Edition, March 17, 2004, Page 1
CONN. HEARS PITCHES.
The State of Connecticut
has issued an RFP to consolidate its 30 outside advertising
and PR firms to "as few vendors as possible" for
its $9 million in contracts.
percent of that budget is tourism work and total PR spending
is believed to be in the mid-to-high six-figure range.
Constitution State's Dept. of Administrative Services is
seeking proposals through March 29 and said it expects the
volume of ad and PR expenditures to remain constant. The
department warns that pricing, quality and service levels
obtained through the current RFP are expected to be "more
aggressive" than any single agency may currently have
with a firm. It will use the proposals for a continuing
short list selection, negotiations and final vendor selections
for projects as they arise.
state also has reserved the right to cancel current contracts
if it "serves the best interests of the state."
DelVecchio & Casey and Lou Hammond Assocs. are the state's
main tourism PR firms.
RFP is part of a state-wide spending management program
called "Buy Smart... Buy Together," which aims
to use the state's $2.6 billion in buying power to get better
deals from vendors.
contract award stage is expected to take place in late April
or early May. Contract(s) run three years with options for
PR GETS $2M JOB FROM SPAIN.
Spain has signed Piper Rudnick to a $2 million contract
to handle a broad range of political and economic issues.
The firm is to receive $100K a-month under the 20-month
agreement. PR is to advise Spain in matters pertaining to
public diplomacy, "strategic communications" with
the media, Embassy event programming and how to improve
ties with the White House, State Dept. and Congress.
a member of President Bush's "coalition of the willing,"
has provided troops to oversee the occupation of Iraq, and
is eager to get its share of reconstruction projects. Prime
Minister Jose Maria Aznar, leading up to the invasion of
Iraq, providing key diplomatic support to the Administration.
partner Lloyd Hand, who was a close counselor to President
Lyndon Johnson, and then senior VP at TRW for a dozen years,
is in charge of the Spanish business. He reports to Spain's
Ambassador to the U.S., Javier Ruperez, and deputy chief
of mission, Felix Valdes.
LOSES $102M IN Q4.
Interpublic suffered a $102.5 million fourth-quarter net
loss as CEO David Bell continues his restructuring program
at the ad/PR combine.
were up 5.7 percent to $1.6 billion.
Bell reports the "first phase of our turnaround will
soon be behind us," though "there remains much
work ahead of us."
who has put a priority on boosting organic revenue, reports
that business from existing clients slipped 1.1 percent
during the quarter. That's an improvement from the declines
of 3.1 percent, 4.5 percent and 6.0 percent slippage for
the earlier three quarters, respectively. Organic growth
for the full-year dipped 3.6 percent.
posted a $451.7 loss for `03, compared to a $99.5 million
year ago profit. Revenues inched ahead by 2.2 percent to
SEGWAY TAPS HICE.
Segway, the Manchester, N.H., maker of the two-wheeled human
transporter, has tapped Joseph Hice, a former Harley-Davidson
PR exec, as its first chief marketing officer.
Hice was director of corporate communications for the motorcycle
company before leaving last summer to become VP of marine
and recreation accounts at Russell & Herder. He earlier
headed marketing communications for Bombardier.
[Segway hired former Bombardier exec Gary Pietruszewski
last month to head sales and customer support.]
The company has been lobbying governments and resorts for
two years on behalf of the transporter, which launched in
2001 with much fanfare aided by Burson-Marsteller. The devices
began selling to consumers last year but some reports have
questioned whether the company has lived up to its buzz.
A recall of 6,000 units in October 2003 was widely covered.
Business Week last year asked "Is Segway Going Anywhere?"noting
three senior marketing execs left the company in the last
few years. Tobe Cohen (Procter & Gamble veteran), and
Gary Bridge (earlier with IBM), are among those departed
GRUBBS CHECKS IN
Wendy Grubbs has joined Citigroup as VP-federal government
affairs. She left the White House in February, where she
worked in its legislative affairs office.
