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Internet Edition, Dec. 31, 2003, Page 1

Burson-Marsteller is counseling the National Cattlemen s Beef Association amid the discovery of Mad Cow disease in the U.S.

The report of the disease, bovine spongiform encephalopathy, or BSE, by the U.S. Dept. of Agriculture has sparked more than 20 countries to halt imports of U.S. beef and companies from Tyson Foods to Wendy s to issue crisis responses to ease consumers and investors fears.

The NCBA is the $27 billion beef industry s main trade group. B-M has counseled the group in the past regarding several issues, including BSE, a spokeswoman at the group s Denver headquarters told O Dwyer s. Ketchum has also worked on marketing issues for the group in the past.

Chrysler has named Jason Vines VP-communications, succeeding Ken Levy, who plans to start his own PR firm in New York.

Vines joins from Strat@comm, where he served as managing director of the Washington, D.C.-based firm s automotive office in Detroit. The 43-year-old executive signed on at Chrysler in 1983, and worked his way through the labor relations and product PR ranks. He also was "executive on loan" to the American Automobile Manufacturers Assn., reporting to then-president Andrew Card, who is now White House Chief of Staff.

Vines left Chrysler in 1998 for a VP slot at Nissan North America. He shifted to Ford Motor in 2000 before moving to Strat@comm in early 2002. Vines reports to Dieter Zetsche, president & CEO of The Chrysler Group.

Levy has 20+ years of PR experience, serving in Europe for Ford and General Motors. He joined Chrysler in 2000. Zetsche, in a statement, praised Levy for "providing tireless leadership of the communications team during our company's turnaround years."

Joele Frank, Wilkinson Brimmer Katcher has been advising Atlantic Coast Airways as it successfully defended against a takeover bid from regional carrier rival Mesa Air Group. The takeover collapsed last week when Mesa lost the backing of United Airlines parent UAL and withdrew its efforts.

The Brunswick Group was brought in by Mesa to handle communications through the attempted takeover.

Mark Weiss has left his CEO slot at Rowland Communications Worldwide to pursue other interests. Publicis Groupe "aligned" RCW with Manning, Selvage and Lee in November, and had Weiss reporting to MS&L CEO Lou Capozzi. The MS&L chief told O Dwyer s at that time that he intended to "preserve the brand integrity of Rowland and manage it as an independent firm."

Weiss, who could not be reached for comment, is succeeded by Anne Moravick, who had left MS&L to set up her own consulting firm. She spent 18 years at MS&L, managing its global healthcare unit, and London office.

RCW's other top executives, SVPs Tony Katz and Laura Stortz, have left the firm that counts Johnson & Johnson/Merck, and Ortho Biotech as clients.

Invest Northern Ireland is looking for a PR firm to drum up business for the U.K.-controlled section of Ireland. INI wants a firm capable of creating targeted business-to-business communications strategies including advertising campaign development and placement. It prefers a firm with coverage in NI s key U.S. marketing territories, which are Boston, Chicago, Atlanta, Silicon Valley and Washington, D.C.

Larry Buchsbaum (617/266-8839) wants to get proposals with a "value-for-money orientation" from a firm that understands the factors and processes involved in international location decisions. The deadline is Jan. 9.

Northern Ireland s political landscape received a jolt during the Nov. 26 elections in which Ian Paisley's hard-right Democratic Unionists scored a victory over David Trimble s Ulster Unionists emerging as the top Protestant party for the first time in 32 years. Paisley is against the 1998 Good Friday power-sharing agreement ironed out with Ulster s Catholic parties.

Torie Clarke, who left the Pentagon in June after serving as its top spokesperson through the invasions of Afghanistan and Iraq, is slated to take an advisory communications role at Philadelphia-based cable giant Comcast. As senior advisor for comms. and government affairs, Clarke is charged with coordinating PR and gov t relations efforts for Comcast, as well as with other members of the cable industry.
continued on page 2

Internet Edition, Dec. 31, 2003, Page 2


Parking lot magnate Abe Hirschfeld has cut ties with The Steven Style Group, the firm he used to announce his candidacy Nov. 4 to replace New York Senator Chuck Schumer.

Brian Barry of TSSG, who handled the 85-year-old s campaign kickoff, told this NL the firm is no longer working for the colorful Hirschfeld.

