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Internet Edition, March 5, 2003, Page 1


Interpublic CEO John Dooner was demoted to CEO of its McCann-Erickson ad unit, and former True North head David Bell was named to head the struggling ad/PR conglomerate on Feb. 26.

J.P. Morgan analyst Fred Searby believes "additional management changes are in the works" including the hiring of an executive from a competitor to be COO. He said Dooner "inherited a nearly impossible situation" from predecessor Phil Geier. IPG has been forced to restate $181 million in earnings due to shoddy accounting. Its stock hit a 10-year low on Feb. 13.

Searby has put the equivalent of a "sell" on both IPG and Omnicom.


The National Association of Broadcasters, faced with a rising tide of criticism over alleged anti-competitive practices in the U.S. radio market and a burgeoning challenge from satellite radio services, has hired Edelman PR Worldwide's Washington, D.C., office after a lengthy review.

Stacy Perrus, media relations manager for NAB, who confirmed via e-mail that the group hired Edelman, has not yet been reached for further comment.

NAB, the main trade group for the radio and TV industries, completed the interview process for the estimated $250K account toward the end of last year. At the time, it was looking to provide "rapid response" to critics and present a positive image of terrestrial radio.

Steve Aiello, who was CEO of Cohn & Wolfe, joins Hill & Knowlton April 1 as senior counselor of PA. He will report to Marilyn Castaldi, GM of H&K/New York. Aiello also was president of the NYC Board of Education (1976-79), and ethnic/urban affairs advisor to former President Jimmy Carter...Al Tortorella has taken a managing director post at Ogilvy PR Worldwide to head its global practice from New York after 20 years at Burson-Marsteller. He replaces Rob Shimmin, who has been given a broader role as managing director for Europe, Africa and the Middle East, based in London....Marie Kennedy has left her senior director, corporate affairs post at Genentech for the VP-corporate communications post at Amgen, Thousand Oaks, Calif. Heyman Assocs. did the placement.


Fifty of 108 independent PR firms providing proofs of their net fees and payrolls in 2002 had declines while only 32 were able to report gains.

(Table on page 7)

About 35 firms from the O'Dwyer ranking of 124 last year declined to take part in this year's rankings.

Six were in the top 50 last year with only two from the lower 25. Most of the defections were in the lower part of the list ($2M or less in fees).

This year's list of 108 independents includes firms new to the list as well as returnees.

Skipping the rankings this year were: Dan Klores Communications (No. 6 last year); Sterling Hager (No. 10); Neale-May & Partners (No. 15); Phase Two Strategies (No. 21), and Zimmerman Agency (No. 50).

Sterling Hager, Neale-May and Phase Two are high-tech or information technology-oriented.

Donovan Neale-May, head of the firm in his name, said it is focusing on building relationships for its IT clients and also on its "Global Fluency" network of 40 similar firms in 27 countries.

Edelman Tops List

Edelman PR Worldwide again topped the list by a wide margin, reporting fees down 6.8% to $205.7M. Consumer was strong but financial services and high-tech aimed at industry were off.

The firm's investment in 21 overseas offices is paying off with international fees gaining 1.8% to $69.5M.

Ruder Finn had a flat year as fees held to the $80Mmark. The two big independents felt they did well considering the recession, 9/11 and threats of war.

Waggener Edstrom, which does much work for Microsoft, was flat at $59M. High-tech specialist Schwartz Communications was off 35% to $19M.

Hunter PR (food specialist) and Cooney/Waters Group (health), both based in New York, had gains of 30% and 38%, respectively, the biggest gains among the top 25.

Fourteen firms had declines of 20% and more while only seven had gains of 20% and more.

The major ad agency-owned PR operations have said they are withholding their 2002 totals until late April when all will report at the same time.

WPP Group last week said PR income was down 8% for the year and Omnicom said PR was off 6.2%. Interpublic, which said PR was down 18% in Q3 of 2001, is to report 2002's results this week.

Internet Edition, March 5, 2003, Page 2


The trade group representing major producers of products containing the herb ephedra was created by Washington, D.C., PR firm The Aker Partners, which finds itself handling crisis PR to counter a media firestorm following the Feb. 17 death of Baltimore Orioles pitcher Steve Bechler.

The controversial herb, a staple of some dietary supplements used by athletes and people looking to shed a few pounds, has been banned by the U.S. military and several professional athletic leagues, including the National Football League.

The FDA does not regulate nor approve dietary supplements, but does have the authority to ban products that bring "unreasonable" risk or harm to users.

