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Internet Edition, March 6, 2002, Page 1


The Dilenschneider Group has been "asked to substitute" for Weber Shandwick, Matthew Swetonic, principal at TDG, told this NL, as counsel for the paint industry which could face billions in legal liability suits regarding exposure to lead in paints. Lead was used in paints until it was banned in 1978.

The New York firm picked up the account after the Feb. 15 Rhode Island Law Tribune published a memo from Jody Powell, CEO of WS's Powell Tate unit, outlining PR strategy for the paint companies. That story carried the "Reporter Spin: PR Firm Bares Lead Strategy" headline.

Mark Day, group VP at PT, confirmed that Powell wrote the e-mail memo, and that WS has lost the account. That e-mail was "inadvertently" sent to somebody who wasn't supposed to be on the address list. PT, he noted, was given the addresses by somebody else working on the legal case.

Swetonic, former director, Asbestos Textile Institute, would neither say how TDG got the lead account, nor discuss strategy for the paint companies, which include Sherwin-Williams, Glidden, NL Industries and DuPont.


The Embassy of Japan has hired WPP Group's Hill and Knowlton unit for media counseling and outreach, according to Ed Belkin, senior managing director in the firm's Washington, D.C., office.

Belkin is a former NBC Radio Network managing editor and Westinghouse Broadcasting news director. He reports to Satoru Satoh, the Embassy's Minister of Public Affairs.


The Jeffrey Group, Miami, has told MasterCard International it plans to resign the account after a five-year run, according to CEO Jeffrey Sharlach.
Sharlach said that MasterCard was a "significant six-figure account" for his firm.

Marcus Molina, MasterCard's VP-PR for Latin America, said MasterCard got the news from Sharlach and the company is weighing its options.

Joele Frank, Wilkinson Brimmer Katcher is advising TRW Inc. on how to respond to the hostile $6 billion takeover bid launched by Northrop Grumman. NG has hired proxy solicitation firm D.F. King, and says the TRW deal would create a $27 billion company.


Only 32 of the 119 independent PR firms ranked by the O'Dwyer Co. had gains of 10% or more in 2001.

Sixty-three had losses or just kept pace with the previous year.

Edelman PR Worldwide, the largest independent by a wide margin, had a 5% decline in fees to $220.7 million, as shown on the table on page 7. Ruder Finn, No. 2, had a 4.5% decline to $80.3M.

Ten of the top 25 had double-digit losses and only two had double-digit gains. The Hoffman Agency was up 15.4% to $13.5M and Alan Taylor Communications was up 10% to $8.1M.

Among those with declines were high-tech specialists Schwartz Communications, off 8.5% to $30.3M; Sterling Hager, off 17.3% to $11.2M, and Neale-May & Partners, off 41.9% to $8.1M.
KCSA PR Worldwide declined 10.7% to $9.5M; Padilla Speer Beardsley, 11.7% to $8.9M, and PepperCom, 20.9% to $7.3M.

More than a half dozen major high-techs decided to skip the rankings. Niehaus Ryan Wong, a high-tech firm that did not take part in the rankings, recently went out of business. It once had more than 100 employees.

The list of 118 independents is off from the 146 that documented their numbers last year.

High-Tech Firms Drop from Rankings

Top 25 firms last year that did not report this year included FitzGerald Communications, high-tech firm that had $21M in fees; Applied Communications, high-tech firm with $11M in fees in 2000; Stoorza Communs., $10M, and Wilson McHenry, another high-tech firm with $9.8M in fees last year.

Two firms in last year's top 25 sold to ad/PR conglomerates. De Vries PR went to Interpublic, and Noonan/Russo to Havas.

Not supplying any ranking information were the PR operations owned by Interpublic, WPP, Omnicom, Bcom3, Publicis, Havas and Grey Global. The CFOs of these PR units attest to their own figures and report them only to the Council of PR Firms which is scheduled to distribute them in April or May. The O'Dwyer rankings are based on W-3 forms showing total payroll; top pages of income tax returns; CPA statements; lists of current accounts and executives and staffers, and other proofs.

