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Internet Edition, June 6, 2001, Page 1


Magnet Communications, a unit of Havas Advertising, "reorganized" its PR, corporate and administrative functions by firing 36 staffers last week.

"We lost business we didn't expect to lose and have not won as much business as we had hoped to win," said CEO David Kratz in explaining the job cuts.

Kratz noted that Magnet lost "some talented people," but they had to go to "make us stronger in this difficult economy."

The cuts were made across the board in each of Magnet's eight offices. Affected staffers were given the bad news by their respective supervisors, Kratz told this NL.

Kratz said the downsizing has given Magnet a much brighter outlook.

The firm, which now employs about 185 people, was formed last year via the merger of Kratz & Jensen, Creamer Dickson Basford, Capstone Communications and ACG Communications. It has eight offices.

Darryl Salerno, who had been CEO of Magnet, was replaced on May 23.


Schwartz Communications, the fifth biggest independent firm, cut 22 people from its Boston office May 30, according to Lloyd Benson, executive VP at the firm. That's about 10 percent of the staff.

"We waited until the last minute before making the move," he told this NL. "Our competitors were forced to make their cuts much earlier," he noted.

Benson said it is SC's policy to hire people in anticipation of demand.

No VPs were let go in SC's "force reduction" program, he noted. There were no cutbacks in its San Francisco office.

SC's fees rose 57.7 percent to $33.2M last year.

Bill Novelli, co-founder of Porter Novelli, has been elected exec. dir., AARP, one of the nation's most powerful lobbying groups. He was the group's PA director, and president of the Campaign for Tobacco-Free Kids before that...Qorvis Comms. has been named PR agency for CompTel, the telecomms. industry's trade group. Maura Colleton who recently joined Qorvis from WorldCom, heads the account... Waggener Edstrom is handling Microsoft's campaign to encourage AOL customers to switch to its MSN online service. McCann-Erickson developed a $50M ad campaign to support the "switcher" campaign.


Linhart McClain Finlon PR beat eight other Denver-area firms to win a $2.5 million five-year contract from the Colorado Dept. of Transportation.

Alexander Ogilvy, Peter Webb PR and Praco Ltd. were among firms pitching the account, Sharon Linhart told this NL.

The firm will encourage drivers to use seatbelts, tackle aggressive driving, provide info about road construction, and highlight the danger of drunk driving, according to Tom Norton, exec. dir., CDOT.

Linhart plans to use a combination of press releases, advertising, e-mail alerts and wireless messages to get the messages across.

LMF PR has worked with clients such as KeyBank, Xcel Energy, and Southeast Business Partnership.


Melinda Ballard, former PR executive at Ruder Finn and United Brands in New York, on June 1 won a $32 million toxic mold case against a unit of Farmers Insurance Group.

She charged the company mishandled her family's claim for mold damage which damaged the health of her husband and son and made her 22-room house uninhabitable.

A jury found that Farmers Insurance Exchange committed fraud in dealing with Ballard and her husband, Ron Allison.
They charged that the company failed to swiftly cover repairs for a water leak, allowing the mold stachybotrys to spread through their home in Dripping Springs, Texas.
Allison suffered neurological damage that forced him to leave his job as an investment banker. However, no medical testimony was allowed pending a court decision on the effects of mold.

The case is the first in which a jury has awarded a homeowner damages on mold contamination. Many other toxic mold cases are pending.

Bill Miller, spokesman for Farmers, said the company will decide on whether to appeal the case after seeing if the award is reduced. Ballard and her husband were awarded $6.2M in actual damages (the house will have to be leveled and rebuilt); $12M in punitive damages as an example to other insurers; $5M for mental anguish, and $8.9M in lawyers' fees.

Ballard said she is going to continue her PR campaign to educate people about toxic mold. The Lund Group, New York, has been assisting in the campaign.

Internet Edition, June 6, 2001, Page 2


Ogilvy PR Worldwide CEO Bob Seltzer earned a 6.4 percent pay hike to $450,000 last year, according to a report from the compensation committee of WPP Group, Ogilvy's parent company. That was the sixth largest salary at WPP last year.

Seltzer's short-term incentive bonus, however, was sliced 14.4 percent to $338,000.

He got $25,000 in compensation covering the value of company cars, club memberships and executive health/supplemental life insurance.