New York counselor Harry Zlokower handled Hirschfeld s Dec. 19 appearance at Blessed Sacrament School in Manhattan, where he discussed his just-published autobiography, "Crazy and in Charge." "We ve been doing PR on and off for Abe for a number of years," Zlokower told O Dwyer's.

Zlokower & Co. s press advisory says Hirschfeld is known for his "pithy, witty statements," and was confidant to Robert Kennedy, Donald Trump and Tony Blair.

Hirschfeld is known for his stormy 16-day ownership of the New York Post in 1983 (The Post, under Hirschfeld's control, ran a special section about him that was headlined "Who Is This Nut?" The paper's cover featured Alexander Hamilton, founder of the Post, with a tear in his eye.)

Hirschfeld is being sued by Paula Jones for allegedly reneging on his 1998 $1M offer to her to drop her sexual harassment suit against former President Bill Clinton. A federal judge on Dec. 11 rejected Hirschfeld's request to depose Clinton before the case went to trial.

The originator of the open-air garage ("because cars never catch cold") also served two years in prison for hiring a hit man to kill a business partner.

Prison reform is a central plank of Hirschfeld's campaign because of his "own experience" says one of his recent campaign ads.

Ogilvy PR Worldwide is handling PR for Hoffmann-La Roche s weight-loss prescription, Xenical, which the Food and Drug Administration recently approved for use by adolescents. That nod makes the drug, also called orlistat, the first prescription diet drug okayed for kids.

The FDA cleared Xenical for 12 to 16-year-olds after two studies were completed.

Terence Hurley, director of product PR for Roche, said the company has no plans to market the drug to kids.

Obesity has become a major PR issue in the last year, as fast food restaurants, and beverage and snack food marketers have begun to respond to criticism that too many children are overweight.

Fifteen percent of adolescents are considered "obese," while 30 percent are said to be overweight.

Xenical, which works in the gut to stop about 1/3 of dietary fat from being absorbed, was first marketed in 1998, and is sold in 140 countries. Ogilvy has handled work in the past for Xenical, which had sales of about $600 million last year but has been regarded by Forbes as a disappointment for Roche.

Citigate Sard Verbinnen is handling media relations and advising financial executive Bruce Wasserstein s New York Media Holdings through its $55 million purchase of New York magazine.

Wasserstein, who heads New York-based investment bank Lazard and equity firm Wasserstein & Co., also owns the weekly financial newspaper The Deal, American Lawyer Media and Real Estate Media. The latter two properties put out various publications like the New York Law Journal and

George Sard, chairman and CEO of Incepta-owned CSV, and VPs Stephanie Pillersdorf and Rich Coyle are handling media for the deal.

The 35-year-old New York magazine has a circulation of about 1.8 million. Tabloid publisher America Media and a high-profile group including Mortimer Zuckerman, ad exec Donny Deutsch and Miramax s Harvey Weinstein, among others, bid for the publication, which turned a profit under $2 million on revenue of $43 million last year for Primedia.

New York Media Holdings is controlled by the Wasserstein family.

Vivendi Universal has been hit with a $50 million civil penalty by the Securities and Exchange Commission to settle charges the company misled investors in news releases and financial statements.

The SEC s complaint alleged the company's senior executives held back accurate financial information by authorizing misleading news releases.

Executives, in releases and other statements, gave ambiguous earnings targets and, in one example, depicted cash flow as "excellent" when it did not have access to cash flow at two major units.

The company's former CEO Jean-Marie Messier has agreed to pay a $1M fine and give up claims to a $26M severance package ironed out before his 2002 departure. He is barred from serving as an officer of a public company for 10 years, but can serve as a director in five years. Former CFO Guillaume Hannezo has agreed to pay a smaller penalty and is similarly barred from serving as an officer or director.

Vivendi said in a statement the deal comes "without admitting or denying any liability" and noted it is not being required to restate any past financial reports.

The $50M will be put in a Sarbanes-Oxley "Fair Fund" to be distributed by a federal court to shareholders.

Brandy Anderson, senior manager at Washington, D.C., PR firm Blakey & Agnew, has joined the Century Council, the liquor industry-backed effort against drunk driving, as VP of government relations.

Prior to B&A, where she ran the National Hardcore Drunk Driver Project, Anderson rose through the PR ranks at Mothers Against Drunk Driving.
B&A was founded by Marion Blakey, currently administrator of the Federal Aviation Administration.