Internet Edition, March 6, 2002, Page 2


Nearly 70 percent of Americans say they do not trust Corporate America, according to a survey conducted for Interpublic's Golin/Harris International.

Respondents to the so-called "Trust Survey" say "recent economic events have created a crisis of confidence and trust in the way we do business in America," and as a result, they're "going to hold business to a higher standard in their behavior and communications."

"When more than two-thirds of American express this level of skepticism and cynicism, American business has a serious problem that goes beyond the `Enron factor,'" said Richard Jernstedt, CEO, G/HI.

"Obviously, the current wave of scandals has a direct impact on specific industries, but when you look at trust levels across the entire spectrum of American business, almost every category is affected. The malaise of trust is becoming epidemic, and no business can escape by saying 'it's not my problem,'" said Jernstedt.

To measure attitudes regarding trust, the Chicago-based PR firm created the survey to identify and compare both the degree and direction of trust across more than 25 different business sectors and express it in a single number.

A positive score indicates a strong trust profile, while a negative index number signals trust challenges that should be addressed immediately.
The survey indicates which industries Americans trust the most and trust the least.

The survey uncovered at least 14 business sectors that have scores of -25 or less--indicating they have severed trust problems, including: oil & gas (-63), insurance (-59), brokerage/Wall Street (-58), utilities (-52), airlines/travel (-52), telecom (-42), advertising (-41), media companies (-39), journalism (-38), PR (-31), accounting (-48),
chemical (-43), pharmaceuticals (-30) and management consulting (-25).

In contrast, at least 10 businesses have a positive or only moderately negative scores: supermarkets (+40), retail chains (+36), drug stores (+9), computer hardware/software (+8), health and beauty (+8), fast food restaurants (-1), food products manufacturers (-1), entertainment/sports (-3), banks/savings and loans (-6) and automotive (-10).

"The outcome of the G/H Trust survey indicates businesses should mount a trust offensive," said Ellen Mardiks, worldwide director of marketing and brand strategy, G/H.

"Building trust must begin with the CEO," said Jernstedt. "But, if it ends there, you will have a charismatic leader, but not a trusted brand with value that can be sustained over time. Building trust has to be everyone's responsibility."

The survey was conducted during the first week of February 2002 by Interpublic's NFO Worldwide unit. More than 700 Americans were surveyed in the national study, yielding a confidence factor of 95 to 96%.


Interpublic had the worst fourth quarter among the top three ad conglomerates but its stock rose on statements that new business activity improved in the first quarter and the consensus among analysts that the worst is over for IPG. PR was hit with a "disproportionate decline," the company said.

Revenues were down 16% in the quarter vs. a decline of 9% for the WPP Group and a gain of 4.7% for Omnicom. IPG supplied no balance sheet with its earnings report (unlike WPP).

Q4 net was $111.2M, or 30 cents a share, vs. $113M, or 30 cents, in the same 2000 quarter. Revenues were $1.7B vs. $2.0B. Loss for 2001 was $505M, or $1.37 a share, vs. a profit of $420M, or $1.14. Revenues fell 6.3% to $6.7B from $7.1B.

Bear Stearns said evidence of "excellent cost controls" and reports of increased new business caused it to upgrade IPG from neutral to "attractive."


The International Assn. of Business Communicators had a loss of $718,069 for the year ended Sept. 30, 2001, bringing losses for the past three years to $2,188,756. Accounts payable ballooned to $1,005,483 as of 9/30 from $425,208 a year earlier. IABC's accumulated deficit was $1,284,669. Liabilities totaled $2.4M and assets, $1.1M. Revenues declined 9% to $5.1M. IABC has suspended publication of its printed directory.


The Center for the Study of Popular Culture, in Los Angeles, has begun a PR campaign to pin the blame of the Sept. 11 terrorist attacks on the Clinton Administration.