The Ogilvy chief also was rewarded with long-term comp pegged at $41,278.

The firm's revenues rose 61 percent, while operating costs increased 59 percent, according to WPP's financials.

Howard Paster, who heads WPP's Hill and Knowlton unit, earned the same $550,000 salary, and $344,000 in short-term incentives last year that he made in 1999.

He got $17,000 to cover cars, clubs, etc., and $14,116 in long-term awards.

H&K's revenues were up 31 percent, while costs rose 29 percent.

WPP CEO Martin Sorrell received $1,295,000 in salary and $819,000 in short-term bonus during the past year.


If BCom3 Group does not complete a public offering by March 14, Japan's Dentsu Inc. has first dibs on the Chicago-based holding company.

That's according to BCom3's Form 10-12G filing made with the SEC.

Dentsu owns 21.4 percent of BCom3, which counts Leo Burnett; D'arcy Masius Benton & Bowles, and Manning, Selvage & Lee as key units.

Under its "standstill" agreement with BCom3, Dentsu has the right to make the "first offer" for the remaining shares of the Chicago-based holding company before they can be shopped to other agencies.

Dentsu, as long as it retains a 15 percent stake in BCom3, also has the right to veto the dismissal of BCom3 CEO Roger Haupt and any acquisitions or divestitures.

BCom3 Group lost $65.6 million on $1.8 billion revenues last year. That red ink resulted from a $71.9 million charge related to a stock redemption offer and a $64.9 million "goodwill amortization charge" related to a business combination.

Haupt earned a salary of $687,000 and received a bonus of $1,315,476. He is to receive a minimum $950,000 in pay through 2004.

BCom3 employs more than 17,000 in 90 countries. More than 60 percent of its staff are based outside the U.S.
Its top 20 clients generate 49 percent of its revenues. They include Philip Morris, General Motors, McDonald's, Procter & Gamble and M&M/Mars.


Pat Kingsley, the 68-year-old celebrity publicist, said a report in The New York Post that her new firm PMK/HBH means practically all of Tinseltown's A-list will be micromanaged by one company is "nonsense."

The May 31 Post article by Michelle Gotthelf said the marriage of the two firms "means a question about Tom Cruise's divorce could get a reporter blacklisted from other stars."

"Nothing has changed, we just are bigger," Kingsley told this NL. "I don't see people quaking in their boots over this. It just gives people one number to contact a lot of good people," Kingsley said.

Huvane Baum Halls, a firm run by Stephen Huvane, 40, Robin Baum, 36, and Simon Halls, 36, has agreed to be acquired by PMK, which is owned by McCann-Erickson, a part of the Interpublic Group. The deal is expected to be completed by end of this month.

PMK currently handles PR for Tom Cruise, Matt Damon, Tom Hanks, and Johnny Depp, while HBH has clients that includes Russell Crowe, Gwyneth Paltrow, Jennifer Aniston, Liv Tyler and Jude Law.

Gotthelf said journalists told her the merger will likely spur reporter blacklistings by the uber-compay if they hit stars with the questions their readers really want answered-and it will have a big effect on what movie fans get to read about their favorite stars.

"Who would dare ask Crowe about why he really dumped Meg Ryan when they could be jeopardizing future access to Cruise and Paltrow?," asked Gotthelf. "Nobody dares ask Damon for the true lowdown on Winona Ryder because they may then be refused Depp," Gotthelf said.

`Dish' Has Chapter on PMK

Jennette Walls, who covers gossip for MSNBC, said it definitely won't bode well for the readers.

Walls, whose new book, "Dish," has an entire chapter about PMK, told Gotthelf that she remembers the PR backlash that resulted when writer Stephanie Mansfield tried to deviate from the "accepted" interview with Cruise for GQ magazine and beforehand talked to a former classmate of Cruise's.

"When she told Tom Cruise, he went absolutely ballistic," Walls said. "He called his publicist, Pat Kingsley at PMK, who told Stephanie she'd be barred from interviewing any PMK client if she used the interview with the classmate."

Mansfield used it anyway-and although it was a positive interview, Kingsley made good on her threat, Walls said.
Kingsley admitted she got tough with Mansfield, but denies she routinely blacklists.