Internet Edition, Dec. 31, 2003, Page 3


The Publicity Club of New York packed 150 PR people and guests into its Dec. 16 luncheon meeting to hear four New York-based reporters outline their criteria for covering advertising and marketing news.

The panel consisted of Jonah Bloom, executive editor of Advertising Age; Brian Steinberg, ad columnist for The Wall Street Journal; Stuart Elliott, ad columnist for The New York Times, and Theresa Howard, ad/marketing reporter for USA Today.

Peter Himler, president of PCNY, was moderator of the panel.

Howard, who has kept a low profile since taking over the beat three years ago, said her paper's policy is to cover only campaigns aimed at consumers and running nationally in media.

"The ads and commercials have to be out there and visible to people," said Howard, who added she also helps cover media news. She is especially interested in getting pitched trend-setting promotions for stories like the one she wrote in USA Today's Dec. 15 edition, which was headlined "Marketers mine humor from serious topics."

The article dwelled on three new campaigns by John Hancock, H&R Block and Citibank that Howard said are "making some headway in trying to put a more human touch in the promotion of their brands."

Howard also laid down some other rules for publicists to follow.

1. "Know whom you pitch." Howard said she recently got an e-mail from one publicist to another with updates on how to pitch her.
2. "Know when to pitch." She does not want to get pitched at 3 p.m. on Friday for a Monday story.
3. "Also, when not to pitch." The day after you see a story on a particular topic and your client is not mentioned is not the time to pitch her, she said.
4. "Know what we cover." Howard said she covers advertising and consumer marketing. "We don t really cover advertising from the business side of things unless there is some scandal," she said.
Her final advice was for publicists not to "overload lunch meetings." If it is someone that wants to talk about how great their company or client roster, she does not want to take the time, but she will go to lunch with someone who makes ad decisions.

Coverage Is Trend-Driven

Steinberg, another relative newcomer to the ad beat, said the Journal s ad coverage is trend-driven.
In the case of campaigns, he pointed out there is heavy emphasis on reporting how much the companies are paying for the ads.

He said the Journal wants to do stories about new ad campaigns before they run.

Bloom said Ad Age's news coverage focuses on marketing communication issues instead of people changes and account moves.

He said AA's reporters have been instructed to cover stories by "following the money and where the money is going to go." Bloom also puts a high priority on "getting ahead of trends" stories.

The former editor of PR Week said an assignment in the works is an article about how "word-of-mouth" is used for marketing campaigns.

He told one questioner he has seen a definite shift away from traditional ad use to non-traditional methods, such as PR.

"We want to be in the forefront of how something will change the ad agency business," Bloom said.

NYT Covers Nuts & Bolts

Elliott said his column, which runs Mondays-Fridays, continues to run "nuts and bolts stuff" as well as information about broader topics such as ad business-side trends, globalization and non-traditional marketing moves.

After the meeting, Elliott told this NL he gets most of his information from publicists at the ad agencies.
"Exclusives are more important than ever before," said Elliott, who pointed out the Internet is loaded with ad stories.

With the exception of Steinberg, who still prefers to get a phone call, the reporters prefer e-mail pitches. Elliott said the Times has eliminated the fax clerks, and Howard no longer checks to see if she got a fax.


Latinos continued to be marginalized on the evening newscasts of ABC, CBS, CNN and NBC in 2002, according to the National Assn. of Hispanic Journalists 8th annual Network Brownout Report released Dec. 11.

The report found that out of approximately 16,000 stories that aired in 2002, only 120—less than 1%—were about Latinos. In 2001, only 99 stories were about Latinos.

Hispanics now make up more than 13% of the nation s population.

This year s study found several significant improvements. The use of Latinos as interview subjects increased and the average length of Latino-related stories increased from two minutes and 25 seconds in 2001 to two minutes and 51 seconds in 2002, with the length of CNN stories far surpassing the other networks.

Diane Alverio, co-owner of Baldwin/Alverio Media Marketing, a media research, marketing and PR firm, helped prepare the report. Alverio is also a past president of NAHJ.


Lillian Vernon, who founded the 52-year-old national catalog company, Lillian Vernon Corp. in Rye, N.Y., will write a national column for Scripps Howard News Service.

