KETCHUM, MS&L LAND HOME DEPOT

Home Depot has singed Ketchum and Manning, Selvage & Lee as its PR firms. The Omnicom unit will handle marketing PR, while the Publicis Groupe operation will focus on corporate duties.

More than 20 firms pitched the account. Jerry Swerling, a Los Angeles management consultant, handled the review.

HD had more than $58B in fiscal 2002 sales. It employs 300K people in the U.S., Canada and Mexico.

SHANGHAI ISSUES $$ RFP

Shanghai, which is China's largest commercial hub, has issue an RFP for a lucrative, potentially long-term PR contract to promote the city's "charm, spirit, popularity, attractiveness and influence overseas" as it prepares to host the 2010 World Expo, according to a bid document obtained by The Wall Street Journal. Billings are pegged between $250K and $500K annually for the project, which could run as long as seven years and bill in the millions.

The city expects as many as 70 million visitors for the Expo.

Weber Shandwick helped Beijing with its image during that city's successful bid for the 2008 Olympics.

BEERS EXITS STATE DEPT.

Propaganda czar Charlotte Beers, who faced withering criticism for her efforts to build support among Muslims for President Bush's war on terrorism, is leaving her State Dept. post because of "health reasons." Patricia Harrison, who heads State's Bureau of Educational and Cultural Affairs, succeeds Beers on an interim basis.

Secretary of State Colin Powell issued a statement praising the former ad woman for bringing "new energy, new ideas and new enthusiasm to our interaction with the public in America and throughout the world." He credited Beers for helping the State Dept. "find ways of making our case to policy makers while expanding our outreach efforts to make connections with ordinary people, particularly in Muslim nations."

Ginny Wolfe, a key advisor to Senate Majority Leader Bill Frist and a former Reagan-Bush campaign official, is slated to join Manning, Selvage & Lee next month as senior VP for PA in D.C. Wolfe was communications director at the National Republican Senatorial Committee, which was headed by Frist, as that party took control of the Senate in November.

IPG's NET SINKS 79% to $20M

Interpublic Group suffered a 79 percent plunge in fourth-quarter net income to $20 million on a four percent revenue drop. The company took a $135 million pre-tax charge related to its Octagon Motor Sports division. IPG's stock traded at $7.50 on March 7, a 12-year low.

New CEO David Bell predicted revenues will continue to drop this year. "We have major work ahead of us," he said. His priorities will be "achieving financial reliability and accountability" at both the holding company and operating unit level.

IPG reported progress on the sale of its NFO WorldGroup unit, which has $466 million in revenues. For the year, IPG earned $99 million to a $534 million 2001 loss. The company pared 3,300 from its payroll, employing 50,800 at yearend 2002.

Standard & Poor's lowered IPG's debt to junk status based on its "recent record of weak profitability."

AD/PR GIANTS NIX RANKINGS; S-O CITED

WPP Group, Interpublic, Omnicom, Grey Global and Publicis said their ad agencies and PR firms will not supply statistics this year for the rankings compiled by this publication, the Council of PR Firms, other publications including Advertising Age and AdWeek or any of the scores or rankings in other countries.

The board of the CPRF was meeting by telephone March 10 to decide on whether to continue ranking PR firms. Kathy Cripps, CPRF president, said the group's goal is to "completely and accurately report" on the PR counseling business and "we will no longer be able to do this." She said she talked to Scott Donaton, editor of Ad Age, who had been told the same thing by the conglomerates.

S-O Makes it Dangerous to Give Numbers

Howard Paster, XVP of WPP and former CEO of its Hill & Knowlton unit, said WPP lawyers and executives of its PR firms had discussed the matter long "vigorously" and decided that the new Sarbanes-Oxley law made it dangerous to give different numbers to all the rankings since each one has different rules. Accounting principles (GAAP) vary from country to country, he noted.

Philippe Krakowsky, spokesman for Interpublic, said the policy of not taking part in industry rankings

(continued on page 7)

LET'S GET IRAQ OVER WITH, PRSA/LA TOLD

"Let's have this damn war and get it over with it," Doug Dowie senior VP at Fleishman-Hillard, told a PRSA/Los Angeles meeting on Feb. 27 because the uncertainty connected with the Iraq war has paralyzed client spending.

He expects a "fantastic" recovery once the war situation has been cleared up so "the sooner we get there the better off most of us are going to be."

