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Internet Edition, June 21, 2000, Page 1


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 and transportation.

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.


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 existed."

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.


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.


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.


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-

(continued on page 7)

Internet Edition, June 21, 2000, Page 2


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."

Based on Success

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 accounts.

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 by H&K.


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 and contracts.

Robinson, 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.

Written Statement Issued

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.


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 been de-emphasized.

"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," he said.

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 said.


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.

Hitachi 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 countries.

Golin/Harris International is putting its name on Women's Off-Road Racing Champion Molly Morter's racecar, driving suit and other equipment.

The 24-year-old Morter is an A/E in G/H's Chicago office.

D 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.

Internet Edition, June 21, 2000, Page 3


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 results.

Bodenheimer's 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.

Angell said "academic medicine has become interwined with the pharmaceutical and biotechnology industries" in a variety of ways.

She 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 settings."

Jeffrey M. Drazen, M.D., will replace Angell July 1 as editor-in-chief.


"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" section.
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 be."

For example,, 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," said Stoltz.

The report contained a detailed review of these sites:,, CBS,,;;, and

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" are,,,, and, 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.

Jack Smith, 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.

Lynn Sherman has replaced Lynn Koffey as's mutual funds/personal finance reporter.

Ray Goldbacher, previously personal finance editor of USA Today, was named editor of the "Money" section, replacing Beth Belton, who left.

Richard 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 by Ziff-Davis.

Juliet 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 year.

Norman Pearstine was given a new three-year contract as Time Inc.'s editor-in-chief.

Internet Edition, June 21, 2000, Page 4


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 users.

Burson-Marsteller, 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.

In 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.

Edward 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."

"The Blair Witch Project" and Hotmail are used by B-M as an example of the influence of E-fluentials on web-based marketing campaigns.

B-M 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 the word.

Business 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.

SHAKEOUT 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.

The company, which was losing a reported $2 million a month, had spent most of the $23 million it had raised in venture capital.

About 100 staffers have continued to work for APBNews after signing: "I am a volunteer and do not expect compensation."

Its 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.

Media observers, like Rick Malwitz, who writes for and The Home News in New Brunswick, said the closing of is another sign that daily newspaper readers are not ready for a news switch.

"Browsing is better done with a newspaper," and local news is what attracts readers, said Malwitz. " can do a great job with O.J., but it doesn't do Edison robberies," said Malwitz.

It was not the only bad news in cyberspace last week., a pioneer Internet news magazine, cut its budget 20%, axed 13 staffers and closed the Seattle bureau.

Among 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.

Oxygen, the startup women's cable network, has shelved two shows, "Pure Oxygen," and "Trackers," for the summer to save money.


Double-spaced, 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.

Jobes 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?

Although all of the editors got press materials by E-mail, just 35% said E-mail is their preference.

Most editors said they preferred getting digital materials on a CD-ROM as 83% had a CD-ROM drive on their computer.

If 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 reproduction.

Jobes believes eventually most PR people will be sending hard copy accompanied by a CD-ROM to the publications.

Mercedes-Benz's press office sent a questionnaire to media outlets that asked how they want to get text information and photos.

For text, respondents were given a choice of five preferences: hard copy, floppy disk, CD-ROM, E-mail and website download.

For photos, the choices were prints, slides, CD-ROM, E-mail, website download, high resolution or low resolution.


Susan 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.

Antilla wrote an article, which was published in 1994, that discussed rumors Howard might be Howard Finkelstein, a convicted felon.

The 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.

The jury in Concord, N.H., found for Antilla on the claim of defamation of character.

Internet Edition, June 21, 2000, Page 7

MILLER 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 website.

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 July 21-23.
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.

Where 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," he said.

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.

Killeen 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 raising dues."


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 1999.

Internet Edition, June 21, 2000, Page 8

Golin/Harris Communications; University of Maryland; Southwestern Bell Telephone; Fleishman-Hillard; Syracuse University; Trinity Health; Publicis Dialog, and EDS Communications.

These 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, a
Catholic institution.

These 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.

For 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.

Southwestern Bell (Sondra Longcrier), Golin/Harris (Mitch Head) and Trinity (Stephen Shivinsky) were added to the board for the same reason. The
criticism was that there were too many sole practitioners on the board.

Michael 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), he
would have won in a walk.

These 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.

Key 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."

Poor 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.



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