CONGRESS PROBES O&M's BILLING

Florida Rep. John Mica slates hearings Wednesday on whether Ogilvy & Mather overbilled the White House on its anti-drug advertising campaign.

A consultant has charged O&M with nearly $14 million in overcharges.

The ad agency, which does not have an internal PR person, uses H&K CEO Howard Paster, as its spokesperson.

He noted the O&M is willing to adjust its charges, but does not expect a significant reduction in its $187 million bill.

Gen. Barry McCaffrey, who heads the White House drug office, defends O&M, and believes Mica's hearings on an effort to discredit the White House before the election.

REEBOK BOOTS PR BUSINESS TO F-H

Reebok International has hired Fleishman-Hillard following a "multi-agency" pitch for the "mid six-figure" PR account, according to Eric Blinderman, senior VP at F-H.

Ruder-Finn had the Reebok business.

F-H is to handle brand, product marketing and entertainment support, plus counsel the firm on its role in promoting human rights.

Reebok sponsors an annual human rights award. Its footwear plants are in China, Indonesia, Thailand and Vietnam.

Lynn Morgen, 53, one of the founders in 1982 of Morgen-Walke Assocs., which grew to be one of the largest financial PR firms, is leaving at the end of the year to work full time for a client and to devote more time to her husband and two sons... Abbott Laboratories, Abbott Park, Ill., reportedly is searching for a VP-communications. Catherine Babington is VP of IR and PA...James M. Simon, a partner and executive director of communications at KPMG, to Cardinal Health, Dublin, Ohio, as SVP and chief communications officer. Cardinal employs 40,000 and has revenues of $25B+...Steven A. Rautenberg, formerly VP of CC at Reliance Group and previously with Chase Manhattan Bank 19 years, rising to VP and director of PA, to Canon U.S.A. as VP and general manager, CC division. Michael Virgintino is press contact at the company...Judith Phair, VP/institutional advancement at the University of Maryland Biotechnology Institute, joined Council on Competitiveness, Washington, D.C., as VP-PA.

SFX PICKS C&W FOR ITS SHOWBIZ ACCOUNT

Cohn & Wolfe beat Fleishman-Hillard and Edelman PR Worldwide for the $500,000 corporate communications account of SFX Entertainment, the New York company that bills itself as the No. 1 promoter of live events.

Howard Schacter, VP-PR at SFX, said at least 15 PR firms responded to his company's RFP that went out in June.
Schacter said C&W is in charge of SFX's corporate branding, media and community relations programs.

SFX handles shows such as Riverdance and Seussical the Musical, and concerts by artists such as Dixie Chicks, Tina Turner, and Santana.

DDB/Seattle is doing media relations work for the RU--486 abortion pill that was approved by the Food and Drug Administration on Sept. 28.

It's been pretty busy, says Tom Phillips, Managing Partner at the firm, which is an Omnicom unit.

The prescription drug, known as mifepristone, will "allow women to have abortions in the privacy of their homes," according to the Sept. 29 New York Times.

Abortion rights groups hailed the FDA decision as the biggest breakthrough in reproductive healthcare since the birth control pill. Opponents blasted mifepristone as "baby poison."

PRSA BLAMES iMIS COMPUTER SYSTEM

The iMIS computer software under installation at PRSA for about two years came in for criticism during two teleconference calls conducted last week by chair Steve Pisinski, treasurer; Joann Killeen, chair-elect; Kathy Lewton, and other leaders.

The criticism was directed not so much at the software but at the local implementer-Development Technologies of Farmingdale, N.J.

Pisinki said PRSA may not pay the last bill to DT and is thinking of hiring another installer. Talks are being held with Taylor Technologies, New York.

Computer costs have soared at PRSA. The audit shows spending of $430,313 on "computer equipment" in 1999 alone with the total in recent years having reached $999,437. Some of this has been depreciated. The iMIS software has cost about $200,000. Also added were new computers for all staffers, two new servers, new printers, three network hubs, and new wiring.

Robert Alves, president of Advanced Solutions International, Alexandria, Va., distributor of iMIS, said installation of the software in a group the size of PRSA "normally" takes six to nine months.

