,
according to B-M.
B. Keller, president/COO of Roper Starch, said B-M's segment
"may well turn out to be the most influential communications
medium ever created."
Blair Witch Project" and Hotmail are used by B-M as
an example of the influence of E-fluentials on web-based
said Blair Witch's website had generated 75 million visits
in the first week alone, and the movie, which cost $15,000,
grossed at least $100 million by using the Internet to spread
2.0 magazine said Hotmail spent less than $500K on a web-based
marketing campaign, which resulted in 12 million subscribers
within 18 months. "The challenge today and in the future
will be for companies, communities and government agencies
to understand E-fluentials and harness their potential impact
to achieve measurable business results in this new E-society,"
said Christopher Komisarjevsky, president/CEO of B-M.
HITS DOT-COM NEWS SITES
which was aiming to be the inter-national source of crime,
justice and safety news, has stopped paying 140 staffers
and several freelancers.
company, which was losing a reported $2 million a month,
had spent most of the $23 million it had raised in venture
100 staffers have continued to work for APBNews after signing:
"I am a volunteer and do not expect compensation."
staff included Sydney Schanberg, who won a Pulitzer Prize
for The New York Times, and police reporters from places
like The Washington Post, Newsday and The Bergen Record.
observers, like Rick Malwitz, who writes for injersey.com
and The Home News in New Brunswick, said the closing of
APBNews.com is another sign that daily newspaper readers
are not ready for a news switch.
is better done with a newspaper," and local news is
what attracts readers, said Malwitz. "APBNews.com can
do a great job with O.J., but it doesn't do Edison robberies,"
was not the only bad news in cyberspace last week. Salon.com,
a pioneer Internet news magazine, cut its budget 20%, axed
13 staffers and closed the Seattle bureau.
those laid off were media reporter Sean Elder, book reporter
Craig Offman, book review editor Craig Seligman, and travel
editor Bill George.
lost $18.8 million on revenue of $8 million in the fiscal
year ended March 31. CBS on-line operation also dismissed
24 of 100 staffers.
the startup women's cable network, has shelved two shows,
"Pure Oxygen," and "Trackers," for the
summer to save money.
NEWS RELEASES STILL WORK BEST
printed copy accompanied by photos is still the best way
to send news releases to trade publication editors, according
to Jim Jobes, PR dir. of Industrial Marketing Services,
Des Plaines, Ill.
arrived at this conclusion after asking editors at 16 trade
publishing companies if they wanted to get materials digitally
or preferred hard copies, and if they wanted digital material,
did they want it on disk or by E-mail?
all of the editors got press materials by E-mail, just 35%
said E-mail is their preference.
editors said they preferred getting digital materials on
a CD-ROM as 83% had a CD-ROM drive on their computer.
images are going to be transmitted, Jobes recommends putting
them on a CD-ROM in a .TIFF for-mat, which was cited as
the most popular electronic imaging format suitable for
believes eventually most PR people will be sending hard
copy accompanied by a CD-ROM to the publications.
press office sent a questionnaire to media outlets that
asked how they want to get text information and photos.
text, respondents were given a choice of five preferences:
hard copy, floppy disk, CD-ROM, E-mail and website download.
photos, the choices were prints, slides, CD-ROM, E-mail,
website download, high resolution or low resolution.
WINS JUDGMENT AGAINST REPORTER
Antilla, a former reporter for The New York Times, must
pay Robert Howard, the founder and former chairman of Presstek
Inc., $480,000 for putting him in a false light.
wrote an article, which was published in 1994, that discussed
rumors Howard might be Howard Finkelstein, a convicted felon.
Times, which was not named in the lawsuit, printed a retraction
the day after Antilla's article ran, and a few days later,
after Howard agreed to be fingerprinted, the SEC said Howard
and Finkelstein were not the same person.
jury in Concord, N.H., found for Antilla on the claim of
defamation of character.
Edition, June 21, 2000, Page 7
DISAPPOINTED (cont'd from page one)
tions headed by Jack Felton to open the nominating process
so that the entire membership could participate via PRSA's
There had been criticism that the nominations in 1999 for
posts on the 2000 board had been subject to undue influence
by a few insiders (not on the nominating committee) who
found out who was running for office. In recent years, identities
of those running for the national board and national offices
have been kept secret. Candidates have not been allowed
to run openly and seek support from fellow members. Only
the nominating committee is supposed to know who is running
and only its members have the opportunity to make the choice.