Colburn Aker, managing partner at The Aker Partners, told this NL the current ephedra backlash is one of the most frustrating and worse examples of a negative campaign he's ever seen. He lashed out at critics using "junk science" to indict the product.

The Ephedra Education Council, created by Aker three years ago, held a press conference and issued a strongly worded statement about Bechler's death, expressing sympathy but calling links to ephedra premature, "sensationalist and speculative."

EEC's general counsel, Wes Siegner, contends that 55 scientific studies say ephedra supplements are "safe and effective when used as directed."

Siegner says misuse of ephedra can result in harm.

He points out that 16,000 deaths a year are attributed to aspirin, "but that does not mean aspirin should be banned, any more than the misuse of dietary supplements justifies a ban on ephedra."


Montreal-based Cossette Communication Group, which owns Optimum PR, expects to make another ad/PR agency acquisition in the U.S. within a few months, the company's CEO said Feb. 26. Claude Lessard, CEO, said the publicly owned company has $50 million in cash and almost no debt. The company has not made a sizable takeover in the U.S. since August 2001, when it bought Post & Ptrs., a New York ad agency, for $7.5 million.

Major clients in Canada include McDonald's, Bell Canada, Home Depot, Petro-Canada, Molson and Dairy Farmers of Canada.


Hollywood publicist Michael Levine, who has represented Charlton Heston and Michael Jackson, wants Americans to boycott French wine because of what he sees as France's lack of support for the U.S.A.

The boycott will last until France recovers from its "political amnesia," said Levine, while noting that 200,000 Americans died to help liberate France in WWII.

Levine said he has been "frustrated with France'simmeasurable ingratitude" for decades. France's opposition to President Bush's war with Iraq along with its "continued flirtation with anti-Semitism is the straw that broke the camel's back," and spurred Levine to the boycott idea.

France, with 37 percent of the market, ranks as the biggest exporter of wine to the U.S. Americans drink more than $820M worth of French wine per-year.

Levine is the author of Guerrilla PR.


Colle+McVoy has ousted Golin/Harris International in a six-firm pitch for the North American Olive Oil Association's $250K PR account.

C+M will pitch olive oil as a "pantry essential" for cooking with many health benefits, said Riff Yeager, director of PR for the Minneapolis-based firm.

He said C+M's pitch was a change from olive oil's traditional campaigns, which catered somewhat to the food "elitist" or more of a niche audience. Yeager said the work will focus on three tenets - taste, versatility and health - and will involve a nationally known celebrity spokesperson, who he declined to identify.

A G/HI staffer told this NL the account and its two primary contacts are no longer with the firm.


The U.S. Government's "message" is not getting through to foreign audiences, Stuart Holliday, who is State Dept. Coordinator of International Information Programs, told a meeting of the U.S. Advisory Commission on Public Diplomacy on Feb. 26.

The government has failed to convey the idea that America stands for strong family values, peace and economic stability, in Holliday's view.

Holliday, an advisor to VP Dick Cheney's campaign, said the State Dept. needs to devise a more "focused and effective manner" to get its message across.

One plan is to step up use of the Internet, which Holliday called "an offensive tool." He said the Internet is used to get information to American embassies throughout the world, and as a medium for sending content to the foreign press. The State Dept. also uses the `Net to rebut the various anti-American conspiracy theories that are floating in cyberspace.

Holliday said his unit works closely with the recently set up White House Office of Global Communications and the State Dept.'s Office of Counterterrorism.

The IIP unit monitors the global press, challenges inaccuracies and provides updates on the global war on terror.

Holliday called President Bush a "clear and focused communicator" who "needs feedback from our allies around the world." Said Holliday: "Public opinion is a national security issue."

Harold Pachios, chairman of the Commission, said: "We haven't got the [foreign] press focused on the good America has done."

Holliday said public diplomacy is a really hard business.

Internet Edition, March 5, 2003, Page 3


A new survey of automotive consumer and trade media found 90% of respondents would like to get a pitch from automotive supplier PR pros via e-mail.

The finding is part of the 2003 Automotive Media Survey conducted by the Automotive PR Council, headquartered in Research Triangle Park, N.C.

The survey also shows 94% of responding media prefer to get news releases via e-mail as well, according to APRC director Neal Zipser.

"The e-mail rules when it comes to communicating with the media," Zipser said. "These findings reiterate the importance for PR departments to compile an accurate and comprehensive database of media members which includes e-mail addresses."