He was mystified at the two years (and counting) needed for installation at PRSA. He said DT is "one of the best providers we have" and said that

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MEXICO CITY CONSOLIDATES PR AT KWE

The Mexico City Tourism Authority has given KWE Assocs. its $1 million PR account, according to Karen Weiner Escalera.

KWE had been doing media relations work for Mexico City in a partnership with Fleishman-Hillard that was terminated in September.

It now handles crisis PR, special events, press trips, consumer promotions and video work, which triples KWE's fees from Mexico City.

Escalera said her firm will deliver a "Take a Fresh Look at Mexico City" pitch for the client.

NIRI ASKS SEC FOR DELAY OF REG FD

National Investor Relations Institute president Lou Thompson has asked the Securities and Exchange Commission to push back implementation of Regulation FD from Oct. 23 to Dec. 29 to give IR units more time to prepare for the rule.

Many NIRI members "have voiced a number of questions about the steps that issuers should take to comply with Reg FD," wrote Thompson to Jonathan Katz, Secretary of the SEC.

They also are concerned with the timing of the effective date.
Thompson noted that Reg FD will "take effect in the middle of the earnings announcement cycle for most public companies."

That, to Thompson, will make it difficult for companies to "draft appropriate earnings releases and prepare for analyst calls that are in compliance" with Reg FD.

Thompson is doing "road shows" to educate members about Reg FD.

The SEC is reviewing Thompson's request.

The Wall Street Journal on Sept. 25 predicted Reg FD will result in more stock price volatility because companies are prohibited from providing "guidance" to favored analysts.

Reg FD, said the WSJ, will require analysts to do more legwork to get inside scoops on companies they cover, rather than issuing reports that are "rewritten and repackaged" PR material.

PR FIRMS BATTLE FOR TOP TALENT

PR firms are fighting to either recruit or retain the 40,000 skilled communicators, said Darryl Salerno, Magnet Communications CEO, in explaining the cutthroat competition for talent in this flush time for PR.

"The firm that keeps its brains, wins the war," he told a breakfast seminar on PR firm profitability.

The session, which was moderated by Lee Levitt, was sponsored by financial consultant Holly Lundberg and Corpro Diversified Programs in New York.

Salerno and Tom Hoog, CEO of Hill & Knowlton/ USA, both cited employee retention as a top priority.

Hoog, in noting that H&K "can't pay the highest dollar" for execs, said his goal is to make sure that each staffer knows the opportunities for advancement.

Each H&K staffer receives extensive training and mentoring. It's "up or out" in two years, he said.

H&K also is trying to appeal to the "new generation of employees" that have lives outside the office.

The firm, said Hoog, went "business casual" a while ago, and has a "Take Five" program in which workers are entitled to five Fridays off in addition to their vacations.

Salerno has dropped clients that "were abusive" to staffers because unhappy workers are more likely to look for other jobs.

He also has a business rationale in getting rid of deadwood clients.

Salerno said 125 percent of a firm's profit comes from 80 percent of its client base, so it makes sense to cut clients that you are losing money on.

Bruce Bishop, CFO of Incepta's U.S. operation, said if a firm has a reputation for retaining talent, clients will soon be knocking on its door.

Incepta, a public company, makes sure executives have an ownership stake in the company, he said.

"Value billing"

The executives talked about how PR firms should educate clients on the merits of "value billing."

Salerno labeled PR's hourly billing system as "grossly wrong."
For instance, he wanted to know if it is fair for a firm to bill a client for the four hours it took to develop an idea that could generate $1 billion in revenues.

He told of a top executive who billed a client $200,000 for work that was worth $2,400 at his billing rate. The client was aghast upon receiving the bill, said Salerno. It claimed the work was only worth $120,000, so the PR exec revised the tab downward.

H&K, said Hoog, doesn't look to make much money on its senior executives.

"They are not about billing," he explained, "they are about building a business."

GAVIN ANDERSON ACQUIRES CLS&A FIRM

Gavin Anderson & Co. has acquired Chlopak, Leonard, Schechter & Assocs., a Washington, D.C.-based PA firm with 40 employees.