The Center has mailed copies of David Horowitz's new pamphlet entitled "How the Left Undermined America's Security," to about 1,500 media outlets on Feb. 19. Horowitz is president of the Center.

The 46-page pamphlet charges that the U.S. national security interests were undermined by the left, leading to the terrorist attacks on Sept. 11.

This will be the theme of the PR campaign that will take Horowitz to more than 30 college campuses this spring, according to Joe Hicks, a onetime PR consultant for Rogers & Assocs. and Chevrolet's western region PR manager. He joined the Center as executive director last fall.

Hicks said the pamphlet has gotten very little, if any press coverage.

Horowitz, as editor of Ramparts during the `60s was one of the leaders of the New Left. He chronicled his dissatisfaction with that movement via two books, "Destructive Generation: Second Thoughts about the Sixties" (1989) and "Radical Son" (1997).


PR people should think of themselves as teachers rather than salespeople, according to Kristin Zhivago, President of Zhivago Marketing Partners.

She has worked on each of the three sides of PR-client, agency, and media. "I've experienced the pressures felt by people in each type of position. The PR process, as it exists, is broken-very broken. That's the bad news. The good news is, it can be fixed," said Zhivago, editor of Marketing Technology, and a columnist for ADWEEK's Technology Marketing magazine.

She feels the basic problem is that many (or even most) agencies charge clients for "activity" and pretend that it's "intelligent targeting and relationship?building," which is what clients think they're paying for. "Sending out press releases to everyone who writes for any remotely related publication or site, and then calling afterwards to ask, in a high-pitched, breathless voice, "Did you get my press release?" is not PR. It's an old form of spam," said Zhivago.

To Zhivago, a good PR firm would educate the client, and then proceed to do PR properly. If the client refused, the PR house would quit, so they wouldn't become the kind of agency that editors go out of their way to avoid.

As long as PR houses play the numbers game, charging clients the biggest number they can get away with for making the biggest number of calls and sending out the biggest number of releases, PR, in Zhivago's view, will remain broken.

She said: "PR will only be fixed when PR houses stop playing the numbers game and start playing the education game. PR houses should be educating clients on how PR really works, and should be teaching their own employees what editors want."

Internet Edition, March 6, 2002, Page 3


National and regional technology publications are looking for information about biometrics, biotechnology, collaboration tools, hybrid mobile devices, medical technology, nanotechnology, network computing, robotics and storage.

These nine areas were pinpointed as the "hot topics" by a panel of high-tech editors at an "Understanding Today's Technology Media" meeting, which was hosted by the Publicity Club of New England on Feb. 20 in Cambridge, Mass.

The panelists were: Tommy Peterson, technology features editor, Computerworld; Colin Haley, managing editor,; Dyke Hendrickson, editor, Mass High Tech; Scott Krisner, contributing editor, Wired Magazine, Fast Company, Darwin Magazine, and a weekly columnist for The Boston Globe; Michael Stern, publisher/editor of Massachusetts Investor's Digest, and Phil Sweeney, reporter, Boston Business Journal.

Pitch Trends

The editors said they get very few of their story ideas from PR people. Krisner said one PR-pitched story in five years made it into Fast Company.

The panelists welcome trend ideas that are not client specific. Peterson said she works with several PR people for an ideas dialog, not a feature story.

"The best PR people really understand their company, the trends in the industry and our publication," Peterson said. "The PR people I enjoy talking to are those who can have a dialog about what they've noticed and what's going on in the industry, not what's on our editorial calendar."

The editors urged PR people to do their homework, to move away from the editorial calendar, and keep every pitch newsworthy. "No one will take you seriously if you can't produce a referenceable client or if you don't know your own client inside and out," said Peterson. "We see you in our e-mailbox, but, if we see you there every week with nothing new to say, it gets to be too much."