Felton has collected opinions from members on the nominating
process. He said the opinions were running toward an open
process but he has yet to reveal any of the replies.
Mary Lynn Cusick, 2000 nominating committee chair, said
it's too late to change the process this year. Deadline
for those seeking a nomination is June 23 and candidates
will not be allowed to disclose this publicly, she said.
The nominating committee will hear presentations in Chicago
Candidates can also run for national office by presenting
10 signatures of Assembly delegates to h.q. 30 days before
the Assembly. Two candidates did that last year and indications
are there may again be opposition to the official slate.
is Democratic Process?
Henry, vice chair of the College of Fellows, noted that
the second article of the PRSA code of ethics calls on members
to "exemplify" the "democratic process."
He said PRSA should allow any member to present his or her
credentials on the website and run for national office.
Kraus said, "I, as well as many other PRSA veterans,
believe that the nominating process, including who's running
for office, should be open to the entire membership."
Roberta Wong Murray, of Wong & Murray PR, Walnut Creek,
Calif., said she was not aware of the resignation of Cussick
nor the failure of D&T to sign the audit. She said she
supports Miller's quest for open nominations but feels Miller
or others will probably have to present a petition to the
Assembly before anything will happen. Murray, who was on
the 1993 nominating committee, said she was disappointed
by last year's election process. She said changes need to
be made but is not sure what they should be.
Bob Stack, who was nominated to the national board last
year representing the Southeast, had declined the nomination
to protest the small number of candidates showing up for
office. He said the process had become too inbred and was
discouraging qualified people from running.
Weintraub had proposed a financial oversight committee of
Assembly members at the 1999 Assembly meeting but was ruled
out of order by chair Sam Waltz who said the Assembly has
no right to usurp the power of the board.
Waltz cited a New York law saying that the governing powers
of an association reside with the board and only with the
board. The Assembly, according to Waltz, can only elect
officers or raise or lower dues.
Weintraub said Waltz mistakenly ruled him out of order because
an oversight committee would only have advisory powers and
would not diminish the board's powers. He said numerous
associations have such committees and that if PRSA had one
the Society would not be in the financial "mess"
that it is now in. He referred to the failure of Deloitte
& Touche to come up with the audit, the resignation
of Joseph Cussick as PRSA's CFO, and the record payables
of $880,000 as of Dec. 31, 1999.
He also called on PRSA leaders to explain the financials
to members. "They should understand what is going on,"
A record for lateness has been set by the current audit.
Previous audits were dated April 24, 1998; April 4, 1997;
May 16, 1995; April 12, 1994; Feb. 15, 1993; March 17, 1992;
March 1, 1990, and March 4, 1988.
A full set of unaudited financials were published by PRSA
in the first week of March, 1997, when Miller was president.
The Society then started putting out quarterly reports but
this practice was abandoned.
Meets with D&T
Joann Killeen, treasurer, who is running for chair-elect
of PRSA, met with D&T June 13 and said the accounting
firm is waiting for additional information from PRSA relating
to payables and receivables. She confirmed that there is
a dispute over a bill by one of the major advertisers. She
denied that D&T is refusing to sign the audit. COO Ray
Gaulke had previously told this NL that the audit was at
D&T and was awaiting the signature of a senior partner
who was out of town. Killeen said this was not correct.
Sixty rank-and-file PRSA members were called by this NL
and 11 were reached. None knew of the resignation of Cussick,
the unsigned D&T audit, or the $880K in payables. Jacqueline
Scott-Shannon of the Teacher's Retirement System of Oklahoma
said members have a right to know financial matters and
who is running for office. "They could post things
on the website," she said. Brenda Farrell of Johnson
& Wales University, who knew nothing of the financial
situation, said, "National is, however, very good at
sending information when they're changing a policy, like
MARKETING BIG AT CORPS
The Promotion Marketing Assn., a New York-based trade group,
said a survey found more than 85% of corporations and 65%
of nonprofit organizations participated in cause marketing
partnerships to raise money and attention for causes during
Edition, June 21, 2000, Page 8
Communications; University of Maryland; Southwestern Bell
Telephone; Fleishman-Hillard; Syracuse University; Trinity
Health; Publicis Dialog, and EDS Communications.
are quite valuable brand names. EDS is the electronic giant
based in Dallas and formerly known as Electronic Data Systems.