Robert Mead, president of GA&C, says the deal enables his Omnicom unit to expand its "political influence."

He calls the 11-year-old CLS&A "the firm of choice in Washington for some of the most sophisticated corporations and organizations in the world."

CLS&A clients include General Electric, World Bank, World Health Organization, Pew Center for Global Climate Change, Oracle, Verizon and Amtrak.

Founding partners Bob Chlopak, Charles Leonard and Peter Schechter are to join GA&C's management team.They had worked with Mead at Sawyer Miller.

Chlopak is to become executive VP, and a member of the firm's worldwide executive committee.

Leonard and Schechter are to develop GA&C's corporate and international issues management practices, respectively

AARP'S NEW MAG WILL TARGET BOOMERS

AARP, which changed its name from American Assn. of Retired Persons, will publish a new magazine called My Generation.

The bimonthly magazine will be aimed at people between the ages of 50 and 55 with a median household income of about $56,000. AARP will publish two editions of Modern Maturity, one targeted at 56 to 65-year-old people, and another for readers 66 and older.

My Generation will have a 3.1 million rate base at launch. The first issue is due out in March.

The magazine, which will address the concerns of aging Boomers, will have articles about healthcare, tending elderly parents, travel and political issues.

Betsy Carter, 55, who was editor of the now-defunct New Woman magazine, is editor-in-chief of My Generation.

CHICAGO TRIBUNE NAMES AD COLUMNIST

Jim Kirk has succeeded the late George Lazarus as marketing columnist for The Chicago Tribune.

Kirk, previously with The Chicago Sun-Times, had been writing the Sunday Tribune's "Media Talk" column, covering local broadcasting news.

His marketing column will appear Tuesdays, Wednesdays and Fridays.

MEDIA BRIEFS __________________________

Monica Lewinsky, the former White House intern, has become a TV reporter for Britain's Channel 5. She will host six four-minute segments called "Postcards from Monica." The segments will air in November.

Carl Bernstein, who covered the Watergate scandal with Bob Woodward for The Washington Post, said the news business "is becoming a freak show." In a speech at Maine's Bowdoin College, Bernstein, now executive editor of Voter.com, said: "We're increasingly losing our way. [Journalism] has less and less to do with truth and reality and totally lacks context. Media bears little resemblance to the community it serves."

Newspaper Assn. of America, Vienna, Va., sponsored the first national Newspaper Career Day on Oct. 3. Debra Hernandez, who is NAA's director of PR, said the event is designed to educate people about the myriad career opportunities the industry has to offer. NAA provided newspapers a package of materials they can use when hosting events in their markets.

Dads Media said the first issue of dads magazine sold more than 70,000 copies at newsstands around the country when it was launched in June. A bimonthly, dads is a lifestyle magazine for the active, involved father. Eric Garland is editor.

(Media news continued on next page)

NEW MAGAZINE TARGETS INTERNET CEOs

dotCEO magazine will make its debut in January.

The New York-based Chief Executive Group, which publishes Chief Executive magazine, will publish the new bimonthly magazine.

dotCEO will be written expressly for CEOs of Internet companies, according to Carol Evans, COO of the CEG, which is headquartered at 733 Third ave.

The magazine will be edited by Christine Larson from Redding, Calif., at 530/229-9099; fax: 941-9418.

Each edition will have an array of feature stories covering issues and trends in management, finance, marketing and technology.
The magazine will also produce a website (www. dotCEO.com) as well as conferences and roundtable events.

dotCEO will have an initial controlled circulation of 25,000.

Readership will include the titles of CEO, founder, president, chairman, vice chairman, and COO.

It will also include leaders of Internet-related technology firms, venture capital and investment banking firms.

"From IPOs to growth managers, dotCEO will cover the subjects of greatest interest to these chief executives-from their unique perspective and in their own voice," said Evans.

PEOPLE.COM LAUNCHES `STYLE WATCH.'

People.com has launched "Style Watch," an online style column with contributions from Steven Cojocaru, who is People magazine's West Coast style editor and author of Behind the Seams.

The site was launched Sept. 29 in conjunction with Lancome.com, which is sponsoring a contest with entry information avaliable through the site.

