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Internet Edition, September 17, 2003, Page 1


Nike has settled a landmark commercial speech case brought against it by pledging $2M for work programs and saying it will limit public and media activity in California because of the five-year ordeal.
Consumer activist Mark Kasky filed the case in April 1998, charging Nike's PR statements defending its manufacturing processes amid allegations of using "sweatshop labor" were false. The U.S. Supreme Court declined to hear the case, sending it back to the California courts, which ruled Nike's commercial statements were not protected under the First Amendment.

Nike said it will spend $1.5 million on workplace-related investments through the D.C.-based Fair Labor Assn., a non-profit borne out of a White House task force in 1999 which monitors companies' labor practices. The global shoe maker has also agreed to sustain existing funding for after-hours worker education and micro-loans at a minimum of $500K over the next two years.

Nike's VP and general counsel Jim Carter said the company will lower its profile in California because of concern over the state's commercial speech ruling, opting not to issue its corporate responsibility report externally and limiting its participation in public events and media engagement in the state.
PR groups including PR Society of America, Arthur Page Society, the Council of PR Firms, Public Affairs Council, Int'l Assn. of Business Communicators and the Institute for PR sided with Nike in the case.


Barbara Comstock, chief spokesperson for Attorney General John Ashcroft, will join Blank Rome Government Relations on Oct. 1.
She was in charge of overall public affairs for the Justice Dept., as well as its FBI; Bureau of Prisons; Drug Enforcement Administration; Bureau of Alcohol, Tobacco and Firearms, and the U.S. Marshals Service.

Prior to the Justice Dept., Comstock was director of research for the Republican National Committee and organized its "Winning Women" initiative to encourage females to vote for George Bush. She is leaving Ashcroft as he tours America to whip up support for the Patriot Act.

Blank Rome Government Relations deals with energy, healthcare, environmental, homeland security and transportation issues.


Schering-Plough has tapped Pharmacia's former VP of PR, Jeffrey Winton, for a new VP post in the company's PR department, as the drug maker moves toward a single marketing communications department with a global focus.

Bob Consalvo, director of external relations for S-P, told this newsletter that Winton, who began work Sept. 15, built a similar global group at Pharmacia, before leaving when it merged with Pfizer earlier this year.

Winton, 45, reports to Joseph Connors, EVP and general counsel, and takes the title group VP, global communications. S-P brought in Pharmacia's former VP of strategic comms., Ken Banta, in July.

The Securities and Exchange Commission last week slapped a $1 million penalty on S-P for violating the disclosure requirements of Reg FD. The penalty is the largest levied against any company for disclosure matters. The SEC also announced that Richard Kogan, former CEO of S-P, has agreed to pay a $50K civil penalty, which is the first disclosure fine issued against any individual.

The SEC found that Kogan during the week of Sept. 30, 2002 disclosed "negative and material nonpublic information regarding Schering's earnings prospects" to analysts and portfolio managers.

Both S-P and Kogan settled the cases without admitting or denying the Commission's allegations and findings.


APCO Worldwide is representing Yukos Oil, Russia's fourth largest energy company, which is in the midst of a power struggle with Vladimir Putin's government.

Yukos, according to the National Review, is widely regarded as the country's "most progressive transparent, and Western-oriented corporation." That makes it a tempting target for Russian bureaucrats who want to keep big business executives out of politics, and to re-consider privatization. ChevronTexaco and ExxonMobil are expected to bid for a stake in the firm.

Russian prosecutors have raided Yukos' Moscow headquarters, and have interrogated its CEO Mikhail Khodorkovsy, the country's richest man. His name has been floated as a potential for prime minister.
Margery Kraus, CEO; former Mich. Senator Don Riegle (D), and ex-Rep. Don Bonker (D-WA.) lead APCO's team. APCO is part of Grey Global Group.

Internet Edition, September 17, 2003, Page 2


The French Government has voted for a 40 percent budget increase to promote itself as the top world tourism destination as travel sags amid economic woes and the ongoing political and military conflict in Iraq.

The government's Tourist Office projects a drop in American visitors between nine and 13 percent by the end of the year and is laying out a campaign to break in the fall to offset those declines. The office plans to build on and continue its 2003 "Let's Fall in Love Again" campaign, a $3 million push which recruited Woody Allen, Wynton Marsalis and George Plimpton and aims to show U.S. travelers they are welcome in France.