Trinity is the newly created $4.1 billion, 10,000-doctor
combination of Mercy Health Services and Trinity Health,
brand names are represented on the national board of PRSA
and are identified with PRSA's policies. The PR people who
work at these organizations got on the PRSA board partly
or even mostly because they work for prestigious institutions.
instance, chair-elect Kathy Lewton's job with Fleishman-Hillard
was a key point in her election last year by the Assembly.
"She's where we want to go," said one of her seconding
speeches. She's big league and we can be big league, too,
was what the seconder was saying.
Bell (Sondra Longcrier), Golin/Harris (Mitch Head) and Trinity
(Stephen Shivinsky) were added to the board for the same
criticism was that there were too many sole practitioners
on the board.
McDermott, a petition candidate along with Lewton, failed
to get elected, we think, because he didn't have a job in
the business world. He's a visiting assistant professor
at Iona College. If he were VP-PR of a big bank (his background),
would have won in a walk.
brand names are being soiled by their association with PRSA.
The presence of employees of these brands has not been able
to change the self-seeking, insular, information-averse,
staff-dominated culture of the Society. The withholding
of information continues on a large scale. The resignation
of CFO Joe Cussick when the (very late) audit has not been
completed is not on the PRSA website. The Society refuses
to list its elected delegates and their e-mails on the site.
Opposition candidates are not allowed to run on the site.
The College of Fellows did a two-year study of what recruiters
think of APR and PRSA refused to print it anywhere because
it's negative. PRSA signed 66-year-old COO Ray Gaulke to
a record five-year contract but no details are available.
No explanation is given for the inability of PRSA to get
a signature out of its auditor, Deloitte & Touche. Payables
skyrocketed to $880,000
but this is concealed from members. Treasurer Joann Killeen
can't even find out the current payables situation. Almost
alone among associations, PRSA refuses to set aside funds
for future services to members. Its financials year after
year falsely state that PRSA makes money from publications.
No matter how big the receivables are (even $544K) it still
says only $7,000 are doubtful.
players at PRSA have a habit of walking out without an explanation
in times of stress. Cussick, a six-year employee, is
the latest example. But PR directors Richard George and
Steve Erickson both quit in front of national conferences.
Jack Felton, who is studying (at leisure) PRSA's nominating
process, was president-elect in 1986 when Tony Franco resigned
after signing an SEC consent decree. Felton went on a week's
vacation (later apologizing for that to the Assembly) and
when he came back appointed Dave Ferguson as "interim
acting president." It appears he didn't want his hands
or the hands of his employer on this messy situation. A
task force headed by Betsy Plank found that Felton violated
the bylaws in ducking the Franco mess. Almost none of the
elected leaders and none of the h.q. staffers could be found
last week, two leaders claiming to be "on vacation."
One tried to convince
us that "receivables" are "cash."
PR on the part of Microsoft's Bill Gates is a big reason
for the antitrust mess the company is in. A turning
point, according to Newsweek, was the videotaped deposition
in 1998 in which Gates appeared "petulant, contemptuous
or bored." He quibbled over the simplest words and
denied knowing what he meant by his own e-mails... this
argumentative, proud, know-nothing stance shows up when
lawyers, CFOs and marketing executives have the ear of the
CEO and not PR. It can be very costly in the long run...
Omnicom, Zero.Net and Clark & Weinstock were all
unavailable for comment last week after the story broke
on Omnicom CEO John Wren resigning from the Z.N. board.
Huge questions remain such as when did Jake Weinstock join
Z.N as CEO and is there any evidence that anyone but Andrew
Evans owns Z.N.? Current wisdom of lawyers, CFOs, etc.,
in this type of situation is to say nothing and hope the
whole thing blows over. But with a lawsuit and public companies
involved, this is not likely to happen... the CUC International
(Cendant) fraud went on 12 years and cost investors $19
billion, said news stories last week. A "culture
of fraud" was tolerated by top executives, it was said.
Jail terms loom for three execs. CUC auditors Ernst &
Young said it, too, was a victim of the fraud in which hundreds
of millions of fictitious profits were created over the
years. The goal was to have 25% earnings growth each year.
Numerous acquisitions were made.