Style Watch will offer complete fashion coverage, including: a celebrity photo gallery to be updated daily; audio commentary from Cojocaru on celebrity fashion; fashion coverage from all major Hollywood award shows and galas, and celebrity fashion trends and news from the pages of People magazine.

PLACEMENT TIPS ________________________

A 100-station survey in the top 50 markets by News Generation found 93% of stations use the Intenet as an information source, with nearly two-thirds of them using the web 10+ times per week.
This is a 40% increase in Internet usage in a year's time, said News Generation spokesman Curt Gill, who is in the company's Atlanta office.

In 1999, 63% of stations preferred receiving pitches by fax, 15% by E-mail and 15% by phone, Gill said. This year E-mail pitches were still second to fax pitches, which are preferred by 59% of res-pondents, but the preference for pitching via E-mail has almost doubled since last year (now 26%). Telephone pitching is still the preferred pitching method for 17% of respondents.

The survey found the most desirable factors in a news piece or interview opportunity are still timeliness (34%) and newsworthiness (28%) and the ability to localize a story for a paper's particular market (15%).

Stations were asked in which format they prefer to receive audio, and 48% answered RealAudio. Wav was the second most popular format with 20% and 18% preferred MP3.

Based on this research, News Generation is launching a fully interactive website in October.

The New York Daily News has expanded its coverage of Sunday NFL action by adding a "Super Monday" insert to its sports section.

The 20-page section offers increased coverage of the Giants and Jets and additional analysis from columnists. Leon Carter is sports editor.

John Huey, managing editor of Fortune, has made several promotions and additions to the editorial department of the magazine.

Editorial promotions from writer/reporter to writer include Julie Creswell, Jeremy Kahn and Amy Kovar.

Creswell will write for the "First" section of the magazine and will also cover the telecom industry; Kahn will continue to write middle-of-the-book features, and Kovar will write for "First" and produce features.

Five reporters were promoted to writer/reporter: Maggie Boitano, Christine Chen, Cora Daniels, Suzanne Koudsi and Nicholas Stein. Boitano will continue to write for "Fortune Investor" and produce features. Chen will report on the telecom industry and will contribute to the "Web Page," which is in the "eCompany" section.

Daniels will continue as a writer in the "On the Job" section; Koudsi will contribute to "First," and Stein will continue to write leads for both the "On the Job" and "eCompany" sections, as well as write features for the middle of the book.

The new staffers include Matthew Boyle and Brian O'Keefe. Boyle was previously at PR Week and O'Keefe had been a reporter-researcher at SmartMoney. Both will be covering general assignments as reporters.

INTERNATIONAL ECONOMY GETS EDITOR

Owen Ullmann, Washington, D.C., editor of USA Today, is now also editor of The International Economy magazine, a bimonthly which covers international financial policy, economic trends and international trade.

SPEAKES OFFERS A PRAYER FOR SPOKESMEN

Larry Speakes, who was President Ronald Reagan's spokesperson from 1982 to 1987, wrote this prayer for press secretaries:
"On Lord, teach me to utter words that are gentle and sweet. For tomorrow, it's those very words I may have to eat!"

PRSA BLAMES COMPUTERS (cont'd)

"planning and coordination" by users of iMIS plays a big role in the installation procedure.

iMIS calls itself "the No. 1 ranked software of its kind with over 18,000 customers worldwide."

Calls were made to DT but no one had responded as of press time.

Dorothy McGuinness, head of membership development at PRSA, complained of "bugs" in the system and could not give any firm date when it might be in operation. She is hoping for a trial run with 10 chapters starting in January.

She said there has been "tremendous turnover in the management" at the service company and that "we encountered difficulties with them." She said there are "problems with the actual programs that operate this."

Pisinski said. "The system has not performed as we were told it would" and that PRSA may have to "pay a new consulting firm to make it finally work."

Cynthia Sharpe, PR director of the AAA Auto Club in Tampa, who raised the issue of iMIS, said that installation "has been going on for three years." PRSA officers, however, said the actual time period is two years. Sharpe said, "It seemed like there were problems from the beginning."

