EPSTEIN REPLACES HUBBELL AT PR21

Jerry Epstein, a former counselor to Ronald Reagan who left Fleishman-Hillard after 17 years to form PeopleTrends in San Francisco, has been named to replace Robert Hubbell as president and CEO of PR21. Hubbell has left to "pursue other interests," the firm said, without further comment.

Epstein managed F-H's Los Angeles office, eventually opening and overseeing the firm's San Francisco, Sacramento, San Diego and Minneapolis offices. He left F-H in 1999 to run PeopleTrends, a marketing and human resources consultancy.

At F-H, he led the team that worked to reposition Las Vegas as a family destination and handled the 1994 World Cup and 2002 Japanese World Cup Bidding Committee.

Hubbell joined PR21, a Daniel J. Edelman Inc. company, as president in January 2001. He was an EVP-managing director at Edelman and previously VP of financial relations at Hill and Knowlton.

RL&M ADVISES TYCO

Robinson Lerer & Montgomery is advising Tyco International in the aftermath of its former CEO's indictment and rumors of a proxy fight over seats on the company's board of directors.

New York-based RL&M, a Young and Rubicam unit, was hired in early June by Bermuda-based Tyco, after its stock plunged 80 percent on rumors of improper accounting and CEO Dennis Kozlowski's highly publicized resignation and indictment over allegedly evading more than $1M in taxes.

Former Motorola president Edward Breen was named CEO to replace Kozlowski last month.

The Aug. 21 Wall Street Journal reported a potential proxy fight led by Tyco investors to rid its 11-member board of nine members who were appointed by Kozlowski.

RL&M's Walter Montgomery has not returned calls from this NL.

RL&M is advising Adelphia Communications in the aftermath of its July Chapter 11 filing and arrest of 77-year-old founder John Rigas and his three sons, after the family was charged with looting the company's coffers for personal investments.

The Securities and Exchange Commission has approved the Publicis-Bcom3 merger. Shareholders to vote with results set for Sept. 20 announcement. Publicis would become 4th largest ad/PR holding co.

MAKOVSKY HANDLES INTERPUBLIC SUIT

Makovsky & Co. is handling communications for the Arkansas law firm Cauley Geller Bowman & Coates, which is suing Interpublic Group of Cos. in a class action on behalf of shareholders, CEO Ken Makovsky told this NL.

CGB&C alleges-via the suit filed in U.S. District Court for the Southern District of New York- that IPG defrauded investors by overstating net income between Oct. 28, 1997 and Aug. 13 of this year. It was the second class action suit against IPG since its stock fell 23 percent earlier this month on news the company would postpone its second quarter earnings announcement for a week. Seven total suits against IPG have been filed in the last week.

IPG later said it identified $68.5 million of improperly expensed charges, mostly from European operations, which will cause it to restate its earnings back to 1997 and prior.

CGB&C has an Oct. 14 deadline to add plaintiffs to the suit and has a sign-up form on its website. Makovsky said M&C is not reaching out to shareholders for the work, but is mostly handling media relations. He referred calls to Lisa Friedman, who heads the account at M&C. She has not yet been reached.

CGB&C filed a suit against Omnicom executives in June, alleging overinflation of OMC's securities.

Mark Padgett has joined GCI Group to handle its effort to offer IR services to biotechnology companies. Tom Reno, GCI/New York president, called Padgett's "deep science background" and "understanding of Wall Street" a winning combination.

Padgett joins from Life Sciences Consulting, and was involved in product development work at Johnson & Johnson.

PRSA PAID BOLTON $283K IN 2001

PR Society of America paid executive director Catherine Bolton salary and bonuses totaling $283,000 in 2001, according to the group's income tax return just released.

Also released were some financial statistics for the first half, a break in recent PRSA practice. Revenues were down $67,000 in the half to $4,473,241 but the Society added $331,722 to net assets due to cost-cutting. Membership total dropped 2%.