Grubbs also served as an aide to former Florida Senator
Connie Mack, and deputy chief of staff to Labor Secretary
Grubbs will work in Citigroup's global investment bank
unit, and brief its bankers on how developments in the Washington,
D.C., political scene will impact their business.
Edition, March 17, 2004, Page 2
W-C FIGHTS GAY MARRIAGE
Witeck-Combs Communications is helping the Log Cabin Republicans,
a band of GOP members who support gay rights, with a wide-reaching
PR and ad campaign to fight their own party on a constitutional
amendment which would ban gay marriage.
President Bush caused a furor in the gay community when
he said last month that the White House would support a
federal amendment defining marriage as a union between a
man and a woman.
Mark Mead, communications director for the group, told
this website W-C was brought in to bolster their two-man
press operation and take the campaign national. "They've
helped us get attention in national outlets and the response
has been through the roof," he said, adding W-C got
the nod based on a friendship with the D.C.-based firm's
president Wes Combs over the years.
The Log Cabiners kicked off a $1 million ad campaign
the first ad blitz in the group's 27-years March
11 across the Washington, D.C., area and several swing states
like Ohio, Florida and Wisconsin. The overall campaign begins
today with lobbying and PR efforts in D.C., along with grassroots
work and the revamp of the group's website, logcabin.org.
Colleen Dermody, VP at W-C, said her firm has specialized
in gay and lesbian issues and marketing in the past, advising
companies like IBM and Ford on issues related to that group.
She noted that W-C has generally been associated with left-of-center
groups in the past and the current work for the Log Cabiners
is its first for that group.
of Lincoln or Buchanan?
Blasting a segment of the GOP as the "radical right,"
the group's executive director, Patrick Guerriero, said
the campaign is meant to highlight the "exclusion and
discrimination" in the amendment, facts which he says
violate the principles of the Republican Party.
"As Republicans, it is our obligation to stand up
and speak out when our party is headed in the wrong direction,"
Guerriero said. "The Republican Party has a choice.
Be the party of Lincoln, Reagan, Schwarzenegger and Guiliani,
or be the party of Bauer, Falwell, Robertson, and Buchanan."
The Log Cabin ad opens with Vice President Dick Cheney
who's daughter is openly gay outlining his
position on same-sex relationships during a 2000 debate
with Sen. Joe Lieberman. Cheney said then states should
make decisions on unions, not the federal government. Images
of the civil rights movement are superimposed over the vice
president. He now supports the President's position.
SMITH TACKLES TECH
Cameron Smith has been named managing director of LNS Communications'
technology practice. He was partner at G2PR, advising tech
companies NSI Software, EqualLogic, Vocal Tec and SavaJe.
Smith left that boutique shop because he was interested
in tapping into LNS' global reach and public affairs capabilities
it has as a unit of Chime PLC, the U.K's biggest independent
He also worked at Bridgeman Communications (Texas Instruments
and Cabletron) and Mullen (S&H Greenpoints and Hifi.com).
Rich Nagle is CEO of Cambridge, Mass.-based LNS.
INFOTECH SPEAKS UP
Washington, D.C.-based Infotech Strategies is promoting
the benefits of "offshoring" high-tech jobs on
behalf of the Computer Systems Policy Project. CSPP is the
high-powered coalition of eight CEOs from leading technology
The roster includes Sam Palmisano (IBM), Carly Fiorina
(Hewlett-Packard), Edward Zander (Motorola), Craig Barrett
(Intel), Michael Dell (Dell Computer), Joe Tucci (EMC),
Mark Hurd (NCR) and Larry Weinbach (Unisys).
CSPP maintains that the U.S. high-tech sector must improve
competitiveness by shipping jobs to lower-waged countries
like India and China, and concentrate on research and development
The group spelled out its philosophy in a report, "Choose
to Compete: How Innovation, Investment, and Productivity
Can Grow U.S. Jobs and Ensure American Competitiveness in
the 21st Century," that was released in January.
Members of CSPP, such as Fiorina, have been criticized
for showing a lack of sensitivity to the outsourcing issue.