Louise O'Brien, a spokeswoman for the tourist office, told this NL the office has an in-house communications staff of eight, and will not be using outside PR or ad firms for the work. She said details of the campaign are to be rolled out this fall and that the U.S. office only found out about the work yesterday. A branding effort and nationwide "Gastronomy Day" are to be part of the push, called the France Quality Plan.

Leon Bertrand, the country's Minister of Tourism, said in a statement that an additional four million euros (about $4.4 million) will be spent in 2004 on top of the four million allocated for this year.

France is the top tourism destination in the world 12 years running, according to the World Trade Organization. The country counted 76.7 million foreign visitors in 2002.


Powell Tate is lobbying Congress to support long-term funding for the Virginia Class submarine on behalf of the Submarine Industrial Base Council, which is composed of more than 100 suppliers to the nation's two submakers-General Dynamics' Electric Boat unit and Northrop Grumman's Newport News operations.

The Navy awarded an $8.7 billion contract last month to a partnership between the two companies for construction of six submarines. That deal was designed to keep both sub shipyards in business. Upon Congressional authorization and appropriation, the contract will award one submarine per year from 2003 through 2006 and two submarines in 2007.


Kathy Bushkin, a former publicist, was named executive VP and COO of the UN Foundation, headed by Timothy Wirth.

Bushkin was president of the AOL Time Warner Foundation since 2001, following her role as chief communications officer of AOL. She ran the media relations practice for Hill and Knowlton USA from 1996 to 1997, and she was the director of editorial administration for U.S. News & World Report from 1985 to 1996.

From 1976 to 1984, she was communications director and co-legislative director for Sen. Gary Hart in both his Senate office and his 1984 presidential campaign.

The UN Foundation was founded by Ted Turner, who is chairman.


The Big Three automakers lost a golden opportunity to win back American consumers during the boom time of the `90s, and will soon pay the price, according to Micheline Maynard, author of "The End of Detroit." She expects one of them to disappear by the end of this decade.

Maynard faults General Motors, Ford and Chrysler for focusing on high-profit SUVs and pick-ups during the past decade.

That short-sighted strategy enabled Japanese, German and Korean competitors to grab a share in the family and economy car markets. They did research to find out what American consumers needed, and then marketed cars that met those needs, according to Maynard, who covers the auto and airline businesses for the New York Times. The Big Three, on the other hand, produced "good enough" cars. They also became addicted to marketing gimmicks, such as zero-percent financing and rebates.

Maynard points out that the Big Three cannot rely on "buy American" sentiment, a tactic skillfully employed by former Chrysler CEO Lee Iacocca when the No. 3 automaker was fighting for its survival in the '80s. Foreign automakers have built 17 plants in the U.S., employing more than 85,000 factory workers.

Toyota spent $1 billion to expand its Georgetown, Ky., plant, build a truck factory in Princeton, Ind., and open a Charlestown W.Va., engine plant. Those facilities employ 20,000 Americans. GM, during the same period, closed two dozen American plants, eliminating 75,000 jobs.


Tricom Assocs., an Arlington, Va.-based PR and public affairs firm, is front and center in Southwest Airlines' 16-month labor dispute with its 7,200 flight attendants, which boiled over Wednesday as the carrier called for a federal mediator to intervene in the standoff.

Tricom VP David Roscow told this NL what began as a good-natured campaign for the flight attendants - "Love Will Keep Us Together" was the initial theme - has progressively gotten more intense. "They don't hate their company, but they are disappointed in Southwest's management," he said of the flight attendants, and the carrier's decision to seek third-party involvement through the National Mediation Board.

Roscow said his firm, which has considerable experience working on labor issues, is about to break a national ad campaign for the attendants, who are represented by Local 556 of the Transport Workers Union. Tricom has helped the workers organize pickets and media events at Texas airports, where Southwest is based, drawing the ire of the carrier's CEO James Parker.

Parker, in a letter to the union's president reported by the Associated Press, said the group's "media events" were getting in the way of bargaining.

Internet Edition, September 17, 2003, Page 3


The Wall Street Journal said "confusion reigned" at the New York Stock Exchange on Sept. 10, a day after the Big Board decided to allow reporters to look at 1,200 pages of documents relating to chairman Richard Grasso's controversial $140 million pay package.