The study revealed several media pet peeves of supplier PR departments and the agencies that serve them. The most popular responses included: Slow to respond, don't know their product/services well enough and don't know the target audience and mission of the publication.

"In general, media is asking PR pros to respect their time," Zipser said. "People are expected today to do more with less, and the media is no different. Know your pitch, know your product, know the publication and be sensitive to the reporter's time before picking up the phone-or sending your e-mail."

Technical innovations and breakthroughs were the greatest topics of interest for the reporters who cover the automotive original equipment, aftermarket and heavy duty market segments of the auto industry. Supplier relations, systems integration and maintenance/ repair issues also were high on the list of hot topics.

The survey results will be reviewed at APRC's Spring Conference to be held April 10, at Crowne Plaza Detroit Metro Airport, Romulus, Mich.


Bloomberg Radio's midday anchor Jessica (nee Ettinger) Gottesman, is producing a weekly "market minute," which airs several times on Saturdays on WBBR-AM, New York.
She is looking for new information, releases, "quick" CEO/CFO interview possibilities, magazines on general business topics, and news about topics such as personal finance, and business travel.

She can be reached at 499 Park ave., New York, NY 10022. 212/318-2338; e-mail: JGottesman@

CNET Networks started a new ZDNet series on Feb. 24, called "Wireless that Works."

Genevieve Cowger, who handles PR for CNET, said publicists might be interested in the series because there is a call for case study submissions that will be highlighted throughout the series.

The first webcast in the series, "The Landscape Now, the Territory Ahead," sets the scene by providing an overview of the wireless devices, architectures, platforms, and applications that currently exist.

Four webcasts will follow-a new one will be posted approximately every five weeks.

The next webcast, "Where Wireless Makes Sense," will be followed by "Best Strategies," "Security and Privacy in the Wireless World," and finally, "Wireless Wins 2003," which will focus on products that are helping businesses go wireless, as well as the products and services that will help them in the future.

Businesses that are using wireless technologies in innovative ways are invited to submit their case studies to ZDNet's editorial team at [email protected]. Dana Farber is editor-in-chief of ZDNet, which is based in San Francisco.

Communication World, a bimonthly magazine for members of the International Assn. of Business Communicators, which has been given a makeover, has added these new departments:

-"Global Perspectives" will cover issues affecting global and regional communicators and their organizations.

-"Case in Point" will feature articles about Gold Quill winners' projects.

-"Personality" will feature personal and candid views of communication professionals.

Natasha Spring is executive editor of CW and Naomi Mandelstein is senior editor. They are based at IABC's headquarters in San Francisco.


"When a reporter calls, start with a few questions of your own," readers of The Atlanta Journal-Constitution were advised recently by Mike King, who is the paper's ombudsman.

Here are his questions:

1. Who are you?
2. What is the story about?
3. What's prompting the reporter's interest?
4. Is this a general survey of parents?"
5. How did you get my name?
6. Who else are you speaking with?
7. Are you going to use my comments in your story? ("Ask the reporter if you can go over your comments at the end of the interview.")
8. When is the story going to run? ("This question is an important one because you may have second thoughts about something and want to call the reporter back later.")
"Lastly, if you don't want to answer something, don't," said King. "It might be a good idea to explain why you choose not to comment, but it isn't always necessary."

WTVD-TV in Raleigh-Durham will become the 100th TV station to offer a customized daily financial news report from Bloomberg TV.

"Bloomberg Business Report," a 90-second report from the floor of the New York Stock Exchange, is now broadcast by 39 of the top 50 stations.

MSNBC has cancelled Phil Donahue's talk show after six months of poor ratings.

(Media news continued on next page)

Internet Edition, March 5, 2003, Page 4


National Public Radio's CEO/president Kevin Klose defended his network's coverage of the Israeli-Palestinian conflict against charges of bias against Israel at the annual meeting of the The Jewish Council of Public Affairs that was held Feb. 25 in Baltimore.

The JCPA is a coalition of advocacy groups committed to promoting Israel and issues important to American Jews.

David Folkenflik, who coverered the meeting for The Sun, said "waves of skepticism toward the media in general, and especially NPR, buffeted Klose during the 90-minute session."

Folkenflik said the copies of the group's "sharply worded single-spaced, 22-page critique of an NPR series about the history of the conflict" was put within easy reach of participants.

One audience member called for NPR to submit its coverage to a review by an outside panel. A second audience member asked about giving credence to Palestinian accusations of atrocities by Israeli forces. A third discussion participant claimed NPR reporters failed to reflect the anti-Semitic tones of a UN conference in South Africa last year.