Gotthelf said "practically every Hollywood reporter has a story about a PR blacklisting-from being banned at press junkets for writing about Crowe's attitude, to having their phone calls never returned again because they inquired about the Kidman/Cruise split."

Internet Edition, June 6, 2001, Page 3


BizCom Assocs. believes good publicity comes from taking advantage of a trend or seasonal opportunity to develop an unusual story idea for media.

"It's a common misconception that press releases are needed to get publicity," the Dallas-based PR firm said in the new issue of its newsletter, Publicity Matters.

While a release is an important tool that can be used to keep a company's name in front of reporters and editors, "it usually won't win you the big story you want," the article states.

As an example, BizCom cites its "April Publicity Showers" campaign for DreamMaker Bath & Kitchen.

The only media hit that resulted from a press release was Kitchen & Bath Business' coverage of the DMB&K's new VP. It was also the smallest story (one paragraph) of all the publicity that BizCom arranged.

Other magazines carried editorials that ranged from one-page exclusives to inclusion in a four-page cover story.

"Each of these hits was obtained through specific, individualized media pitches," said BizCom.

"Targeting your message around an event, a time of year, or something else noteworthy for your industry creates the possibility of reaching a greater number of people, building a bigger brand name and/or giving your audience the impression that `I see that company everywhere these days,'" the firm said.

PLACEMENT TIPS ___________________

Messages for "Nightly Business Report" anchors and staff should be sent to [email protected], and it will be forwarded to the appropriate person.

Now in its 23rd year in broadcasting, NBR is carried on more than 260 U.S. public TV stations and internationally via the International Broadcast Bureau's Worldnet Satellite Network and the Armed Forces TV Satellite Network.

It is seen by more than one million viewers every weeknight, making it TV's No. 1 daily business news program.

Publicists at BizCom Assocs., Dallas, will book a guest on morning shows in 15 to 20 of top TV markets at a cost of approximately $1,000 per market.

If the client has a good story, the bookings are guaranteed. The firm offers a free evaluation of a story's potential for TV. Info.: 972/490-0903.

Marc Malkin, who co-wrote the "Hot Stuff" column at US Weekly, was named contributing editor at New York magazine. He will co-write the magazine's gossip column-"Intelligencer"-with Ian Spiegelman. Malkin succeeds Beth Keil, who will become beauty editor and remain a contributing editor, focusing on cultural and trend pieces.

Malkin previously wrote for The New York Daily News'<D> "Rush and Molloy" gossip column.

George Benge, formerly executive editor of The Asheville (N.C) Herald-Dispatch, is moving to Gannett's corporate offices in Arlington, Va., to write national columns for the Gannett News Service and direct corporate news projects with a focus on national diversity issues.


Shashi Tharoor, who is director of communications for the United Secretary General Kofi Annan of the United Nations, and interim head of the UN's department of public information, is writing a column for Newsweek International.

Tharoor is only identified in the first two columns as author of a nonfiction book on India.

As chief PR man for the UN, Tharoor controls a budget of more than $110 million, and also has nearly 1,000 people working directly under him, according to Dyan Neary of Earth Times News Service, who disclosed Tharoor's PR ties.

"It is highly unusual for a major publication in the U.S. to offer columns to PR personnel," said Neary.

"While PR flacks sometimes contribute opinion articles to the Op-Ed pages of newspapers, their affiliation is almost always cited by the publication," Neary said.


Joseph Davis, who is acting editor of The Environment Writer, said reporters ought to be able to expect the following from federal agency press offices:

1. Returned phone calls-"Normally within no more than a couple of hours."

2. Prompt notice of news-"Press releases about an event can be e-mailed or put on the web within minutes after an event or press conference."

3. Informed press officers-"He or she should know the important facts about important stories."

4. Names and phone numbers-"Every press release should have the name and phone of at least one authoritative or quotable contact."

5. Access to agency people-"The job of the press office is to put reporters directly in touch with agency people, not to shelter or censor them."

6. Fair and equal treatment of media-"Day-ahead leaks to The Washington Post are unfair and manipulative."

7. Access to information-"The press office's job is to help reporters find and get information relevant to their stories."

8. A good website-"An effective agency website can help with most of the above."

9. Accuracy-"Goes without saying but needs to be said."

10. Honesty-"Ditto."

EW, a newsletter, is published 10 times yearly by the National Saftey Council/Environmental Health Center, Washington, D.C.