Paul Tharp, a New York Post reporter, described the scene at the Exchange as a "litte circus."

The NYSE said each news organization could send two reporters to the Exchange to examine the documents for two hours. Reporters could take notes but could not take documents or make copies of them.

"Many news organizations said they were convinced it was a ploy by the Big Board to hide bad news, especially when the information would likely become public at some point through a Freedom of Information Act," said Matthew Rose, a reporter for the Journal.

"There were nasty remarks, threats of calling lawyers and at least one camera and data disk seized by officials from a Wall Street Journal reporter," Tharp said.

"It was a sham," said one of the dozens of journalists allowed to examine the voluminous documents. "There was only enough time to examine just a small part of the evidence."

Early Start

At 7 a.m. reporters, surrounded by tight security, were ushered into a small room containing four identical stacks of documents and told to read as fast as they could. They were grouped by as many as four news organizations at one time, and were escorted to and from a cramped 12th floor conference room and watched by NYSE representatives as they worked.

Rose said three piles of documents a foot high were stacked hapazardly around a conference table and were shared among rival reporters, leading to confusion as the clock wound down.

By midday, the Exchange officials were trying to shorten the two-hour blocks by as much as 15 minutes, raising immediate protests from journalists.

At one point, Theo Francis, a reporter from the Journal, took out a digital camera to photograph some documents, but was stopped by an Exchange official, who demanded Francis' film.

After a bitter exchange, the NYSE claimed the documents were private, and forced the reporter to erase his camera disk, and seized both, Tharp said.

Robert Zito, the NYSE's EVP/communications, said it was his fault that reporters early in the day were not given copies of specific documents because he was not in the office to give that instruction, Rose said in his report.

"Mr. Zito said the NYSE was under no obligation to make the documents public in the first place," Rose reported. "There is nothing to hide. We did not have to do this," Rose quoted Zito as saying.

Asked why the Exchange did not post the documents on its website, Zito said most of the documents would not be of interest to reporters on this story.

"Is this about saving time? I realize that most communications professionals operate under the guidelines that you want to make a reporter's job as easy as you can, but as I have not had an opportunity to read through all 1,200 pages, I would like to know what's going out and I want to know what stories are being worked on," Zito said.


Some of the most significant stories today-the obesity epidemic, water purity, the genetic manipulation of the food supply as well as its safety and sustainability-are food related.

"But you won't find these stories in the food section because the focus of food stories is on entertainment, rather than news and consumer education," according to Molly O'Neill, who was a reporter and food columnist for The New York Times for 10 years.

O'Neill, an author of three cookbooks, said the question is whether food writers will pander to these readers or seize the chance to be better journalists.

"Unfortunately, recent history-including my own -favors the former," said O'Neill. "In general, entertainment, rather than news and consumer education, has been the focus of food stories for nearly a decade.

"Food porn-prose and recipes so removed from real life that they cannot be used except as vicarious experiences-has reigned."

While science and business writers, as well as general assignment reporters and a growing number of food scholars, have and should continue to address food issues, she believes food writers are uniquely suited to the discussion.

"A food writer is trusted to disseminate the issues that can affect what readers put in their mouths," she writes in the September/October issue of Columbia Journalism Review.

Be Wary of PR Tactics

O'Neill said food writers should be wary of the PR tactics used by food companies and organizations. She cited as an example the International Olive Oil Council, a consortium of olive oil producers, exporters and importers, which began a major push in the 1980s to publicize dietary health research that championed olive oil and sponsored seminars in "tantalizing spots" abroad to disseminate that information.

"I attended several of these events," she said. "Some of my closest food-writing friends consulted for the Council. I didn't write about the events directly, but over time I found myself cooking more often with olive oil and that shift was obvious in the recipes that I published."

In 1982 "olive oil" appeared 483 times in the publications tracked by Nexis. Last year, the oil had 8,161 mentions. In that same period, olive oil imports rose from $8.4 million worth to the $64.3M worth that will be imported this year, O'Neill said.

(Media news continued on next page)

Internet Edition, September 17, 2003, Page 4


The Columbus (Oh.) Dispatch will no longer publish columns from an Ohio State University professor who admitted he used information provided by the Potomac Communications Group, a PR firm.