The column, "Lillian s Business," will explore a range of business topics that relate to entrepreneurs and business leaders alike.

Vernon is at [email protected].

(Media news continued on next page)

Internet Edition, Dec. 31, 2003, Page 4


William Holstein, editor-in-chief of Chief Executive magazine, said news coverage, especially foreign news, has deteriorated because of layoffs.

Holstein said a "top media maven who shall forever remain nameless" told him that somewhere in the neighborhood of 12,000 to 15,000 journalists have been fired over the past two or three years.

The vast majority of these reporters and editors were seasoned reporters in their 40 s and 50's.

Holstein, a former foreign correspondent for United Press International and a past president of the Overseas Press Club, said it has become obvious to him that media organizations are missing the experience of these journalists.

"The coverage of the potential hazards of invading Iraq, which were so obvious to anyone with Mideast experience, was one example," he said in an article that appears in the December issue of the OPC Bulletin.

Coverage of China, Japan, and Korea, a region he spent time in as a correspondent, also has been poor, he said.

"News organizations keep rediscovering the same lessons about Asia and recycling the same myths, such as the old canard that Japan s Liberal Democratic Party is about to undergo sweeping change and then lead a major `reform of the Japanese system," said Holstein, who was based in Hong Kong and Beijing for UPI.

Other regions, such as Russia and Latin America, seem to have "simply fallen off the map," he said.
The owners of journalistic organizations understand entertainment and marketing, but he wonders if they understand that part of the charter of being in journalism is "a commitment to speaking the truth as best you can."


Shopping Etc. is the title of Hearst s new women s shopping magazine that will debut in September as a competitor to Conde Nast's Lucky.

Three issues of Shopping Etc. will be published in 2004 and 10 in 2005. Mandi Norwood is editor. Sarah Ruffin, previously with Living Room magazine, has joined as home editor.

Fairchild Publications will start up a quarterly men s shopping magazine called Vitals.
The first issue is scheduled to come out in September after the spring debut of Cargo, a male-oriented spinoff of Lucky.


The obesity story easily tipped the scale as the No. 1 food story of the year in Hunter PR s annual survey of newspaper and magazine food editors.
Obesity also was named as the top health story by the Harvard Medical School's Harvard Health Letter (NL, Dec. 10).

The firm said virtually every editor participating in the survey ranked obesity within the top three.
Editors voted the Atkins Diet as the year s No. 2 food story, followed by trans fatty acid—the FDA s new public enemy No. 1.

The other top ranked stories were: "Freedom" fries; South Beach Diet; Mediterranean Diet; a bill requiring nutritional information on menus; the "semi homemade" movement; airline food fees, and a reality TV show called "The Restaurant."

Joyce Wadler is giving up the "Boldface Names" column in The New York Times for about a month to work on stories for the paper's "Style" section.

Carl Lavin, who held various news editing positions at The New York Times, where he has worked for 20 years, is joining The Philadelphia Inquirer on Feb. 2 as deputy managing editor for news.

He will oversee the metro, national/foreign, and business news departments.

Mary Gail Pezzimenti, former managing editor at Details magazine, has replaced Bob Sabat as managing editor of GQ.

Also named to the staff were veteran British profiler Chris Heath; Jo Sullivan, previously a feature writer at Harper s; Jeanne Marie Laskas from Esquire , and Joel Lovell from The New York Times Magazine.

Marsha Mercer was promoted to Washington, D.C., bureau chief for Media General News Service.

Joseph Daly, 85, former chairman/CEO of Doyle Dane Bernbach, died Dec. 6 at his home in Jupiter, Fla.

Daly, a fighter pilot in World War II, who survived the battle of Guadalcanal when his Grumman F4F was shot down, went to work for DDB as an A/E after the war.

Stuart Varney is leaving CNN, where he has been for 20 years, to join the business news staff of the Fox News Channel.

John Raess
, 53, previously West Coast bureau chief for, was named Associated Press assistant chief of bureau for Northern California and Northern Nevada, replacing Anthony Marquez, who was recently promoted to chief of bureau in Los Angeles. Raess is based in San Francisco.

The Associated Press is collaborating with Paris-based Ipsos-Public Affairs on development and distribution of twice-a-month national polls, occasional state polls and quarterly international polls.