(Media news continued on next page)

Internet Edition, June 6, 2001, Page 4


Paul Van Slambrouck, currently The Christian Science Monitor's San Francisco bureau chief, was chosen to succeed David T. Cook as editor of the newspaper on July 15.

Van Slambrouck joined the paper in 1976 as a reporter, and has served as a business reporter, Houston bureau chief; Johannesburg bureau chief, and international news editor.

He left the Monitor in 1989 to join The San Jose Mercury News, where he was deputy managing editor, and rejoined the Monitor in 1997.

Cook will move to Washington, D.C., as senior editor and Washington bureau chief, replacing John Dillin, the current bureau chief, who is retiring.

In January 2002, Cook will succeed Godfrey Sperling Jr. as host of the Monitor's Washington policy breakfasts, which Sperling has run for 35 years.

PEOPLE ________________________

Liz Brody, previously at Glamour, is joining O Magazine as news director. Wendy Naugle has replaced Brody as Glamour's health editor.

Jack Egan has resigned as senior editor of Forbes.

Elizabeth Cummings was upped to managing editor of Crain's New York Business.

Bill Howard, who was senior executive editor of PC Magazine, is now a contributing editor, but he will continue to write the "On Technology" column and product reviews. He is also expected to become executive editor of Family PC Magazine.

Amy Mastrangelo has joined Gourmet magazine as food editor.

Mary Duenwald has resigned as executive editor of Harper's Bazaar to join Sports Illustrated for Women in the same title.

Gail Evans, who is retiring as CNN news group VP of domestic networks, will be presented the 2001 International Matrix Award by the Assn. for Women in Communications on Aug. 3 at the AWC annual conference, at Baltimore's Renaissance Harborplace Hotel.


A daily newspaper featuring coverage of major financial, business and diplomatic meetings in the U.S. and overseas has been started by Theodore Kheel, who also founded The Earth Times in 1991.

Conference News Daily plans to cover about 30 global meetings between now and the end of 2002, including the annual meetings of the World Bank and the International Monetary Fund.

Louis Silverstein, previously with The New York Times, is editor of CND, and Anjum Niaz, formerly senior editor of Dawn, a paper in Pakistan, is managing editor.

CND is located in New York at 205 E. 42nd. st., #1304; 212/297-0488, ext. 17; fax: 297-0566.


Cleveland's mayor, Michael White, refused to allow a reporter and photographer for The Plain Dealer cover a political event in a local elementary school cafeteria where he announced he would not seek re-election to a fourth term.

White was angry at the PD for not giving more coverage of a mayoral groundbreaking ceremony for a new airport runway.

Douglas Clifton, editor of the PD, said the newspaper, which is owned by Newhouse's Advance Publications, was considering suing the city for punitive damages, charging violation of its civil rights.


The Hollywood Reporter has stopped running a column by George Christy.

Christy, who covered Hollywood parties and premiers, was removed from his job, pending separate investigations by the newspaper and the Screen Actors Guild into allegations that he accepted favors from movie producers and receieved pension and health benefits for which he was not entitled.

MEDIA BRIEFS _____________________

Kevin Maney, USA Today's tech columnist, asked Gina Smith, a former tech journalist who became CEO of New Internet Computer (NIC) 18 months ago, what's been hard about becoming CEO? "Dealing with the press!", she said.

Beth Berselli has given up her job as a reporter for The Washington Post's "The Reliable Source" column to teach elementary schoolchildren in inner-city Phoenix as part of Teach for America.

Danielle Crittenden, who has a political novel, Amanda.Bright@home, which is being serialized by the online, is the wife of President Bush's economics speechwriter, David Frum.

Fashion Wire Daily, a New York-based news service started in May 1999 by publicist Brenda Niro, plans to publish a weekly magazine version of FWD targeted at working women.

It will be published and distributed by American Media, the publisher of The National Enquirer, Star, Globe, and Weekly World News., which is used in nearly all of TV newsrooms in the U.S., will sell space to corporations and PR firms to pitch messages to the news media on its new "Event Window" site.

Jim Lichtenstein, CEO of AssignmentEditor, said the messages will be seen by thousands of journalists. He is at 312/432-9911; [email protected]

Internet Edition, June 6, 2001, Page 7


-Ads work better on "light" readers of news and may have little effect on heavy readers.