All the editors prefer to get e-mail pitches. Here is the contact information for each panelist:

Haley: 617/714-3002; [email protected].
Hendrickson: 617/241-4330; fax: 617/242-9373; [email protected].
Krisner: 617/742-0476; [email protected].
Peterson: 508/620-7729; fax: 875-8931; Tommy [email protected].
Stern: 781/777-1314; [email protected].
Sweeney: 617/330-1000; fax: 617/330-1016; [email protected].


People En Espanol has named Lourdes Centeno as sections editor, and Teresa Aranguez has joined as staff writer.

Centeno, who was previously PR manager for the magazine, will coordinate and edit the following monthly sections: "Salud" (Health); "Inolvidales" (Unfogettable); "Dinero" (Money); "En Familia" (Family); "Musica" (Music); "Horoscopo" (Horoscope); "Picadillo" (Bits & Pieces) and "Sucesos" (Successes).

She will also generate section ideas and handle fact-checking of articles.

Aranguez will write articles for the entertainment, fashion and beauty coverage, and society articles.

Also joining the staff as a fashion and beauty writer is Cecilia Dominguez, who had been beauty assistant for Mode magazine.

She will conduct interviews on similar topics, generate story ideas and evaluate new products/trends.


John Scalzi, a fulltime freelance writers in the U.S., said e-mail is not always the best way to pitch a story to an editor.

"I query many editors by e-mail, but only when I know they accept them," he told Bob Levey, who hosts "Levey Live," a weekly program on Levey had asked his guest: "Can you query any editor these days via e-mail? Or is a phone call or a letter still effective?"

"It's best to check," said Scalzi. "The smart thing to do is give the editor a query in the format he or she prefers. No sense irritating them right off the bat."

Scalzi recommends a directory, called "The Writer's Market," to find out whether an editor prefers his or her queries by phone, fax, mail or e-mail. The directory will also provide information on which magazines and newspapers have a need for the story, said Scalzi, who has written dozens of articles on an array of topics, ranging from personal finance to humor and entertainment and parenting for publications.

Rules to Know

"There are probably four or five hundred `rules' for how to talk to a reporter," says Dan Burkee of the LePoidevin Rickinger Group, a Waukesha, Wisc.-based PR firm.

"One rule upon which almost all spokespeople and reporters agree: know the difference between `on the record,' 'on background,' and `off the record,'" says Burkee, who defined each in a column for the agency's current newsletter.

-On the Record: "This means that quotation marks can be put around what you say and it can be attributed to you."

-On Background: "This is a useful tool. It enables the reporter to gather information-and allows the spokesperson to give it-without attributing it to the spokesperson."

-Off the Record: "It is supposed to mean that the reporter puts his/her pencil down, and agrees not to use the information you give them in any way."

"Unless you are an experienced media spokesperson, assume that everything you say is on the record. And be careful what you say," said Burkee.

(Media news continued on next page)

Internet Edition, March 6, 2002, Page 4


Bill Barnhart, who is president of the Society of American Business Editors and Writers, said the Enron scandal "finally put to rest the notion that business is a specialty beat."

Barnhart, who is markets columnist for The Chicago Tribune, said the scandal shows business news can no longer be aimed at the few active investors.

He said SABEW's goal is to help train a new generation of journalists who can tell business stories effectively to a wide audience.

"Aggressive business journalism has never been more difficult and the demand for it has never been greater, as Americans try to make sense of the recent shocks," said Barnhart.

Annual Conference

Barnhart said SABEW's 39th annual conference in Phoenix, April 28-30, will feature talks by Martin Baron, editor of The Boston Globe, and Larry Kramer, CEO of CBS MarketWatch, who will weigh how business journalism has changed in the wake of recent events.

Addressing the issue of Enron will be Floyd Norris, senior financial correspondent for The New York Times, who, along with a team of business journalists, will dissect Enron coverage by the financial press.

Keynoting the SABEW conference is Southwest Airlines founder Herb Kelleher, whose airline refused federal help in the wake of the travel industry disaster caused by the terrorist attacks.