The polling partnership began Dec. 5 with a national poll that showed growing optimism the economy is improving President Bush's public standing.


Ziff Davis Media's event marketing group is launching a four-day consumer technology event next Oct. at the Jacob Javits Convention Center in New York.

DigitalLife, which will kick off on Oct. 13, is expected to attract more than 25,000 consumers and technology enthusiasts.

A major media relations program is planned for DigitalLife. In addition to industry insiders, press and channel partners will be able to attend an industry and media preview prior to the public opening.

Over four days, more than 150 companies will showcase the newest in digital products, including digital home entertainment, digital music, gaming, digital photography and moviews, home networking, mobile technology, Internet access, small office/ home office, digital commerce and digital culture.

The new event will coincide with Ziff Davis Media's new consumer lifestyle magazine, which is under development and scheduled to debut in early part of 2004.

The new magazine will highlight ways in which consumer electronics are changing and enhancing people s lives.

The American Assn. of Ad Agencies will hold a series of events next September to mark "Advertising Week." They will include the presentation of a new award to recognize outstanding achievements in advertising, the creation of a "walk of fame" and exhibitions at Grand Central Terminal.

The Cincinnati Enquirer is redesigning it pages to emphasize coverage of local and regional news.

The Gannett-owned paper said readers have said they want more news about their neighborhoods, more local business news and broader coverage of sports and entertainment in the area.

Internet Edition, Dec. 31, 2003, Page 7

Quotes from PR-related
stories in 2004:

"When intelligent, capable, honorable people sit around a boardroom table, their I.Q.'s drop 50% and their courage disappears entirely."
--Boardroom expert Nell Minow of

"The best analysts know when they're being lied to. I've got a guy who sniffs it out within 30 seconds."
--Jeff Knight of Putnam Investments to NIRI. He insists on personal interviews with CEOs and CFOs.

"Short of an actual conviction or revocation of a license, none of that information gets shared."
--A doctor explaining how nurse Charles Cullen was able to murder an estimated 69 people because hospitals feared saying anything negative about previous employees.

"Don't use bullying techniques, don't try to get directors of research fired, don't play into the conflicts of interest in the business" (e.g., by asking CFOs to cancel banking relationships).
--Analyst Lisa Shalett to members of NIRI at their annual conference.

"Payroll and employee headcounts are simply accumulations of historical data and don't fall under GAAP (generally accepted accounting principles).
--CPA czar Doug Carmichael on decision of ad/PR conglomerates to stop releasing any statistics for their ad/PR firms on the ground that GAAP might be violated.

"Dictators are but temporary and puny obstructions. In Germany too in a little while Hitler would have disappeared. What matters if it were a day or a year?"
--Carl Byoir in 1934 to House Committee on Nazi Propaganda. He argued in an 18-page statement against the boycott of German goods demanded by many Americans. The Byoir firm worked for the Hitler government via the German Tourist Bureau.

"Public relations (is) mastery of the facts, and reasoning that makes common sense to common people."
--George Hammond in giving the PRSA Foundation Lecture in 1978. Hammond, who died Dec. 4 at 96, headed Byoir 25 years.

"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 $1.5 million rather than defend the truthfulness of its past statements."
--PRSA board member Jeff Seideman after Nike pulled out of the Nike vs. Kasky lawsuit. The Assembly voted Seideman off the board although he tried to get re-elected.

"We listened to a lot of advice (from Omnicom's PR units) and decided no PR strategy was going to overcome it" (the June 12, 2002 Wall Street
expose of OMC's accounting practices that dropped the stock price from the $80's to the mid-30's).

--OMC's John Wren to CBS MarketWatch in ending 15-month press boycott. He accused the WSJ of "inaccuracies" but never named any.

"It's over."
--Interpublic CEO David Bell in abruptly walking out on an interview with the Financial Times of the U.K. when the reporter brought up the subject of IPG's $2.7 billion debt.

"Employees are forbidden from talking to journalists on pain of immediate dismissal."
--E-mails from Interpublic in New York to London staffers of McCann-Erickson, as reported by the Financial Times.

"It was a horrible culture of bullying, greed and fear driven by the desire for short-term profit growth and little else."
--Former executive of McCann-Erickson to the Financial Times. M-E was the unit of Interpublic that booked $181M in non-existent revenues, resulting in an SEC investigation and lawsuits that IPG settled for $115M in cash and stock.