"There is a lot of Anti-Americanism globally, said Joe Kessler, president of Weber Shandwick/California. "As an industry, we must resist the temptation to sell our services cheap just because the pressure is on," he said. The idea is "to increase the value of our services. Kessler faulted PR firms for cutting prices to win clients. "That's the worst thing we could possibly do, because it devalues us and doesn't make our services less expensive.

Dowie said the state of the business is clearly not as good as it was two years ago. "None of us are growing, especially the larger agencies, which had been used to phenomenal growth over the last 20 years," he said. The hard times have had firms rethink the way they measure success. F-H, he said, is "profitable, but maintaining those profits has become more difficult." To offset the high-tech slump, F-H has stepped up its life sciences push, and expanded its PA practice.

High-Tech Is Not Dead

Kessler said high-tech is not dead. "We are going to see the Microsofts, Ciscos and the Oracles of the world are still going to be the driving force of change-more than the General Electrics or General Motors," he said.

Hill & Knowlton's Bonnie Goodman exploded the "No. 1 PR myth" that there is no PR work. "We see it the other way. While agency work is not recession-proof, we have faired better than our advertising partners have," said the firm's Los Angeles general manager. "There are lots of opportunities for agencies and PR pros to get in and help rebuild businesses," she said. For example, she noted that H&K is working with Enron.

MAGNET'S BRANNAN ATTRACTED TO GCI

Magnet Communications' Julia Brannan has joined GCI Group as group VP in its New York consumer marketing practice. She will handle the Slim-Fast, Zantac 75 and Lipton Recipe Secrets products.

At Magnet, Brannan worked on Oxford Health Plans, Lactaid and H.J. Heinz, where she handled the crisis regarding the launch of the company's EZ Squirt Blastin' Green ketchup. "News of the introduction leaked to a small trade journal," Brannan explained. "We successfully controlled the situation by moving up the launch date," she said.

Brannan was at R.C. Auletta Assocs. (with clients Perdue Farms and Hydrodyne Meat Processing) and Creamer Dickson Basford (Coors Brewing, Kraft Foods and SmithKline Beecham).

Ellen Golden heads GCI's consumer marketing.

GEORGESON IS UP FOR SALE

Georgeson Shareholder Communications, the New York-based proxy solicitation firm, has retained Goldman Sachs Group to handle the potential sale of the firm.

The investment bank is in the process of putting together an offering memorandum and approaching possible buyers, according to The New York Post, which said investment bankers, who have not seen the company's financials, are estimating it would fetch between $300 million and $400 million. It is likely PR firms will be among Georgeson's interested suitors. Georgeson established a corporate governance unit with Fleishman-Hillard this month to offer "investor perception audits."

Georgeson, whose competitors include D.F. King, Innisfree M&A, MacKenzie Partners and Morrow & Co., was ranked No. 1 in terms of proxy solicitations for doing work on 40 mergers and acquisition deals in 2002, according to Corporate Control Alert, a trade publication which compiles the annual rankings.

For the first two months of this year, M&A activity was down 22% from the same period a year ago, and down 88% from 2000's record pace, according to Thomson Financial.

As a shareholder response firm, Georgeson gets involved in more than M&A solicitation. Its other activities include corporate governance consulting, proxy contests, mutual fund solicitation and general issues.

Alexander Miller is chairman/CEO of Georgeson, which was founded in 1935. Besides New York, the firm has offices in London, Toronto, Sydney, Johannesburg, Rome and Milan.

TGG, S-C PITCH WTC FIREFIGHTER MEMORIAL

The Graubard Group and Stanton-Crenshaw are doing pro bono PR work for the Emerald Society of New York City Fire Dept. which has launched a grassroots campaign to win support for building a Firefighters' Memorial at the World Trade Center site to honor the 343 firefighters who died on Sept. 11. (NL Feb. 5). The Society wants a memorial with the name, rank and badge number of firefighters who died while rescuing the thousands of people who escaped the inferno.

Bill Pearse, VP at TGG, said he is submitting an op-ed piece written by former FDNY Commissioner Charlie Hynes (now Brooklyn District Attorney) to the New York Times urging the construction of the memorial. Terry Golway has already written two columns about the firefighter effort in the New York Observer.

The Lower Manhattan Development Corp., which is in charge of downtown reconstruction, has opposed the firefighter memorial. It wants one monument for all the Sept. 11 victims. There has been some movement on that front, say S-C's Carolyn Daly, a former New York City Hall staffer. LMDC plans to meet with the Society to discuss matters, she said.

MEDIA BLAMED FOR MARTHA'S LOSS

Martha Stewart Living Omnimedia reported a loss of $2 million for the October-December period compared with a profit of $5.7 million a year earlier.