The column, which appeared with Professor Tunc Aldemir's name and photo, was about how nuclear power is making a comeback. The Nuclear Energy Institute, a lobbying group in D.C., uses Potomac to handle "strategic media outreach."

Aldemir's column came into question because two of its 14 paragraphs appeared in columns submitted by other academicians to at least four other newspapers.

Each was written-in part or entirely-by Peter Bernstein, a VP in Potomac's Alexandria, Va., office. Bernstein said he has been working with Aldemir for about four years.


Alan Siegal, 63, was named The New York Times' first standards editor.

Siegal, who directed a committee that reviewed newsroom practices after Jayson Blair was fired for fabricating stories, will oversee corrections and train employees on ethical practices.

He will keep the title of assistant managing editor, a position he has held since Jan. 1987.


Joe Mandese, previously editor of Media Daily, a newsletter, was named editor-in-chief of Media, a new bimonthly magazine targeted at ad agency media buyers.

Steve Yahn, a publicist at The Dilenschneider Group, was named executive editor of Media, and editor of Media Daily News, an online news service.

Vincent Alabasio, 56, who has been The Associated Press' executive photo editor since 1990, was named director of global business development/photos. He will oversee the marketing, sales and promotion of AP's collection of current and historical images.

Alabasio's successor will be named later.

Jared Paul Stern, a gossip reporter/columnist at The New York Post, is joining Star magazine as executive editor.

Adam Balkin, 28, NY1 News' technology reporter, is marrying Susan Jhun, 31, the channel's consumer reporter, on Oct. 9.

Adam Rogers, previously a Washington, D.C.-based technology correspondent for Newsweek, has joined Wired as senior associate editor.

Scott Alexander, former technology editor at Time Out New York magazine, has joined Popular Science as senior editor, overseeing the "What's New" section, replacing Sam Grobart, who left.

Jean McNair, 47, was named Virginia news editor of The Associated Press. She is based in Richmond.

Cathi Downing, 50, features editor for The Anniston (Ala.) Star, was killed Sept. 4 in a car accident.


Walt Disney Co. is producing a TV show to boost tourism in Colorado. The one-hour program, called "Courage Colorado," was put together by Praco Ltd., a Colorado Springs-based ad/PR firm.

The program will feature a North Carolina family as they travel across the state for two weeks sampling the food, culture, recreation and scenery.

Praco, which has been handling the Colorado Tourism Office since 2000, is negotiating with two cable networks to air the show next spring during prime time. In addition, the firm expects it will run on TV at least five other times and says it likely will be used as in-flight entertainment on airliners coming into Colorado.

Nechie Hall, Praco president, believes this is the first time a nationwide program like this has been done.


Business Wire has partnered with Getty Images to offer its photo services to PR pros worldwide.

The arrangement will allow BW's customers to work with Getty Images to hire commercial photographers for commissioned photo shoots or to select images from the company's pre-shot imagery collections.

The Globe and Mail, Canada's national newspaper, is expanding its news coverage with the launch of Globe Toronto.

On weekdays, the paper is expanding its city coverage with added pages in the front section. On Saturdays, GT will be a new standalone section offering a combination of news, features, lifestyle content, and commentary columns by John Barber and Christie Blatchford.

"Rolling Stone on SIRIUS," an exclusive collaboration with Rolling Stone magazine, will air every Wednesday from 5-6 p.m. (ET) on Sirius Entertainment.

The program, which debuted Sept. 10, is hosted live by RS editors Joe Levy and Jenny Eliscu and features breaking insider music-related news plus information culled from the most current issue of RS.


The New Single Copy newsletter said newsstand sales of magazines fell 4.5% in the first half of 2003.

Bob Castardi, president of Curtis Circulation, which distributes many titles, told Advertising Age the decline in single copy sales is probably the worst he has seen in his 30+ years in the business.

Some of the hardest hit were women's magazines, led by Family Circle, down 28.6%, and Woman's Day, down 20.6%.

Internet Edition, September 17, 2003, Page 7


PR pros said the new accreditation exam of PR Society of America, on which only 5% of the questions deal with "media relations," is not reflective of what PR people do.

Most of the PR people queried said media relations usually occupies 50-70% of a PR pro's attention.

"Clients hire us for our creativity and fire us for our lack of publicity," said Jerry Schwartz, president of G.S. Schwartz & Co., New York.