"McCann-Erickson's Weber Group will become the quality and volume leader in all practices (of PR) in all the major regions of the world."
--Statement in 1996 by M-E after it acquired Weber with IPG stock.

"PR is getting more like telemarketing every day, with PR pros wearing headsets and dialing editors all day long. When business is slack, they do actual telemarketing"
--Anonymous. [A telemarketing firm, meanwhile, also
does press placements].

"Your (PRSA) board pledged to operate in a transparent financial environment, with a commitment to rigorous ethical standards."
--2004 president-elect Judith Phair to the 2003 Assembly, which was not told about an $86,250 hike in section dues; not told until the day of the Assembly about the planned $6 million, 15-year lease of a downtown office, nor provided with a nine-month balance sheet.

"The primary issue that faces our institutions today is a crisis of governance."
--PRSA president Reed Byrum to 2003 Assembly, which voted to continue to bar 80% of PRSA's members (the non-APRs) from voting in or even speaking to the Assembly.

"Success in the 21st century comes from reading the public's mind, not manipulating it."
--Al Golin of Golin/Harris International to Institute for PR.

"The job of advertising is to convince consumers; the job of PR is to convince the press."
--Statement by former Advertising Age New York editor
John Wolf.

"We usually find ways to go around the press, duck 'em and screw 'em."
--Philosophy of Patrick Jackson, who was highly active in PRSA until his death in 2002.

"Quality communications is the best brand differentiator available to an organization."
--Tyson Heyn, organizer of the new League of American Communications Professionals, an online PR society with $119 annual dues ( 33,000 visit free portion of its website.

"Young singles--child labor--is about all that PR firms can afford now."
--Anonymous PR pro in commenting on the $15,000-$18,000 rate for HMOs for a married employee with children in New York (2003 rate).

Internet Edition, Dec. 31, 2003, Page 8



Dave Drobis of Ketchum, offloaded by Omnicom at 62, is the latest in a long string of senior PR pros dumped by the youth-oriented ad culture that is sitting on much of the PR counseling industry like an elephant on a flower bed.

Omnicom-owned PR units such as Ketchum are particularly prone to jettisoning established PR names.

Drobis is currently president of the Arthur Page Society and president of ICCO (Europe-based group of PR firms). He was the founding chair of the Council of PR Firms.

OMC previously dumped Drobis' partner of many years, Paul Alvarez, at the ripe old age of 55 in 1997, less than a year after OMC purchased Ketchum. Ketchum's Walt Lindenmann, the No. 1 researcher in PR, was sent packing by OMC in 2000 at the age of 64.

Carnage of this type is rampant in the world of the PR operations owned by the congloms.

The No. 1 figure in financial PR, Ted Pincus, was expunged by Interpublic within two years after he sold his firm in 1999. Pincus had told us he had a five-year contract and intended to stay ten years.

The ad world obviously doesn't believe that PR pros, like writers, grow more valuable with age because of the knowledge and judgment they have accumulated and the personal relationships they have built.

John Hill, co-founder of Hill & Knowlton, was active in H&K into his 80's. Harold Burson, 80+, is active at Burson-Marsteller. Daniel Edelman and David Finn, both past 80, gave excellent speeches at the Dec. 4-5 PRSA international seminar at the U.N. Edelman PR Worldwide and Ruder Finn are the two biggest independent PR firms.

It is ironic that Drobis, who embraced the insular, numbers-driven, youth-oriented, press-avoiding OMC culture, is now a victim of it. The contrast between Drobis' behavior before and after the sellout to OMC is like day and night.

The sellout, for $68M in stock and cash in 1996, was forced because Ketchum ad/PR was a wreck in a ditch. It was $13 million in debt and was told that its loans were being cancelled because it wasn't living up to loan terms. It lost $7.5M on $127M in revenues in 1995.

The PR side had suffered "significant losses" since 1992, said a 98-page "S-4" document that was filed with the SEC. Deloitte & Touche expressed "substantial doubt" about Ketchum's "ability to continue as a going concern."

Departing execs in 1993-95 had drained the company of $11.4M by having their stock bought back at $60 a share when book value was -$1.42. In spite of the rising debt, staff continued to get raises, bonuses, dividends, etc.