Pisinski said, "The original provider did not recommend the proper software for us, particularly with regard to servicing chapters...there were arguments over what PRSA asked for...they had changes in personnel."

Killeen Letter Blamed iMIS

The Sept. 21 letter of Killeen to the Assembly delegates announcing the postponement of publication of the Blue Book of members until early 2001 had also cited problems with iMIS.

She wrote the installation of iMIS was a "major undertaking begun in 1999" but that it has not been "smooth sailing."

She added: "The computer conversion and rollout of the iMIS system in June 1999 has been more complicated than anticipated. As a result, we found ourselves faced with poor membership data and inadequate financial information."

Teleconferences Lightly Attended

Participation in the two teleconferences Sept. 27 was light. Only 39 of the 282 Assembly delegates were on the delegates' call (ten asking questions or making comments) while only six asked questions during the "leaders" teleconference later in the day. A "blast fax" had been sent to 400 leaders and follow-up calls or e-mails were made to 60 when the faxes failed to go through.

This NL, which was denied access to the two calls by Pisinski, who said the were for leaders only, called a half dozen leaders for the purpose of having them "patch" us through to the calls. None of the half dozen leaders we called knew of the conference calls. The calls were mentioned in the last paragraph of a three-page letter from Killeen.

One of the leaders arranged for the NL to listen to the two calls. Pisinski said PRSA did transcribe or record the calls and that no reports would be made to members about them.

In starting out each call, Pisinski warned participants that "media" might be listening in. Commenting on this warning, Margaret Allender of Allenbrand PR, Jackson Calif., an officer of the North Pacific district, said the leaders are "PR people" and they should "deal with" the press listening in.

Allender Asks if Funds "Mis-used"

Allender, the first speaker on the leaders' call, said she had heard "rumors" about "mishandling" of funds at PRSA h.q. and that staff people may be "culpable for the mis-use of these monies."

Allender did not return phone calls or e-mails from this NL seeking further information on her comment.

Killeen answered there has been "no hint of that from Deloitte & Touch." She said D&T asked about deferred dues, payables, receivables and other "issues."

Jeff Julin of MGA Communications Denver, who is running for "open" director against Michael Jackson and Carole Gorney, the nominating committee's choices, asked what was the highest PRSA's "reserves" have been in recent years.

The leaders did not know but Killeen said D&T has told PRSA it should have about six months of total revenues or $4 million, in PRSA's case.

PRSA had $26,768 in cash on June 30, 2000 and six-month CDs and other investments totaling $971,123. CPAs say that if deferred dues are put at $1.6 million (six months' dues), PRSA's current liabilities exceed current assets and it is insolvent.

The largest amount of cash/investments PRSA had in the past ten years was in 1991 when they totaled $2.1M. Revenues were $5.2M and the group had 15,276 members. Joe Epley was president.

PRSA lost more than 4,000 members this spring when the attrition rate, normally about 12-13%, soared to 25%. McGuinness told the Assembly conference call that renewals and new member applications "slowed down tremendously in the summer" but applications are again coming in. PRSA hopes to replace the 4,000+ through new members and renewals by year's end.

Members who have learned about postponement of the Blue Book voiced loud complaints. Fraser Seitel, editor of the Strategist of PRSA, said, "It's important for a group to publish a members' directory and I trust my friends at PRSA will do the right thing." New York counselor Ed Orgon said the directory is the "cornerstone" of PRSA's services and that it should not be cancelled to balance PRSA's books.

Chicago counselor Herb Kraus was appalled" and New York counselor Bob Stone said "the entire board should resign" if the reports about PRSA's finances are true. Others calling for publication included Chuck Werle and Phil Dunne of Chicago, Bob Weintraub of New York, Frank Wylie of California, and Joe Ledlie of Atlanta. An "instant poll" being taken by the O'Dwyer website showed a four-to-one margin in favor of publication this year.

A 1997 poll of PRSA members conducted by an outside research firm for president Debra Miller found that only 2% strongly supported a $25-$50 dues increase and only 1% thought dues were "too low for benefits received"; 41% thought dues were "too high for services/benefits received" while 55% said they were "about right."