Don Bates, an executive of Media Distribution Services and an instructor in Columbia University's master's degree in strategic communications, said the exam should devote more questions to publicity and media relations since 60-70% of what PR pros do is working on press coverage.

"I don't mean questions about how to format a release or when to call reporters, but about the media's role in a free society and about professional and institutional credibility in dealing with reporters, especially in a crisis," he said.

Bates said that "despite weaknesses," he is "four-square for APR as a way for PR pros to understand more about the thinking that goes into PR decision-making and to deepen their knowledge of what the practice is and how it relates to the public interest."

Counselor Kenneth Makovsky was "surprised" at the 5% media relations content. "Despite the variety of tools available to PR pros today, media relations is still a core skillset," he said. "It is even more important that this skill be tested now because of the media skepticism that abounds as a result of the corporate scandals," he added.

Flaws Found in PRSA APR Paper

An 11-page white paper on "decoupling" the PRSA Assembly from APR says that "groups within PRSA" have been urging this "for many years" and that a committee headed by Patrick Jackson urged the bylaw change in the early 1990s."

Jackson, 1980 president who died last year, said in late 1998 (11/11/98 NL) that he favored "decoupling of APR for the Assembly as well as for national offices." He was co-chair of a PRSA task force on decoupling with 1993 PRSA president Hal Warner.

The new white paper, dated September 2003, was prepared by the PRSA Assembly Representation Task Force of Reed Byrum, president; Del Galloway, president-elect; Art Stevens, secretary; Judith Phair, treasurer, and directors Debbie Mason, Phil Ryan, Jeff Seideman, and Tom Vitelli.

The white paper says that "the concept of changing the APR requirement for national PRSA leaders is a separate issue not connected to the issue of Assembly representation." Leadership remains fully committed to APR, it adds.

It notes that 35% of members were once APR but this has dipped to 21% and that the new multiple-choice test is not likely to increase the percentage.

Even if Assembly decoupling is passed, "research suggests that APR members will always dominate the Assembly," says the paper.


The Associated General Contractors of America has hired Qorvis Comms. to handle its grassroots effort to win federal dollars to modernize the nation's infrastructure, a need highlighted by the Aug. 14 blackout that affected the midwest and east coast.

AGC wants Congress to invest in America's infrastructure to "create jobs and help get the economy rolling again," according to Stephen Sandheer, CEO of the 35,000-member group. The group issued a bulletin on Sept. 4, noting that the American Society of Engineers estimates the country should spend $1.6 trillion to upgrade D+ -infrastructure rated categories to acceptable levels.

The AGC is running radio ads to encourage Congressional support for reauthorization of the Transportation Equity Act, which expires on Sept. 30. Its pitch is for every billion dollars of federal highway funds creates 47,500 jobs.

Qorvis managing director Rich Masters, a former aide to Sen. Mary Landrieu (D-LA.) is responsible for day-to-day management of the AGC account.


GCI Group has named Bill Marks president of GCI Atlanta, replacing Ken Willis, who becomes chairman of Grey Global Atlanta.

Marks had headed GCI's Atlanta office three years ago, but left to join Coca-Cola. He left Coke as North America VP-PR. Marks also will be GCI's managing partner for diversity, and lead the firm's business-to-business practice.

He has more than 25 years of PR corporate experience at IBM, BellSouth, D&B Software, and Digital Communications. He also served as deputy managing director-communications for the Atlanta Committee for the Olympic Games.

Willis and Marks report to GCI CEO Bob Feldman.


Golin/Harris played a key behind-the-scenes role in getting the Sept. 9 front-page New York Times story about the Florida growers efforts to develop a "hip image" for grapefruit, according to Alicia Alfano, VP and head of the G/H grapefruit team. Abby Goodnough wrote how growers want to "transform grapefruit juice from the dutiful tonic of old people into the must-have drink for chic, health-conscious young women."

G/H supplied marketing material about the "Sass in a Glass" campaign to Goodnough, and arranged for Nicole LeBeau, marketing communications director for the Florida Dept. of Citrus, to talk to her about the effort to target women 21-to-49 for a grapefruit pitch. Citrus growers are betting that the $3M marketing campaign will help reverse the decline in grapefruit sales.