She was roasted for her remark, "There is no job that
is America's God-given right anymore." Sacramento Bee
writer Rich Heintz mused if that "Marie Antoinette-approved
remark makes me wonder if H-P hasn't already offshored its
public relations department."
IS was founded in `96 to provide "vision and voice
in the digital world." Its chairman Ken Kay is former
executive director of CSPP. Tamika Spaulding heads the CSPP
HYRE JOINS DIX &
John Hyre, who handled the great "Oscar" heist
crisis, has joined Dix & Eaton as VP. The 16-year veteran
of $3 billion (revenues) Roadway Corp. dealt with the media
firestorm connected with the theft of 55 Academy Award "Oscars"
that were stolen in `00 from Roadway's loading dock in Los
Fifty-two of the purloined statuettes were discovered next
to a dumpster in L.A.'s Korea Town nine days later. The
ongoing probe into the whereabouts of the three remaining
pilfered Oscars received a boost in June as the FBI discovered
one of the looted Oscars in Miami during a drug bust.
Hyre served as investor relations director at Roadway,
which was recently acquired by Yellow Corp. Roadway is a
D&E client, which supported Hyre during the Oscar robbery
FOR BUSH'S PHOTO-OP
Halliburton, which according to its just-released 10-K report
has earned $85 million on $3.6 billion in Iraqi work last
year, has not yet paid the subcontractor that prepared the
Thanksgiving Day photo-op of President George Bush serving
the troops dinner in Baghdad International Airport.
The President addressed the troops, and then ladled out
mashed potatoes for about ten minutes before heading off
to meetings with members of Iraq''s Governing Council and
Salt Lake City-based Event Source has been dishing out
100,000 meals a day under a contract with Halliburton. CEO
Phil Morrell told NBC News that Halliburton owes his company
$87 million. He says ES hasn''t been paid since November
and the financial shortfall is starting to hurt. The company
has laid off workers, and soon will feed sandwiches rather
than hot meals to the soldiers as an economy move.
Halliburton, which has been accused of overcharging the
government on Iraq work, does not dispute ES'' bill. It
currently is auditing its dining facilities, and plans to
pay its subcontractor as soon as possible.
Wendy Hall of Halliburton, has told O''Dwyer''s that she
cannot comment on PR firms used by Dick Cheney''s former
company because of "competitive" reasons. Hall
did say that Halliburton "from time to time" hires
outside PR firms for specific projects.
Edition, March 17, 2004, Page 3
REUTERS IS `OFFSHORING'
Reuters is hiring six reporters in Bangalore, India, to
cover financial news of small- and mid-cap U.S. companies
using press releases transmitted by the news release services.
"Basically, what we re doing is offshoring,"
David Schlesinger, Reuters global managing editor, who is
based in New York, told Business Week online. "We re
simply experimenting with doing reporting from a different
It is "certainly not outsourcing, which is giving
work to another company," said Schlesinger, who also
pointed out the reporters are employees, and must adhere
to Reuters standards. "It's simply moving the work,"
he told BW.
He said the journalists in Bangalore will cover the basic
earnings announcements of U.S. companies by watching PR
Newswire and Business Wire for announcements of small- and
mid-cap companies that "we re currently not even covering
on a regular basis."
The program could be expanded to other locations if it
goes well, said Schlesinger, who sees it as a way to free
up reporters in New York and London, and other financial
centers, to do more "value-added reporting," of
larger companies, which entails interviews, attending analyst
meetings, and visiting companies.
"I think the wire monitoring you can do anywhere.
But for value-added reporting, you need to be able to go
to the meetings, visit the company, have the relationship
with the anyalyst and the company officials," he said.
Schlesinger said there will be a "signifcant difference"
between the salary of the new Bangalore reporter and an
entry-level reporter in New York, who can earn about $58,000
SALON'S D.C. BUREAU.
Salon.com, the San Francisco-based website, is opening a
new bureau, in Washington, D.C.
It will be run by Sidney Blumenthal, a veteran political
journalist, who was a senior advisor to former President
Blumenthal also will be a daily contributor on Air America,
the new left-leaning progressive radio network, which will
feature Salon's leading story each day.