Other speakers include U.S. Trade Representative Robert Zoellick, commenting on NAFTA and world economic crises; and Jerry Colangelo, owner of the Phoenix Suns and Arizona Diamondbacks.


The Can do Woman Media Networks has started a new division, called the Nextpert News Network, to cover new products and trends.

David Post, who is executive producer, said networks, TV stations, and syndicated entertainment shows will be offered a newsfeed about new products and ideas, with VNRs and B-roll packages that are produced and distributed by NNN.

Among the events NNN will cover are new product launch parties, fashion shows, charity events, and trade shows.

Katlean de Monchy, who reports on new products and trends for "The View" and weekly for network affiliate stations across the country, will host the segments.

Post said publicists are welcome to submit samples or pre-release information. The NNN service is free to companies. Post can be reached at 212/244-1444.


Peter Stothard has resigned as editor of The London (England) Times after 10 years.

Stothard's resignation was unexpected.

Robert Thomson, who is managing editor of The Financial Times in the U.S., will take over Stothard's job on March 6. Thomson, who is a citizen of Australia, is the first foreigner to edit the 200-year-old paper.

The Times is published by Rupert Murdoch's News Corp., and Pearson owns FT.


Bob Dubill, executive editor of USA Today, will retire in June.

Bonnie Fuller was named editor-in-chief of Us magazine, succeeding Terry McDonell, who recently was picked to edit Sports Illustrated. Charlie Leerhsen has resigned as editor of Us.

Bobbie Battista, the former host of CNN's "Talk Back Live" show, is starting Atamira Communications. The Atlanta-based firm will coach executives and politicians on how to navigate the news media.

David Bernknopf, a former CNN VP of news planning; Natalie Allen, former CNN anchor, and Wendy Guarisco, who was a senior editorial producer of "TalkBack Live," also have joined the company.


LA Confidential magazine will publish its first issue on March 18 to coincide with the Academy Awards, which are scheduled for Sunday, March 24.

Jason Binn, who also publishes Hamptons, and Gotham magazines in New York, is publisher of LAC. Roger Friedman is editor.

Binn is printing 50,000 copies of the first issue, which will feature Nicole Kidman on the cover. It also contains photos and gossip, which Binn's publications are known for.

The next issue of LAC is slated for September, and the magazine will go monthly in 2003.

EE Times, a technology and business news-weekly, will introduce a full, electronic version of the newspaper on March 11., the Aliso Viejo, Calif.-based Internet superstore, has published the first edition of Magazine.

The quarterly magazine offers an array of brands in computing, wireless products, etc., and articles aimed at helping customers understand the benefits of the latest technologies.

The MSG Network, which lost the New York Yankees games, is expanding its schedule to 24 hours starting April 1.

A new segment, called "SportsTalk in the Afternoon," featuring in-studio guests, will air from 3:00 to 6:00 Mondays through Fridays.

Conde Nast has paid $52 million in cash to acquire Modern Bride from Primedia.

Internet Edition, March 6, 2002, Page 7


Internet Edition, March 6, 2002, Page 8



The Feb. 25 Wall Street Journal lead article on the rise of oligopolies noted that with college textbook publishing now dominated by three companies that have 66% of revenues, prices to bookstores have climbed 65% in the past ten years while producer prices rose just 11.2%.

Some college texts are $100+. The WSJ is worried about consolidation in the defense industry, computer chips, cable TV, local TV, drug companies, wireless phones and online job sites. Oddly, it skipped the consolidation in the ad business where six firms control 60% of the U.S. and world ads (Interpublic, Omnicom, WPP, Bcom3, Publicis and Havas)... the wave of media mergers "is bad news for local news," said an op-ed piece in the New York Times Feb. 28 by Alex Jones, former media reporter for the NYT and now at the Harvard School of Government.