PRSA previously said (5/15 NL) that Bolton's salary for 2001 was $215,000. She had joined in September 2000 at a salary of $200,000.

(continued on page 2)

PRSA PAID BOLTON $283K

(continued from page 1)

Bolton said the additional $68K in remuneration consisted of two bonuses for outstanding overall performance and a $10,000 addition to salary since she was not eligible for inclusion in the group's pension plan in 2001.

She said that unlike previous policy her bonuses are not related to membership numbers or PRSA income. Former CEO Ray Gaulke had such a contract.

Pension benefits of about $20,000 a year started this year for Bolton. She will also receive health and other benefits. Bolton's expense account was not revealed in the tax return although Gaulke's once was (it was $49,000 in one year).

CFO John Colletti was paid $98,750 for eight months of employment.

This would indicate a salary of $150,000 but Bolton said Colletti had also received a bonus. He is a Certified Management Accountant.

Former chief administrative officer Linda Burnett was paid $93,195 for nine months, which included a bonus. She resigned in June.

Still unrevealed is the settlement made to Gaulke, who left under an agreement with PRSA in 2001 with four years still to go on his contract of about $250K a year.

Payroll costs rose 14.4% in 2001 to $4.01M or 43% of revenues of $9.1M. The average payroll cost for associations in the $5-$10M range is 29%, according to the American Society of Assn. Executives.

PRSA payroll costs were 27% higher than 1999 costs of $3.1M. A settlement was also made with Dorothy McGuinness, 31-year veteran whose job was eliminated in late 2001.

In its first intra-year report since 1997, PRSA said cash/investments totaled $1.74M as of June 30 vs. $1.11M a year earlier and $1.51M on Dec. 31, 2001. Accounts payable rose to $494,792 from $338,197 and accounts receivable declined to $164,445 from $193,298. Expenses of about $9.5M are expected for 2002.

The Society gets the bulk of its dues income in the first half. Dues income in the half was $2.55M. It collected $3.15M in dues for all of 2001.

PRSA did not provide a current paid membership total. It counts as members those who are up to three months in arrears on their dues.

Twelve manager-level staffers of PRSA met Aug. 26 at Bolton's home in Lake Wallenpaupack, Pa. She also maintains a New York apartment because of the distance her home is from the city.

Weber Shandwick has picked up the Little Tikes PR account in a pitch that included five other shops. The firm's experience in reaching "moms" via work for clients such as Kraft, Cambell Soup and Enfamil was a reason for the win, according to Laurie Yingling, communications manager at LT. Sister Interpublic firm McCann-Erickson is LT's ad agency. WS/Chicago will lead the LT account.

PRO-ISRAEL AD DRIVE IS IN THE WORKS

American Jewish groups are backing a pro-Israel TV ad campaign to bolster support for that embattled nation in the U.S.

The American Jewish Committee is a driving force behind that effort. It recently sponsored a poll that found American support for Israel is slipping a bit as more respondents expressed "neutrality" in the Israeli-Palestine conflict.

Kenneth Bandler, the Committee's PR and communications director, has not returned a call for comment. An AJC staffer did say that the kick-off date for the multi-million effort has not yet been determined.

Political consultant Jennifer Laszlo Mizrahi is developing the ad effort. She is a Democratic consultant with close ties to former Israel PM Ehud Barak. Laszlo Mizrahi has done work for clients such as American Israel Public Affairs Committee, which bills itself as America's pro-Israel lobby; Ford Foundation; American Cancer Society, and the American Medical Assn.

The pro-Israel ad campaign will position the country as a beacon of freedom in a rough area of the world. It also will argue that Israel is committed to the peace process, having already signed agreements with former adversaries Egypt and Jordon.

The pro-Israel ads may go head-to-head with those from Saudi Arabia. That Qorvis Communications-developed campaign, pitching the Kingdom as a reliable U.S. ally and partner in the so-called "war on terror" is ready to run, QC CEO Michael Petruzzello has told this NL.