It was the first loss the New York-based business has had since going public in October 1999. The company also said it will lose money in the first three months of this year.

For the year, the company reported its profit fell 67% to $7.2 million while revenues climbed 2% to $295 million.

Sharon Patrick, president of the company, blasted the media for its "relentlessly negative coverage" of the eight-month-old scandal surrounding the company's founder Martha Stewart, who is the subject of a government investigation of her stock trading.

Patrick repeatedly cited the "negative media environment" while discussing a drop in circulation of Martha Stewart Living magazine and catalog sales during a report to Wall Street analysts.

She expects magazine circulation to continue to decline because of "the negative impact of the investigations."
Observers say Stewart, who has been front page fodder since June, when news first broke of selling ImClone shares, bears some blame for dragging out the story by refusing to answer questions from reporters and congressmen for eight months, according to Newsday.

Newsweek & Forbes on Martha's Case

Paul Argenti, a communications professor at Dartmouth College's Tuck school of business, who worked with Stewart in the early 1980s when he was a consultant to Kmart, singled out Newsweek and Forbes for publishing the most damaging articles.

Argenti said Newsweek's July 1 cover story, which was headlined, "Martha Mess-An Insider Trading Scandal Tarnishes the Queen of Perfection," appeared to be a rush to judgment coming three weeks after the ImClone controversy first broke.

Forbes ran Stewart's photo on the cover of its 400-richest Americans issues alongside the word: "Gone!" She had been on the annual list since 2000.

The New York Daily News and New York Post together published approximately 15 front pages during August 2002 that called attention to a Stewart-related story on the inside pages, according to Newsday.

Some carried provocative headlines such as the Post's "Birthday Suit-Martha hits 61 and is sued by shareholder" in its Aug. 3 edtion, "Marthagate- Congress gets tough" on Aug. 7 and the Daily News' "Martha's New Mess-Now she's sued for dumping her own stock" in its Aug. 22 edition.

During Aug.-Sept., Newsday said Stewart was referred to as a "diva" at least once in The New York Times, Wall Street Journal, Washington Post and Newsday; none of the papers employed the term in April-May, according to a search of the newspapers' archives.

TEEN EDITORS PINPOINT DIFFERENCES

Editors of three teen magazines claim they have found the editorial formula for unlocking the profitable teen market.

While each has a mix of celebrity, products and real-life stories, the degree to which they present those elements is the difference, reports Tara Weiss, a reporter for The Hartford Courant.

Barbara O'Dair, managing editor of Teen People, which marked its fifth anniversary last month, said TP is the only teen magazine that covers pop culture, real life and fashion in one magazine.

"I think we're one of the last real general-interest magazines out there," O'Dair told Weiss.

Amy Astley, who is editor-in-chief of Teen Vogue, said her magazine is filling a void by focusing on fashion, beauty and style.

So while Teen People uses its teen "trend spotters" to alert editors to new trends, Teen Vogue tells its readers what's hot, Astley told Weiss.

"We want to show them things they're not wearing yet," said Astley. "They want to see new stuff, to get inspired. We consider ourselves to be trend spotters."

Its first issue, featuring rocker Gwen Stefani on the cover, has a story discussing her new clothing line.

At Cosmo Girl, editor Atoosa Rubenstein is focusing on what she calls the teen girl's lifestyle.

"We recognized what's missing from the teen market is a focus on the girl herself," Rubenstein told Weiss. "All the magazines out at the time we launched focused on fashion and celebrity. We've owned the area of lifestyle," said Rubenstein.

COMMON GOOD IN THE WORKS

Helen O'Donnell, daughter of Kenneth O'Donnell--onetime aide to President Kennedy--is planning to start a monthly magazine called Common Good. She has raised about $25 million for her magazine, which will focus on political life and public affairs.

Jim Bellows, former editor of the now-defunct New York Herald Tribune, will be executive editor of CG, which will be based in Los Angeles.

O'Donnell has contracted with Rubenstein Associates, New York, to help promote the magazine with pre-launch parties with the media, political groups, and citizens.

The magazine's name is a spinoff of O'Donnell's new book "A Common Good: The Friendship of Robert F. Kennedy and Kenneth P. O'Donnell."

O'Donnell told The Los Angeles Times she hopes to have a mockup done by June and limited newsstand launch in September.

George May Be Revived

O'Donnell is trying to get the rights to the name George, a magazine founded by John F. Kennedy Jr., which closed in March 2001.