-Heavy advertising during a period of bad news may make matters worse by focusing attention on the company.

-In a period of light advertising, PR can be used to bolster a company's image in the marketplace.

Above are some of the tentative conclusions in a study for the Institute for PR on how news and ads impact consumer attitudes.

The study is by Bruce Jeffries-Fox of Insight Farm, a unit of Burrelle's/VMS Co. It is based on research materials provided by AT&T.

"More work is needed to investigate the combined impact of news and advertising," says the "Commission on PR Measurement and Evaluation," an initiative of IPR.

"If we are to have truly integrated marketing communications plans, we need to bring together the worlds of PR-and particularly media relations-and advertising," it adds.

Media relations and ads are usually managed by different units in a company that have "little contact with each other, let alone share joint planning or research," says an introduction.

"The status quo (that advertising dominates discussions of marketing communications) is supported both by advertising, and inadvertently, by PR," it adds.

The initial hypotheses ("more work is needed to investigate the combined impact of news and advertising") were drawn from four studies by AT&T in the late 1990s on how news coverage impacted on consumer attitudes and perceptions.

The company has an ongoing system of news coverage monitoring analysis that covers a broad range of general and specialized news media including print, broadcast and the Internet. Content, favorability/unfavorability, story length, placement, size of headlines and other factors are studied.

The complete text is at


Craig Shirley & Assocs. is positioning The University Club of Washington, D.C., and the club's Tewaaraton Trophy to be the Downtown Athletic Club/Heisman Trophy of college lacrosse.

The annual award, named for a Mohawk Indian predecessor to modern lacrosse, will be presented at the club for the first time June 6 to the sports top male and female collegiate player.

The Tewaaraton award was endorsed by the Mohawk Nation's tribe of elders.


PRSA chair Kathy Lewton, addressing 70 PR pros at the Sunshine district conference May 16-18, said PR pros should concentrate on identifying the appropriate messages for clients rather than on how the messages will be delivered.

"We tend to fall in love with the methods, or the `how,' instead of focusing on the messages," she said. "Tactics should not be discussed until the messages have been defined and understood," she told the meeting in St. Augustine, Fla.

Other speakers included Tom Harmening, of Hill and Knowlton/Tampa, who gave ten rules for handling crisis communications; Jim Lukaszewski, crisis counselor, who gave his definition of "strategy," and Cheryl Procter-Rogers, of Home Box Office, who said PR pros should keep written records of praise given by clients and employers.

"We Live in 24-7 Environment"

Lewton said that people are living in a "24-7" environment where everyone can see everything almost instantaneously. PR pros serve as counselors and translators in this ever-changing world, she said.

"We are PR counselors who provide context and translation...we tend to fall in love with the methods, or the `how,' instead of focusing on the messages..." she added.

Messages can be sent, but not received; received, but not understood, and understood, but not believed, she continued.

Messages, therefore, need relevance and resonance and need to be sent to audiences who will care, according to Lewton.

"Everybody is usually not our audience," she said. "Are we speaking to them in ways that will make them care? Does it make their hearts flinch?"

Saying this process may take a long time, Lewton said listening is a critical PR skill and after translation is complete, "We must show them!"

Crisis Tips Given by Harmening

Harmening gave ten crisis tips:

1. Take ownership-it's not the same as taking blame.

2. Recognize the difference between bad publicity and a crisis, then calibrate your response accordingly.

3. Get the confirmed facts and base your response on them.

4. Recruit and use third parties to speak on your behalf.

5. Treat the media as conduits, not enemies.

6. Assume you'll be sued.

7. Watch the web as closely as the traditional media.

8. Demonstrate concern, care and empathy.

9. Take the first 24 hours very seriously.

10. Begin your crisis management program now by building your reputational assets.

Lukaszewski Defines Strategy

Lukaszewski, chair of Lukaszewski Group, White<%0> Plains, N.Y., and author of a series of crisis communications workbooks, said, "Strategy is a unique mixture of mental energy verbally injected into an organization through communications, which results in behavior that achieves organizational objectives."

A strategist, he said, has exceptional verbal skills, communicates effectively in real time and on the spot, focuses on what is important and helps everyone recognize the obvious.

Internet Edition, June 6, 2001, Page 8



The Institute for PR, in a well-meaning but naive way, is asking for further study of the impact of news and ads on consumer attitudes.