The Saudi campaign will run through Sept. 11, the one-year anniversary of the day that 19 hijackers - of which 15 were Saudis-launched their terror attacks on the U.S.

KCSA PR Worldwide chairman Herb Corbin chairs AJC's PR and communications committee. He referred questions to Bandler.

Corbin recently succeeded Makovsky & Co.'s Ken Makovsky at the AJC post.

GRUBMAN PLEADS GUILTY IN CAR CRASH

Lizzie Grubman, a New York publicist, pleaded guilty in a hit-and-run crash that injured 16 people outside a Hamptons nightclub.

The judge indicated that Grubman, 31, will get two months in jail, 280 hours of community service and five years probation.

Grubman, who pleaded guilty to third-degree assault and leaving the scene of an accident, had faced a maximum sentence of seven years behind bars if convicted of all 26 charges in the original indictment.

She remains free on bail pending formal sentencing on Oct. 23.

"I just want to say again I'm sorry for the people that I hurt in the accident and I apologize to their families," she said.

Grubman, who uses Dan Klores Comms. for PR, still faces at least eight lawsuits seeking millions.

NYT TO REPORT GAY 'WEDDINGS'

The "Sunday Styles" section of The New York
Times will start publishing reports of same-sex commitment ceremonies and of some types of formal registration of gay and lesbian partnerships next month. On occasion, the "Vows" column will be devoted to a same-sex couple.

The reports will appear in the pages that currently are headed "Weddings," and the heading will change to "Weddings/Celebrations," the Times announcement said.

Howell Raines, executive editor of the Times, said: "In making this change, we acknowledge the newsworthiness of a growing and visible trend in society toward public celebrations of commitment by gay and lesbian couples-celebrations important to many of our readers, their families and their friends. We recognize that the society remains divided about the legal and religious definition of marriage, and our news columns will remain impartial in that debate, reporting fully on all points of view. The Styles pages will treat same-sex celebrations as a discrete phenomenon meriting coverage in their own right."

Raines said the articles and pictures will be identical to those the Times has used for weddings. As with weddings, the Styles editors will decide which couples can be accommodated in the available space. The criteria-the newsworthiness-and accomplishments of the couples and their families-will be the same as those that have traditionally applied to weddings.

The Times will publish the selected announcements without charge. To qualify for considerations, same-sex couples must fulfill at least one of two requirements:

1. Celebrate their commitment in a public ceremony.

2. Enter into a legally recognized civil union (currently only available in Vermont) or register their domestic partnership (in those localities, including New York, that offer registration).

GLAAD Praises Times

Joan Garry, executive director of The Gay & Lesbian Alliance, said The New York Times' decision to publish same-sex union announcements is "nothing less than a watershed moment in the pursuit of equality for the lesbian and gay community."

Garry said GLAAD and the Times had been discussing this issue for more than a year. She hopes the Times' decision will cause other newspapers to follow suit.

FEATURES ADDED TO SUNDAY MAGAZINE

The New York Times Magazine is adding five new features, including a 10-page photo section, called "Portfolio" that will appear on a regular basis, starting Sept. 22.

Portfolio will feature an "art gallery" of photos, taken by award-winning photographers.

Adam Moss, editor of the magazine, said this new feature "expands on our ability to provide some of the most highly regarded and stunning photographic works being showcased today."

On Sept. 8, another new feature, called "Diagnosis," will delve into real life medical puzzles, with a physician taking readers through the process of diagnosing and treating a specific ailment.

Sept. 15, a section called "Page Turner" will focus on young, artistic talent as they ascend into stardom via movies, TV, books, art, music and theater.

On Sept. 22, the magazine presents "Crash Course," its own version of an adult education primer, with the best available thinking from leading academics on hot subjects in the news.

Next year, a section called "Domains" will make its debut. Articles in this section will offer a glimpse into otherwise off-limits' quarters, showing how people in the news-from figures in entertainment to sports, from politics to business-live their lives, making the private public.