Money had been spent making 16 acquisitions that added 200+ staffers and millions in ad commissions and PR fees. Some of these turned sour including the purchase of Group PR in London in 1991.

Ketchum sued Group PR and its two founders in 1993, claiming $240K was improperly removed from the treasury. It lost the suit and not only had to pay its own legal costs but $500K in bills of the defendants. A $4 million write-down was taken in 1996 on this.

A $900,000 note from a partially owned agency in France was written down in 1993 because of the firm's "poor financial condition and negative cash flows in recent years."

Another $700K was written down for the same operation based on past results and future projections.

The Ketchum ad side had its problems. Its biggest account, Acura of American Honda, with billings of $125M out of the Los Angeles office, was under review. Ketchum soon lost it.

Ketchum's New York ad office was so weak that Alvarez, in an interview with Stuart Elliott of the New York Times on April 18, 1994, referred to the office's poor reputation as "the Ketchum curse."

Ketchum/New York linked with Jerry Della Femina, who was described by Elliott as "a rambunctious adman whose self-promotion skills almost equal his creative capacities."

Some members of the previous generation of Ketchum owners claimed they were shafted because they got far less than the $125 per share the current owners received. They were warned that if they didn't take less, attempts to sell out Ketchum might collapse and they wouldn't get anything.

It's possible the Ketchum owners ran up the debt with a view towards selling out since the congloms often took on debt in buying companies.

Both Interpublic and OMC sought Ketchum, IPG making the first bid in March 1995.

Before the sale to the conglomerates, heads of the big PR firms worked hard at building relationships with reporters. None worked harder than Alvarez and Drobis.

Typical activities were lunches with editors; nights on the town in which both editors and their wives participated; golf and other outings for editors; dinner parties at ad agencies and PR firms to showcase what such agencies do; numerous occasions when the activity was couples' tennis, sailing, skiing, etc.; many home-and-home visits between editor/PR couples, etc.

We once counted 30 homes of PR people that we visited including those of Drobis and Alvarez; Herb Rowland of The Rowland Co.; Ed Stanton of Manning, Selvage & Lee, and Mitch Kozikowski, Creamer Dickson Basford, to name a few. We reciprocated by inviting them to our home.

Efforts were made by the heads of all the top PR firms to build trust with reporters by spending "quality time" with them.

One Ketchum expedition was a weekend at a lodge outside of Pittsburgh at which we spoke at night to about 20 Ketchum PR pros and played golf during the day at Oglebay Park in Pittsburgh.

Drobis was the numbers-oriented manager who shopped for agencies to buy and services to add to help Ketchum grow, while Alvarez was the creative spark plug, excellent at personal relationships, making pitches and motivating staff. Alvarez, who no doubt had the bigger salary (he got $3.4M in OMC stock vs. $2.2M for Drobis), and who was press-oriented, had no future in the OMC culture.

Executives at Ketchum and most of the ad agency-owned units stopped socializing or even meeting with reporters. They became "executive managers" like Drobis.

This is not true of the heads of independent PR firms. They do not duck press calls nor avoid meeting with reporters.

The "new" post-Alvarez Ketchum emphasized award-winning (PRSA Silver Anvils now total 84 including 57 won in the last ten years), and heavy advertising including the inside cover and first page ads for seven years in the former Reputation Management magazine and frequent full-page ads in PR Week.

Acquisitions helped improve its position among the "Top Ten" PR firms. However, the "Top Ten" list no longer exists. There is only the list of the top independents.

The ad congloms have barred their 50 or so PR units from providing any statistics to such rankings, citing Sarbanes-Oxley. While exact numbers are missing for the PR units, the financial statements of OMC, IPG and WPP Group show that PR is their worst-performing sector.

How much of the slide is caused by the dot-com bust and recession, and how much is caused by adland's drive to depersonalize the PR business, is anyone's guess.

However, it's widely acknowledged that trust between the public and institutions such as OMC, IPG and WPP is at an all-time low.

Nineteen PR groups met in Madison, N.J., last January in an historic move to find ways to restore trust.

Doug Pinkham, president of the Public Affairs Council, a participant in the meeting, says PR and PA pros "need to remember that no amount of technology or management expertise will take the place of the ability to sustain strong personal relationships. PR is not the direct mail business."

Reporters and others, he said, "trust those whom they respect on a personal level."

--Jack O'Dwyer


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