Klose attempted to engage his questioners, acknowledging occasional lapses and promising to consider critiques, wrote Folkenflik. But he praised the work of NPR's staff, saying any failings were those of human fraility, not intentional bias, said the report.


Abby Gardner, beauty director of YM, hopes other mainstream women's magazines will begin to shift the focus away from body image.

She praised YM's editor-in-chief Christine Taylor's decision to eliminate dieting articles from YM.

Gardner, who spoke on a panel at Harvard University that was the kickoff to a series of campus activities marking National Eating Disorders Awareness Week, said YM's editors have tried to incorporate images of women of more realistic sizes and shapes throughout the magazine, not only in select features, but integrated throughout the magazine.

She hopes other editors will move away from the "you're pear-shaped, this is the page for you" idea common in women's magazines. She said editors run into problems casting more full-figured models because they tend to be under-represented by modeling agencies.


New York Times business columnist Gretchen Morgenson told law professors at Nova Southeastern University that the news media's failure to help deflate the stock market bubble of the late 1990s was "one of the tragedies in the history of the press."

Morgenson, who won a Pulitzer Prize last year for her beat coverage of Wall Street, said "My media colleagues were right alongside the corporate spokesmen and conflicted Wall Street analysts in accepting these mind-numbingly stupid ways of valuing stock, such as page views on websites and `share of customer mind.'"

The columnist, a former assistant managing editor of Forbes and press secretary for Steve Forbes during his unsuccessful 1996 presidential run, said reporters played along with the game of "beating earnings" and reporting "pro forma earnings," which did not take into account items like payroll taxes or interest expenses.

The worst offender on all counts was CNBC, which turned the serious business of investing into entertainment, said Morgenson.

New Training Center

After conducting national research that showed a strong need for improvement in American business journalism, the Donald Reynolds Foundation of Las Vegas, Nev., has awarded $2,914,612 in grants to the American Press Institute for a national program of business-journalism workshops and for the development and implementation of a comprehensive website for journalists covering business.
Both programs will be run out of the newly created Donald Reynolds National Center for Business Journalism, which is being established at API's headquarters in Reston, Va.


Judith Dobrzynski, who is Sunday business editor of The New York Times, is joining CNBC, the General Electric-owned cable news network, as managing editor.

Dobrzynski, who will oversee business news coverage, will report to David Friend, who is SVP.

Lynette Khalfani, who has been covering the Wall Street beat for The Wall Street Journal, and appears daily on CNBC, is leaving the paper to write a book, entitled "Investing Mistakes."


Lou Dobbs, who anchors "Moneyline" on CNN, will write a monthly newsletter focusing on the stock market.

Lou Dobbs' Moneyletter will be published and sold for $199 a year by Phillips Investment Resources, a unit of Potomac.

Md.-based Phillips Publishing, which currently publishes 15 investment newsletters.


Art Cooper, 65, is retiring in June as editor of GQ, a position he has held since 1983. Dave Zinczenko, editor of Men's Health, and Dylan Jones, the British editor of GQ, are being considered as replacements.

Carolyn Ryan, 38, was named assistant managing editor/metro of The Boston Globe, replacing Peter Canellos, who will take charge of the Washington, D.C., bureau.

Bill Taylor and Alan Webber, co-founding editors of Fast Company, are resigning from G+J USA Publishing.

David Armstrong, 55, was appointed editor-in-chief of The South China Morning Post, Hong Kong's leading English-language newspaper.

Errol Louis, 40, has joined The New York Sun as an associate editor. Louis, a former reporter for the now-defunct City Sun, ran unsuccessfully for City Council seat as a Democrat and Green Party candidate in 1997.


CBS newsman Bob Schieffer's new book, "This Just In: What I Couldn't Tell You on TV," rose to No. 3 on the New York Times Bestseller List. Schieffer, 66, has been chief Washington, D.C., correspondent for CBS News since 1991.

The publishers of The Examiner, in San Francisco, began distributing a free newspaper on Feb. 24 after firing most of the staff.

Internet Edition, March 5, 2003, Page 7


Internet Edition, March 5, 2003, Page 8



Last week was a bad one for the big three ad/ PR conglomerates, which employed 17,778 people in their PR subsidiaries in 2000.

Omnicom's senior unsecured debts were downgraded by Moody's, which scolded OMC for its acquisition spree that boosts quarterly revenues and profits but sends it deeper into debt.

Interpublic ousted CEO John Dooner as IPG's free-spending ways also caught up with it. IPG stock at $9 is one-sixth of its price of $57 two years ago.