The editors for each section are: Portfolio
Kathy Ryan/Ariel Kaminer; Diagnosis-Joel Lovell; Domains and Page Turner-Megan Liberman, and Crash Course-Dean Robinson.

PLACEMENT TIPS

Denise Gee was named editor of Tampa Bay Illustrated, which will start publishing eight times a year in January 2003.

Jason Davis was named managing editor of the magazine, which will be published by the Palm Beach Media Group, in Palm Beach, Fla.

The editors will be based in the Pinellas Business Park, 11001 Roosevelt blvd., St. Petersburg, FL 33716. 727/456-0400; fax: 456-0401.

Entertainment News Syndicate editor Lee Canaan is seeking information about and invites to press trips, hotels, travel, resorts and spa packages.

ENS' interest is worldwide, with emphasis on Asian, Mid-East and European regions for a readership with generally affluent tastes.

Black-and-white photos are also welcomed by the syndicate, which produces a monthly column that is sent to more than 1,200 newspapers with a combined circulation exceeding 12 million.

Canaan, who is also a founder and currently chief consultant to Canaan PR, wants information sent to ENS, P.O. Box 276, Murray Hill Station, New York, NY 10156. 212/679-9968; fax: 679-9969, or [email protected].

The Associated Press has hired Steve Giegerich,
51, previously at The Asbury Park (N.J.) Press, to
cover the higher education beat.

Giegerich, who will be based in New York, is replacing Arlene Levinson, who is taking a leave of absence.

(Media news continued on next page)

STYLE RIVALS EYE STEWART'S ROOST

The Washington Post said B. Smith, Christopher Lowell and Chris Madden all have designs on the lifestyle crown of a besieged Martha Stewart.

Madden, a former publicist and magazine editor, appears weekly on HGTV and writes a column for Scripps Howard News Service. She has produced 14 books and designs furniture and candles, and is currently working up a magazine prototype for Hearst Corp.

Madden works from home and a nearby office in
Rye, N.Y., which she shares with husband and partner Kevin Madden, who is a former Conde Nast publisher of House & Garden, Self and Bon Appetit.

Lowell, a former ad executive, is host of his own TV show on the Discovery Channel. His name is on bedding, bath linens, paint and upholstered furniture sold by Burlington Coat Factory.

Former cover girl Barbara Smith, who has been called the black Martha Stewart, hosts a half-hour syndicated TV show, "B. Smith With Style," which has made her one of the most prominent African American voices on style.

Like Stewart, Smith films from her own garden and kitchen in Sag Harbor in the Hamptons. She also owns three restaurants in Washington, New York and Sag Harbor.

Bed, Bath & Beyond, which markets Smith's ethnically inspired bed linens, will add rugs, throws and pillows in September.

PLATT NAMED EDITOR OF PHILADELPHIA

David Lipson, publisher of Philadelphia magazine, has named Larry Platt as editor-in-chief to succeed Loren Feldman.

Platt, who will take over on Sept. 9, said the monthly magazine, which was started in 1908, will continue doing the service coverage combined with an "emphasis on reporting and telling our area's most dramatic stories of power, achievement, pathos, and lifestyle."

He said the magazine will be "dramatic, but not 'gotcha'; aggressive, but not superior in tone."

Platt had been editor-at-large for Philadelphia magazine for 10 years.

EDITOR DIES IN FALL FROM 15TH FLOOR

Allen Myerson, 47, who was assistant business editor/weekends for The New York Times, fell to his death from the 15th floor of the New York Times building on 43rd st. at about 9:45 a.m. on Aug. 22.

Myerson, who joined the Times in 1989 as a copy editor, had just returned to work after attending his 25th class reunion at Harvard Univ.

Agis Salpukas, a Times business reporter, jumped off the George Washington Bridge in January 2000.

Myerson's wife, Carol Cropper, is a personal finance
editor at Business Week.