The IPR and a unit of Burrelle's, with the help of statistics compiled by AT&T, have found that consumers who are heavy readers of news on a certain subject are not too affected by advertising.

Said the report:

"Among lighter news consumers, our (AT&T's) advertising had the expected effect; i.e., those aware of the advertising gave higher ratings than those unaware of the advertising. However, this was generally not true among heavier news consumers, for whom advertising seems to have contributed little or nothing above the impact of news coverage."

Advertisers, realizing this, have made the logical next step: eliminate the news as much as possible. Then, there is nothing for these "heavy readers" to read. They, like the "light" readers, will form their opinions from company ads and promotions.

The coordination between advertising and editorial is growing stronger and probably needs no one to urge even more cooperation.

For instance, media have discovered that if they write about health issues, ads from drug and other health-related companies will flow.

Some of our best national magazines on occasion<%0> become like medical textbooks with frightening dis<%-2>eases examined in endless graphic detail.

A good example of medical ads working in unison with editorial was the May 6 New York Times<D> Sunday magazine. It was a collection of rare and horrible diseases from throughout the world including "brain fag," "hyperstartle syndrome,"and fatal "familial insomnia" (victims have a "sleep debt" hundreds of times greater than subjects in any sleep experiment). There were 17 pages of health ads.

The magazine advised travelers to consider wearing a bike helmet on "unsafe" public transportation in foreign countries and a mask while walking down the street. Also advisable would be a "pith helmet with mosquito netting attached, like a veil."

A greater danger might be insulting the natives with these and similar precautions urged on travelers.

Rather than yanking ads from publications that displease them, advertisers have taken the tack of rewarding publications that please them (as noted above). Trade magazines that have awards programs get ads from many of the same companies that win the awards. The publications that don't give awards don't get anywhere near the amount of ads.

Typical of the current "message-oriented" school of PR is the speech given by PRSA chair Kathy Lewton to the Sunshine District in May.

Lewton said PR pros should concentrate on identifying the appropriate messages for clients rather than how the messages will be delivered. Dissemination should be sought only after the messages "have been defined and understood," she said. This approach coordinates well with an advertising program, which is also at work on a "message" that will be delivered to "target" audiences. The current "message" of the big ad agencies and many of their PR wings is: "We are growing rapidly because of our new business wins and because of our excellent work as evidenced by the numerous awards we win." Written speeches circulated to the press by ad/PR execs have become a rarity. The Lewton speech referred to above was covered by a local chapter member. Lewton has said she will not supply any speech texts this year because she speaks only from notes.

The failure of Omnicom to use modern communications techniques is on display in its 2000 annual report. It only has a sketchy description of its novel zero-interest convertible bond called a LYON that gives the buyer the right to nine shares of OMC for each $1,000 loaned to OMC. With such a bond, OMC pays no interest but can deduct the imputed or phantom interest from earnings, thus improving cash flow. The buyer has to pay taxes on the phantom interest. In an odd wrinkle, if the price of OMC stock goes up enough to make a $1,000 LYON worth more than 220% of the original price, OMC can redeem the bond for the original $1,000. There are many other bells and whistles on this unique debt vehicle. The OMC report says its LYON is explained in Exhibit 4.1 to its SEC Registration Statement 333-55386 "and incorporated herein by reference." That last phrase, attached to 23 other OMC exhibits, means you have to chase after the documents yourself. OMC should have given the web link to the LYON and other filings to make it easy for readers to find them. The route is:; enter OMC for ticker symbol; for "select," highlight "freeedgar," and then click "search" at right. When the OMC listings come up, click on "view filings" and scroll down to S-3/A Registration Statement dated 2/27/01 (click here to get to the OMC filing). Click on "body" at left and 173-page document comes up. This filing, highly repetitive and in thick legalese, is anything but reader-friendly. An OMC copywriter could probably summarize its key elements in a half page...deadline for filing for PRSA nominations is June 14. Reports are that candidates who previously tried for office and failed may run again...Advertising Age columnist Richard Linnett (Adage column), twitted this NL in his May 28 column for asking questions of Omnicom and Interpublic officers at their annual meetings. Ad Age also can't get answers from OMC and we advised Linnett he should be helping other reporters to get answers.


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