Allowing common ownership of local newspaper and TV stations (where court decisions are headed) is "inherently unhealthy," he said...Business Week (March 4) says investors are revolting against the confusing earnings reports put out by companies and want "more frequent and more expansive information." The pressure is forcing "executives to wrestle with exactly how much new information to reveal," it says in an article entitled, "Slammed." IBM is hit for passing off gains on the sale of property as income from "core operations." Tyco's shares are down 50%, BW says, because of deterioration in fundamentals and late reporting of "crucial financial information" (PRSA and IABC take note)...

One of the most wildly spinning earnings reports we have seen is the one Feb. 21 from Nextel, the wireless company. Because of a $1-$2 billion loss that is coming from failed international operations, it was only able to report domestic results. Net for the fourth quarter was a loss of $127 million on sales of $1.8 billion vs. a loss of $42M on sales of $1.5B. Its net loss for the nine months was $1.53B. The stock is $4.80. The Nextel release, which didn t want to talk about the quarter or the disaster in international, headlined, "Record Domestic Results for 2001."

Revenues were said to be up 30%; operating cash flow up 36%, and subscriber additions up 1.99 million. "Positive free cash flow" is being targeted for 2004.

Imagine trying to get some baseball game scores and all you hear is "record number of ground balls fielded by team X," centerfielder catches seven pop-ups, five scoreless innings pitched," etc. What was the score?! VP/internal communications for Nextel is John Clemons, chair of IABC. IR head Steve Virostek is a member of the National IR Institute...

NIRI has been impaled on the earnings report scandal. The reports of several of its national board members would win prizes in an obfuscation contest. NIRI is therefore speechless on the topic. NIRI was always analyst-oriented and has done nothing to help the press to understand today s convoluted finances. Former SEC top enforcer Stan Sporkin (11/22/00 NL) said today's financial reporters don t understand derivatives and many other complicated accounting techniques and tricks... one publication, lacking knowledge of financial reporting, said Feb. 25 that WPP s "gross profits" rose 38% to $5.5 billion on revenues of $5.8B (a $5B mistake). The "profits" of WPP actually rose 10% to $390 million.

With WPP, "gross profits" means revenues not counting purchases of research and other items for clients that merely pass through its books. The publication missed WPP s 20% decline in per share net and the 45 times jump in debt to $1.5 billion. AdWeek was surprised that Interpublic s stock rose 22% the day after it announced its largest quarterly loss ever–$477M.Actually, IPG was taking a "big bath" (lumping a lot of expenses in one quarter), which analysts love. But it s an abuse that has been condemned by the SEC... the advent of "free" searches being available on the 22,000 publication database of Lexis/ Nexis (2/27 NL), plus the availability of the free Google and other databases, will have a big impact on PR. A PR firm can now search the Lexis/Nexis database for client mentions and get three-line reports on each. Stories are permanently and easily accessible, meaning editorial mentions are more important than ever...

"The Sweet Smell of Success," a new musical, portrays both columnists and press agents as mean-spirited, unethical power brokers. Columnist J.J. Hunsecker gives ink to press agents who give him gossip, preferably negative. "Give him dirt, make it hurt," says one lyric. Press agents have now gained the upper hand over columnists by organizing into a mega-agency, PMK/HBH, said the March 3 New York Times magazine in an article on "Sweet Smell."

PMK/HBH (owned by Interpublic) dictates which reporters get an interview, how long it will last, topics that won t be covered, photographs that will be used, and how the story will be played. Pat Kingsley, its head, "in particular has a reputation for high-handed ferocity in dealing with writers and editors," says writer Kurt Andersen, who admits PMK president Leslee Dart promoted a novel he wrote and an online publication he co-founded...

PR pros should think of themselves as teachers rather than as salespeople, said Kristin Zhivago, who has worked in both the press and PR . PR is currently "broken," she feels, because PR is churning out too much fluff and not enough substance. One thing that s needed is a code of ethics and etiquette specifically for press/PR relations. Current PR codes cover general behavior of PR people in relation to their clients. The new PRSA code, mentioned in the Times article (above), has one reference to media. -- Jack O'Dwyer


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