PEOPLE

Scott Baltic, former editor of Fire Chief magazine, is editor of Homeland Protection Professional, a new magazine for the homeland security market. He can be reached at 773/275-7898. The magazine's website address is www.hppmag.com.

Michael Lewittes was promoted to news editor
of Us Weekly.

Rachel Beck, who just got her MBA degree, has rejoined The Associated Press in New York.

She has begun writing a new twice-a-week business column, called "All Business," which is tied to current news and trends. She will examine executive decisions, and analyze everything from mergers to new products to technology advancements.

Beck wants to get column ideas submitted to her
by e-mail at [email protected].

Jim Louderback, who currently writes the
"TechSmart" column in USA Weekend, a newspaper supplement, is rejoining Ziff-Davis Media, in New York, as editor-in-chief of Ziff Davis Internet.

Louderback, who will continue to write his monthly column for USA Weekend, will handle planning, developing and implementing Ziff Davis Media's online editorial content.

Julia Hood, a reporter in PR Week's San Francisco bureau, is coming to New York to become editor-in-chief of the paper's U.S. edition.

Hood, who starts Sept. 9, replaces Jonah Bloom, who left to join Advertising Age as executive editor.

Tim McDarrah, a former "Page Six" reporter for The New York Post, has recently joined The Las Vegas Sun as a gossip columnist. He can be reached at 702/259-4096.

Beth Laski, who resigned last May as executive editor/film for The Hollywood Reporter, has joined Universal Pictures as SVP/media relations.

FEWER ADS MEAN FEWER BOOK REVIEWS

A decline in advertising in The New York Times Book Review is a troubling trend for book publicists and authors, who rely on the literary world's bestread publication for reviews to launch new books.

With fewer ads, the weekly supplement has been running fewer book reviews or running the reviews months later-when there is room-but the "harm is often done by then," said Newsweek.

"As with films, initial sales can make or break a title because cash-strapped publishers are quick to kill marketing dollars for a book that fails to make a splash fast," said the magazine.

Other newspapers have cut back on book reviews, including The Philadelphia Inquirer, papers in Seattle, Boston, San Jose, Chicago, San Francisco, Atlanta and Dallas, according to the Authors Guild Bulletin.

LEHMAN RAPS WPP FINANCIAL REPORTS

Lehman Brothers investment banking and stock brokerage house has criticized the financial reporting practices of the WPP Group, owner of Hill and Knowlton, Burson-Marsteller, Ogilvy PR Worldwide and other PR operations.

Lehman's London office, in a 25-page report for institutions published Aug. 8, said WPP's free cash flow was "zero" in 2001 rather than the £504 million claimed.

It also hits the WPP reporting practices on new business wins, size of debt, identity of acquisitions, share buy-backs, share options to employees, and calculation of return on capital.

If WPP amortized goodwill under the "normal" U.K. (FSR 10) accounting rules, it would lower 2002 earnings by £260 million, Lehman said.

WPP netted £274M in 2001. The company mostly does not amortize goodwill. This totaled £4.45 billion as of June 30. The U.K. pound is currently worth about $1.52.

The Lehman report is called a review of "WPP's financial reporting indepth" and not a "comprehensive discussion of WPP's accounting." The conclusion reached is that WPP's "commentary on its results is sometimes flattering or inaccurate."

The investment house also highlights "the important differences between U.K. GAAP and U.S. GAAP (GAAP stands for generally accepted accounting principles).

WPP's £271.2M of net income in 2001 under U.K. GAAP falls to $79.2M under U.S. GAAP.

Even if goodwill amortization is removed, net under U.S. GAAP would still be £50M lower, LB says.

WSJ Lauded WPP

An ad column in the Aug. 21 Wall Street Journal was headlined: "WPP's Sorrell Shines Amid Gloom." Written by Erin White and Alessandra Galloni of the London bureau, it uses the term "Sir" in referring to Sorrell. WSJ/U.S. does not use the title.