(Media news continued on next page)

S&P NAMES EDITORS FOR THE OUTLOOK

Joseph Lisanti was promoted to editor-in-chief of Standard & Poor's The Outlook, and Jane Sandiford was named managing editor of the investment advisory newsletter for individuals and financial professionals.

Lisanti, who was senior editor of Physicians Financial News and mangaging editor of Fact prior to joining S&P in 1989, is succeeding Arnold Kaufman, who retired.

Sandiford, who joined S&P in 1996 and has been a senior editor of The Outlook since 2000, is replacing Joseph Tigue, who also retired.

Beth Piskora and Joseph Radigan were hired as senior editors, and will join Nilus Mattive, senior editor, who is webmaster for Outlook Online.

Piskora had been a reporter, editor and columnist for the business section of The New York Post, and previously was a reporter at American Banker.

Radigan, who joined the staff in Dec. 2002, had held editorial positions over the last 16 years at U.S. Banker where he was senior editor in charge of technology coverage and editor of its website.

HEILEMANN & BATTELLE JOIN BUSINESS 2.0

John Heilemann, author of "Pride Before the Fall: The Trials of Bill Gates and the End of the Microsoft Era," and John Battelle, the former CEO of The Industry Standard and co-founder of Wired magazine, will write monthly columns for Business 2.0 magazine.

Heilemann's column, "Face Time," will debut in the April issue, and will focus on the leaders of the information economy-technology, media, and communications.

Starting in the May issue, Battelle will pen a column called "The Message," offering his take on the intersection of media, technology, and marketing.

Battelle is currently a visiting professor and director of the business reporting program at the graduate school of journalism at the Univ. of California at Berkeley, where he also is faculty editor of The Big Story, a new magazine, which analyzes the coverage of one big story that has lingered in the headlines.

GILES TO EDIT NEWSWEEK'S A&E SECTION

Jeff Giles, who joined Newsweek in 1993, was named its senior editor for arts and entertainment. He will take over the position which was left empty by the recent death of Sarah Pettit.

Sean Smith, previously west coast editor of Premiere Magazine, was hired to cover the entertainment industry for Newsweek's Los Angeles bureau.

David Gates, who covers arts and entertainment and writes essays on other cultural topics, was promoted to senior editor. He will continue his writing and editing assignments, as well as overseeing the "Newsmakers" page.

David Noonan, also promoted to senior editor, will continue working in the "Society" section on everything from healthcare to sports to family issues. David Kaplan also moves up to senior editor, running the "Enterprise" section.

Devin Gordon, who covers movies, music, sports and pop culture, was promoted to general editor.

PEOPLE

Serge Schmemann, 57, a member of the editorial board of The New York Times, will become the editorial page editor for the International Herald Tribune in May, succeeding Robert Donahue, who is retiring after 22 years.

Oma Ford, previously editor-in-chief at Atlanta Homes and Lifestyles, has joined Better Homes & Gardens as senior deputy editor of home design.

Elvin McDonald, previously at Traditional Home, was named deputy editor of gardens and outdoor living. Interestingly, McDonald turned down the same job some 40 years earlier.

Vince Bielski, editor-in-chief of MBA Jungle, is joining Popular Science as executive editor.

WTVH-TV ACCUSED OF DISGUISING ADS

Dow Smith, an associate professor of journalism at Syracuse Univ., has accused WTVH-TV, in Syracuse, of succumbing to the "pressures of bottom line" by selling airtime, then packaging it like news.

Granite's ABC affiliate in Buffalo is doing the same thing.

"Having watched WTVH's new "Central New York Live" at 5 p.m. for a couple of weeks now, I can testify that it's hard to tell which interviews are legitimate news and which are paid," said Smith in his "guest commentary" for Broadcasting & Cable.

MEDIA BRIEFS

The founders of Good Media Music will start publishing an as-yet unnamed magazine targeting adults this September.

Editor Alan Light, CEO John Rollins and COO Dana Sacher, who helped create Vibe magazine, and also managed Spin, another consumer-oriented music magazine, are working with World Publications, a Winter Park, Fla.-based producer of 14 special interest magazines, ranging from Saveur and Garden Design to Boating Life, Caribbean Travel & Life and Wake Boarding.

The editorial department of the new magazine will share New York office space with Saveur.

Red Herring, the San Francisco title that chronicled the dot-com boom and bust, is closing down, having failed to attract new funding or a buyer.

Executive editor Duff McDonald and CEO Chris Dobbrow told 31 staffers that the company had no option but to cease publication of the magazine.