WPP Group's stock hit a 52-week low of $29 after it reported revenues down nearly 3% to 3.9 billion pounds ($6.13B at the current exchange rate of $1.57). Net fell 67% to 88 million pounds.

The three ad/PR roll-ups (as Wall Street refers to serial acquirers) have debt totaling nearly $9 billion.

Moody's was especially strict with OMC, saying it now regards OMC's deferred acquisition costs (that the Wall Street Journal "outed" last June) as debt since the earnout payments are "a near certainty."

The earn-out obligations to 2006 and beyond total $471M and OMC can also be forced to pay another $234M to complete partial buyouts.

The firm, ignoring pleas by credit raters to stop the acquisition binge, spent $680M on this in 2002.
Counting OMC's $2.03B in longterm debt, that gives the firm at least $2.7B in debt.

Also "contributing significantly" to OMC's "adjusted debt" are lease obligations, says Moody's. OMC and other firms that laid off staff are stuck with empty office space on which rent must be paid.

As usual, OMC provided no balance sheet with its earnings report at the Feb. 25 analyst conference call (ignoring this "standard" set by NIRI) nor a list of its acquisitions, which it did for one quarter in 2002. WPP, which is bigger than OMC, provided a balance sheet with its annual financials distributed on Feb. 24. OMC filed its balance sheet last year on March 31, the last possible day.

WPP's longterm debt is $3.04B and IPG's, $2.9B.

With material such as this hitting the fan, the question becomes what happened to the 17,778 PR people employed by the three congloms at 12/31/00?

They worked for such valued PR brands as Fleishman-Hillard, Hill & Knowlton, Burson-Marsteller, Ketchum, Porter Novelli, Golin/Harris, Ogilvy PR and Weber Shandwick.

IPG has admitted laying off 10,000 of its 62,000 workers but won't say how many were in PR.

Of all the types of firms that the congloms purchased, PR has turned out to be the worst.

WPP said PR had by far the biggest decline of any activity in 2002, off 8%. The next biggest decline was 0.2% in branding, healthcare and specialty. Ads were up 2% and information and consultancy, up 4%. PR dragged WPP down!

WPP said B-M, Ogilvy and Robinson Lerer & Montgomery "performed well," pointedly leaving out H&K and Cohn &Wolfe.

PR also had the biggest decline at OMC, off 6.2% for the year and 10.4% for Q4. Ads were up 10% for the year, direct marketing, 8.7% and specialty, 14.4%. PR also dragged down OMC!

Interpublic has yet to report 2002's results. But for Q3, PR was down 18%, by far the biggest decline in any category.

What happened to the promises of "synergy" and "cross-fertilization" that the congloms used (along with much $$) to talk these famous PR brands out of their independence?

The PR units were told they were joining giant families of agencies that would recommend them to all their clients. It never happened.

The last thing an ad A/E wants is some reporter poking his or her nose into a client's affairs and writing who knows what? The congloms themselves are virtually unavailable to press questioning and their PR units are following this lead. The big ad agency-owned PR units have created a new form of "press-less PR," emphasizing everything but press relations.

OMC doesn't even like talking to analysts. Its brief, before-the-market sessions are riling the analysts, who feel they are being shut out. The calls are set for 8:30 to 9:30 a.m. when the analysts supposedly have to leave for the stock market opening (they don't). The Feb. 25 call started at 8:35 a.m. and was halted 40 minutes later at 9:15 by CFO Randy Weisenberger who said, "We'll let you go." Some analysts did not get on the call and feel the whole thing is a set-up. Weisenberger and CEO John Wren, being in New York where many analysts and financial press are based, could easily meet them in person if they wanted to.

Proof that PR operations can have their fee income totals ready early in the year is on page 7, where 125+ firms have provided documentation such as W-3s and top pages of income tax returns.

Harper's (March) said the percentage increase in the cost of a U.S. employee health plan has exceeded inflation by seven times since 2001.

"Daredevil," briefly the No. 1 movie, has ads that quote Scott Bowles of USA Today saying it is "As great as it is cool." However, Bowles covers entertainment and is not the movie critic for the paper. The quote cannot be found in the paper's archives. Mike Clark, USA Today's movie reviewer, gave Daredevil 1 1/2 stars, saying it was the "dullest live-action comic strip on record, lacking even an interesting villain." Attention was focused on movie ad blurbs in 2001 when Sony Pictures was found to be quoting a fictitious reviewer. -
-- Jack O'Dwyer


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