A subhead in the story said Sorrell "Received Accolades for Accounting Practices."

The article says Sorrell's critics "call him a cut-throat deal maker who littered his acquisition trail with enemies" but that "investors say Sir Martin stands out for the transparency of WPP's books."

WPP's "candor and caution are popular with Wall Street," it adds. Noted are that WPP waits a full year after an acquisition before adding the revenue to its own; generally discloses the revenue of companies it acquires; regularly discloses future performance-related payouts; will report the cost of stock options on results, and Sorrell will certify financial results as required by a new SEC rule.

Lehman Sees It Differently

Lehman said WPP defines free cash flow to include such items as cash from the issue of shares and the sale of investments. Lehman would include neither (thus lowering claimed FCF of £504M by £96M). If working capital and movement in provisions is also included, FCF "would be approximately zero," says Lehman. WPP contradicts itself by including proceeds from investments in figuring FCF but not the costs of such investments, Lehman notes.

-WPP claims return on capital of 10.8% but this is "incorrect," said the banking house. It's 8.4% by WPP's own definition and 8% by LB's, it adds.

-WPP commits £150-£200M to buying back shares each year but these are used to pay staff and should be a staff cost, not a buyback. Shares have not been cancelled for three years, LB says.

-Investors should be "cautious" on new business figures of all ad agencies. WPP said it added $800M for Hindustan Lever but the press said it was only worth $120-$150M. Issues include when to count new wins and whether an agency admits an account is lost or whether it merely says it's "inactive."

-The numerous acquisitions of WPP (70 small purchases plus Tempus and Young & Rubicam in 2000-2001) make its financial statements "harder to understand" because it is "less clear where growth is coming from," says LB. It calls "somewhat unhelpful" the fact that WPP spent £700M on acquisitions in 2001 and decided none were "material." Also, it says, where revenues and profits are disclosed, it's only for the year of acquisition.

-WPP says it never has to amortize large acquisitions such as Tempus and Y&R, pointing out that the goodwill on J.W. Thompson and Ogilvy & Mather, acquired in the 1980's, is now well below the current value of the brands. However, LB figures that Y&R, purchased for £3 billion in stock in 2000, now has a value of £1.8B to £2.1B, meaning there could be a write-down of about £1B.

TATE CHAIRS WEST POINT PA COUNCIL

Powell Tate vice chairman Sheila Tate has been named to chair the U.S. Military Academy's Civilian Public Affairs council replacing Burson-Marsteller vice chairman Stan Sauerhaft, who becomes chairman emeritus of the West Point, N.Y.-based council.

The council advises the Academy's Superintendent and PA Officer and assists with media relations, crisis communications, alumni affairs, recruiting & admissions, and government relations.

Tate was press secretary for the first President Bush and First Lady Nancy Reagan, and was previously vice chairman of Hill and Knowlton's Washington, D.C., office.

Powell Tate, based in D.C., is the public affairs arm of Interpublic's Weber Shandwick.
The Academy is marking its 200th year.

RENNERT DIES AT 74

Vincent Paul Rennert, who spent his entire 36-year PR career at Manning, Selvage & Lee, died Aug. 18, along with his wife, Annetta, in Wareham, Mass., from injuries sustained in a car accident.

Rennert, 74, was president of MS&L's international division until his retirement in 1992. He previously headed the firm's New York corporate practice.

Lehman Brothers has criticized the financial reporting habits of WPP Group while an article in the Wall Street Journal praises them (page 7).

Who's right?!

It's pretty obvious that the WSJ piece, a dispatch from London, can't hold a candle to the 25-page Lehman report, authored by some of the most sophisticated analysts at the banking house.

The WSJ report is an unmitigated puff piece of the type common in the U.K. trade and general press. U.K. trade papers often openly describe themselves as "supporters" of the industries they're covering.