Besides media relations, G/H also does buzz/mobile marketing and has developed alliances with the American Cancer Society and the March of Dimes for the Dept. of Citrus. LeBeau told O'Dwyer's that she was very happy with the Times article.

Internet Edition, September 17, 2003, Page 8



As noted on page one, Nike has decided not to press its "free speech" defense in Nike vs. Kasky.

The case has ended with a "whimper," the New York Times said Sept. 13.

Reed Byrum, president of PRSA, which backed Nike in the case by spending at least $10,000 on an amicus brief, said PRSA is "pleased that the settlement addresses the overall issue of corporate transparency."

He said PRSA contends that consumers throughout the world are "entitled to better information from corporations and other institutions."

PRSA board member Jeff Seideman had a different read: "This settlement ends an embarrassing chapter in PRSA's history in which it backed the spurious free speech claims of a company that now chooses to pay out $1.5M rather than defend the truthfulness of its past statements and won't release its social responsibility report."

Seideman feels those who led PRSA and other groups "down this shameful path owe an apology to their members, the profession and society for claiming that requiring a company to tell the truth about its own facts is a threat to our freedom of speech."

The California Supreme Court decision is "virtually identical" to PRSA's code of ethics, said Seideman, who was rejected for re-election to the board by the nominating committee. He had served one year with the expectation of winning a full three-year term.

Nike argued in a panel at the Aug. 20 Arthur Page Society meeting in Chicago that California does not recognize an "innocent mistake."

Companies can get sued even if certain facts they disseminate are correct, said Kirk Stewart, VP-CC of Nike.

This is what the case is all about, to our mind. The SEC has a strict standard of truthfulness in which it says that certain "facts and statements" that seem to be true may not be so "in the light" of other statements that are not mentioned.

In other words, don't leave out key facts or you're going to get nailed.

A bad habit of some PR pros (who are only doing what they must for clients and employers), is to mention some facts but not others.

An example is the 11-page white paper that PRSA has just put out about decoupling.

The flaw that makes the paper misleading is that it talks about decoupling APR from the Assembly as though this slight change is the only proposal that has ever been made about the APR rule.

The paper, which appears to be exhaustive, doesn't mention the recommendation of the 16-member strategic planning committee in 1999 to "decouple" all officer, board and Assembly posts from APR.

Decoupling just the Assembly is almost meaningless because, as the paper points out, APRs will "always dominate the Assembly." One PR pro told that the Assembly is PRSA's "House of Lords" and there is no "House of Commons."

The fact that only 5% of the questions on the new APR exam concern "media relations" is an example of the power academics have achieved over PRSA, veteran members told us.

"We courted the academics for many years and now we have surrendered to them," said one. Another said there is "no one to fight them such as the corporate contingent, which has mostly fled to Arthur Page and PR Seminar, nor the Counselors Academy, a shadow of its former self after the big shops started the Council of PR Firms."

Putting most of the APR test on theory and process such as research, planning, communications models, management skills, etc., is exactly something the educators would do, said the veterans.

Other evidence of the power of the educators is that there is no discussion this year of a proposal that enraged them last year-that students from non-PRSA affiliated colleges be allowed to join PRSA directly. The educators at the 235 PRSA-recognized colleges (out of the 4,000 total) saw that as a threat to their jobs. They rounded up 21 ex-presidents of PRSA to keep it off the 2002 Assembly agenda.

Still other evidence is that PRSA would be headed two years in a row by those from the academic community if the nominating committee has its way-Judy Phair, a counselor specializing in academic clients and a former PR teacher, and Maria Russell, PR professor at Syracuse University.

Russell and her employer, the Newhouse School of Communications, got incredible publicity in the 2003 PRSA Bluebook of members.

Her listing and that of the Newhouse School, including address, phone, fax and e-mail, took up 10 lines at the top of nine different committees and boards, a PR bonanza. She is said to be "senior counsel" to the committees although all of them already have board members who counsel the units.

Newhouse graduate PR programs, mostly handled through e-mail and regular mail, are now under competition from Columbia University in New York, which makes its students go to class every week.

Syracuse/Newhouse are good names but Columbia is an Ivy school with greater prestige.

Columbia, which is now into its second year of offering a master's in strategic communications for about the same $30,000 price as Newhouse, is located in the city with the greatest concentration of media, PR firms, financial communicators, etc.

--Jack O'Dwyer


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