Chris Alden, one of the co-founders, is reported to have an interest in reviving the title.

The withdrawal of the Big Three conglomerates (WPP, Omnicom, Interpublic) from the ranking process is the latest unraveling in their grand scheme to corner the ad/PR market.

The holding companies, including Havas and Publicis, bought up virtually all the medium and big ad agencies, leaving advertisers no choice except to go with a holding company ad shop.

They tried the same thing in PR but three big firms held out-Edelman PR Worldwide, Ruder Finn and Waggener Edstrom-plus hundreds of medium and small-sized PR firms.

Purchase of the PR units for extravagant prices was one reason for the collapse of Interpublic's stock price and the steep declines in OMC and WPP. PR has been the worst performing element in all three.

Faced with reporting huge declines in ad revenues and for PR rankings assembled by their own creature, the Council of PR Firms, the congloms opted to report no figures at all, decimating the overall and specialized rankings (cities, product categories) of the CPRF.

There's no doubt that the rankings are CPRF's main reason for being. This was an attempt to control the definition of PR (everything but the kitchen sink) so that the PR units of the congloms would be far ahead of all other PR firms on the main list and in all the categories. To this end, the congloms invested at least $500,000 a year for the past four years-a gigantic waste of money.

The reason given for withdrawing from the rankings of the PR and ad trade publications-Sarbanes-Oxley-can be questioned. The Economist (Feb. 1) has called the act "wishy-washy." Nell Minow of thecorporatelibrary.com told the 12/12/02 NIRI/PAC credibility seminar that it wouldn't make "much of a difference" because "almost any structure can be subverted."

Time mag (Feb. 3) said outgoing SEC head Harvey Pitt was "watering down" tough rules including the one barring CPAs from getting consulting fees from their CPA clients.

In this business-friendly Administration (SEC is now headed by the former chairman of the New York Stock Exchange), whether S-O will be enforced is questionable.

Public companies have ignored disclosure initiatives before including the "plain English" dictum of the SEC dating back to the 1970s and the recent "Reg FD" (Fair Disclosure). Press conferences such as the one President Bush held March 6 aren't on the agendas of the ad/PR holding companies.

David Bell, the new CEO of Interpublic, told the March 6 analyst teleconference that he is "committed to communications internally and to the financial community" (pointedly leaving out the press and public).

Bell has promised new policies. We'd like to see him hold press conferences and identify IPG's 200+ "mystery acquisitions" (we're not even told what industry many of them are in).

Ironically, S-O, which the congloms cite as the reason for non-disclosure, is supposed to improve disclosure.

WPP's annual financial report issued 2/24 was a repeat of last year's obfuscating document (3/13/02 NL). Reported on its first page are four different types of profits: before taxes, goodwill and impairment; before fixed asset gains; before investment write-downs, and before interest. "Headline" earnings are announced. Only by turning to page 12 of a 30-page report can a journalist find the true earnings in a column of 27 types of financial statistics.

The earnings are 7.7 British pence per share, down 67.5%. This report, which badly needs an editor, is an obstacle course for journalists and doesn't fool analysts.

Lehman Brothers (8/28/02 NL) criticized WPP reporting practices as "sometimes flattering or inaccurate." Among other things, it said WPP's free cash flow in 2001 was not 504 million British pounds as claimed by WPP but "approximately zero." It called "somewhat unhelpful" the fact that WPP spent £700M on acquisitions in 2001 and decided none were "material." It's "less clear where growth is coming from," Lehman added.

"Consistency" is the operative word in ad circles these days. The exact same client message must be hammered home for ads to work and companies to be "branded." No deviation can be allowed. But the disclosure policies of IPG and OMC flop wildly. IPG announced (5/8/02 NL) that PR would no longer be reported on as a separate category (it was merged into "marketing communications"). But it then broke out PR for Q3, saying it was down 18%. With the 2002 report, PR is again submerged into marketing communications.

IPG refused to break out PR when asked. Similarly, OMC, in a move to be more transparent, revealed the names of 17 acquisitions in the first half (8/14/02 NL). Now it is back to not identifying acquisitions. When the story of the Big Three is written, there must be a chapter on how the near complete lack of PR hurt them.

Judy Johnson, head of the Los Angeles office of Golin/Harris International, told a PRSA/LA gathering of PR leaders Feb. 27 that what people want from companies is "honesty, integrity, accountability, transparency, two-way communications, products that fill real and perceived needs and not to have scandals out in the public." PR firms and PR departments "need to be accountable" for the money they're spending, she said.