The WSJ, headlining how WPP CEO Martin Sorrell "Shines Amid Gloom," even refers to him as "Sir," a title never used by the WSJ when its U.S. reporters and editors are writing about him.

Newsday columnist Terry MacDonald wrote July 15 that he would not use the "sir" moniker with Elton John, Paul McCartney, Mick Jagger or anyone else.

It's "embarrassing to watch TV journalists during
interviews with John and McCartney mentioning their sterling titles in every third sentence," he added.

"Your Highness, Sir and Dame have no place in the American lexicon," wrote MacDonald. "Our forebears fought a revolution so we would never again bow to the Crown."

Another odd thing about the WPP story is that the WSJ has been very tough lately with the two big competitors of WPP-Omnicom and Interpublic.

The first half report of WPP is yet another example of its inadequate and misleading financial reporting habits.

-The first page of the release reports revenue is down almost 2%..."and flat in constant currencies." Whether it's "flat" in constant currencies doesn't count. Foreign exchange effects are real. Some analysts do not like references to "constant currencies."

-Profit before interest, taxes, goodwill and impairment is reported. -Operating margin is given pre-goodwill.

-Diluted "headline" earnings are provided.

-Nowhere on the first page is earnings-pershare provided. That can only be found in a table on page 9. They're down 31% to 72 cents. Omnicom's CFO Randy Weisenburger has said that EPS is the most important single financial measurement.

This wouldn't be so bad but the glossy 2001 WPP annual report has 16 pages of text on the importance of "branding," saying that "every corporate action, every corporate decision, every corporate communication will be seen as a clue-as one of those all-important scraps and straws from which people build brands."

Furthermore, the essay, by Jeremy Bullmore, former J.W. Thompson creative head and WPP director, says parent companies are increasingly identified with their subsidiary companies. Anything the parent does
reflects on the individual "brands" and vice versa.

If this is the case, then WPP's poor financial reports hurt not only its own reputation but the reputations of Hill & Knowlton, Burson-Marsteller, Ogilvy PR Worldwide, and all its advertising and PR units.

The essay advises marketers to read The Cluetrain
Manifesto, calling this a "splendidly anarchic rant" about the Internet. Bullmore says readers should "feel free to ignore quite a lot of it." We hope the authors of Cluetrain get to see this knock by a 33-year advertising veteran.

Bullmore also mentions No Logo by Naomi Klein, saying the book about exploitation of foreign labor exposes the "double standards of multinational corporations and the risk they run."

A final irony is that Sorrell has pledged in full page NASDAQ ads to provide clarity and transparency in his company's financial reports. He is a director of NASDAQ (which is unreachable these days by phone, e-mail, fax, messenger or carrier pigeon).

Lehman has done a service in taking an axe to the billions in "net new wins" regularly claimed by the ad agencies. Such figures are "not audited," it says in a massive understatement.

Non-ad agency sources get "much lower reported
net new wins than the ad agencies," it notes. Among
questions it raises is when will the new billings take effect? Budgets can easily be trimmed or erased. Advertisers habitually say their new ad campaigns are the "biggest ever." Also, ad agencies, instead of admitting an account is lost, merely consider it "inactive" and fail to make the deduction. PR firms tend to say they "completed the assignment." But the fees are gone in either case.

The new billings figures are exaggerated by a factor of about 10. Ad agencies these days are getting close to 10% of the billings and only 1%-2% if media buying alone is involved. A "billion-dollars" in net new business is worth only a $100 million. Ad agencies, if they weren't so hooked on exaggeration, would change their method of reporting.

Grant's Investor, like Lehman Brothers with WPP, earlier this year took issue with Interpublic's claims of "free cash flow." Defining FCF as "cash from operations less capital spending," Grant's said that IPG, instead of having FCF of $249M in the first nine months of 2001, had a negative cash flow of $712M for the period. IPG's Sean Orr argued that Grant's was wrong and that there wasn't enough publicly available information for Grant's to make its statement.
-Jack O'Dwyer