Thus, there was considerable sentiment against a dues hike among the rank and file although the leaders were anxious to end 12 years without a hike.

So a nearly year-long campaign aimed at raising dues was conducted among Assembly delegates and members, leading to the $50 hike voted last year.

But many of PRSA's members remained opposed to the jump and 4,000 of them decided not to renew this spring (the non-renewal rate doubling to 25%).

After all the talk of PRSA having 20,000 members, it was faced with putting out a directory of 16,000 members in early summer. Attempts to build membership in the summer failed.

taffer Dorothy McGuinness told a teleconference last week that renewals and new member applications "slowed down tremendously in the summer."

So, faced with a disaster in renewals, PRSA opted to blame the new iMIS computer system and put out no directory out at all in 2000. It's waiting until early 2001 when it hopes membership will have built up again to the 20,000 level. iMIS is also blamed by the leaders as the reason they were so uninformed about the Society's finances.

Our view, however, is that this is just another example of non-communication and mis-communication involving the h.q. staff and elected leadership. No computer was needed at h.q. to see that renewal checks weren't coming in at the expected rate. This must have been known all over h.q., from the people who sort the mail and see the window envelopes, to those who open them, deposit the checks, check off the renewals, prepare names for the directory of members, etc.

Supposedly, all these staffers and h.q. leaders kept this a big secret from the elected leaders. Both chair Steve Pisinski and treasurer Joann Killeen said they did not know of the financial problems until August.

Another example of non-communication is the two teleconference calls conducted last week among Assembly delegates and chapter leaders. Only 39 of the 282 delegates showed up for one of the calls and PRSA made no tape or transcription of it. PRSA has no intention of telling the missing delegates what was said. The only way the delegates can find this out is by reading this NL or the O'Dwyer website. Only six leaders posed questions on the other call.

One of the participants in the leaders' call asked, "Suppose it (the next $15 installment in the dues hike) is not affirmed?" Chair Steve Pisinski noted the Assembly has the power to do just that. It could be that the Assembly will roll back the $25 hike granted last year. After all, 20,000 members are not getting their 800-page members' directory this year (which PRSA sells separately for $100). In effect, each member has been cheated out of $100.

Incoming chair Kathy Lewton has ended, at least for her term, the practice of PRSA leaders meeting at resort and travel destinations (Vancouver, Lake Tahoe, London, San Antonio, Sundance, Carmel, Montreal, Sante Fe, San Juan, etc.). All four board meetings next year will be in New York...There will be no ill-disguised Christmas shopping expeditions for the 115 presidents-elect this December in New York (with $500 in spending money provided to each participant), as was planned (9/15/99 NL). This boondoggle has been canceled and a June meeting instead is planned...we don't think either iMIS or service provider Development Technologies is to blame for the mess PRSA has made of its new computers. Chapter demands seem to be one cause. Also, although PRSA has complained about executive turnover at DT, PRSA itself has not had a chief staff officers since Ellen Gerber left in June 1999...Paul Wetzel, Boston counselor, has been recruited as board nominee for the Northeast district after no one voluntarily ran for the post earlier this year. Counselor Vivian Hamilton of Alaska has agreed to fill the vacancy for North Pacific director...what disappointed us about the two PRSA conference calls last week was the powder-puff nature of most of the questions. Difficult subjects like deferred dues, no Blue Book this year, sudden departure of CFO Joe Cussick, etc., were not brought up. Penetrating questions about the iMIS system were not posed. Trade press reporters would have been much tougher on the leaders. PRSA's last press conference was in 1993.

IABC's new e-business, which has cost it $1 million so far, is to be called "TalkingBusinessNow" when it goes onstream. IABC still needs a sponsor to fund it. The site will "focus on business solutions that communication strategy can provide." Content will be on business issues such as reputation/brand management; mergers and acquisitions; recruitment and retention of employees, and technology and its effect on "how we communicate." It will cover "current business news with a communication twist, updated daily" and provide "commentary on the news of the day from renowned experts who take a communication angle." There will also be "articles, research, benchmarking material, current best practices, knowledge products" and other resources.