David Talbot, who is editor, said Salon has 74,000 subscribers.
N.Y. TIMES PICKS
BOOK REVIEW EDITOR.
Sam Tanenhaus, currently a contributing editor at Vanity
Fair, was named editor of the "Book Review" section
at The New York Times. He takes over on April 1, replacing
Tanenhaus, who was until April 1999 an editor on the op-ed
page at the Times, has written several books, including
the 1997 biography of Whittaker Chambers. His current work
in progress is a biography of William Buckley Jr., which
he is setting aside to run the book review.
Bill Keller, executive editor, said Tanenhaus is an "avid
reader and incisive critic of serious fiction. To anyone
who might have fallen for the notion that we were looking
to dumb down this precious franchise: take that!"
Alex Ward, editor of special sections at The Times, was
named editorial director, book development, succeeding Susan
Chira, who was named foreign editor.
SCHWARZENEGGER IS EXEC.
EDITOR OF FLEX.
California Gov. Arnold Schwarzenegger is now also the executive
editor of Muscle & Fitness and Flex magazines.
Both magazines are published by American Media, Inc. in
Boca Raton, Fla., which also owns The National Enquirer
and other celebrity papers.
Schwarzenegger, who refused to accept a salary as governor,
will get paid as editor and AMI also will donate $250,000
a year to his Council on Physical Fitness.
David Pecker, AMI president, said Schwarzenegger will have
little day-to-day control over content.
Harry McCracken, editor of PC World magazine, was promoted
Lisa Tant was promoted to editor-in-chief of Flare, a 25-year-old
Toronto-based women's fashion magazine that circulates in
Tant succeeds Suzanne Boyd, who recently joined the publisher
of Essence magazine in New York as editor of a fashion and
beauty magazine aimed at young African-American women, which
is scheduled to publish its first issue this fall.
Tom Slocca, previously a senior editor at Washington City
Paper, is joining The New York Observer to write the "Off
The Record" column.
Kate Lawler, previously articles editor, was promoted to
executive editor of Parents magazine in New York. She also
will continue as editor-in-chief of Parents Expecting.
Lauren Tabach-Bach, formerly associate features editor at
Vanity Fair, was named west coast editor of Teen People
Jim Turley was named editor-in-chief of CMP Media's Embedded
Systems Programming, a technical magazine for engineers
involved in designing processor-based electronic systems.
Turley will work out of his home office in Pacific Grove,
Calif., at 831/375-8086 or e-mail at [email protected].
Wen Stephenson, 35, who was managing editor of the web edition
of the WGBH-TV's documentary series "Frontline,"
joined The Boston Globe as deputy editor of the "Ideas"
Edward Baker was promoted to editor-in-chief of CIO Insight
magazine, and Brad Wieners was named to succeed him as executive
AgeWise is the title of a new quarterly magazine that will
target residents of Michigan 60 years and older.
Kristine Kletke, a former community relations director
for a retirement community in East Lansing, who is publisher,
said the first issue will be published this August, and
sent free to 20,000 people.
Barbara White, editor, is soliciting articles and stories
for future issues from Michigan writers.
White can be pitched at [email protected] or by phone at
517/881-4018. AgeWise is located at 5460 Curtice, Mason,
Swirl Wine News, a bimonthly, 16-page newsletter, which
just published its first anniversary issue, is adding four
pages in late 2004 to accomodate more features, according
to Tom Wszalek, who started the Los Angeles-based publication.
The newsletter, which is targeted at wine lovers, recommends
75-100 different wines, in addition to wine accessories,
restaurants, books, and events in each issue.
Wszalek can be reached at 818/788-7686.
(Media news continued on next page)
Edition, March 17, 2004, Page 4
AUTO PR DEPTS. GOOBLE
Keith Bradsher, former Detroit bureau chief of The New
York Times, who now heads the paper's Hong Kong bureau,
is not surprised by the number of reporters who are hired
as auto publicists.
Bradsher, who wrote a book about SUVs called "High
and Mighty," said it is hard for news organizations
to hold on to people against the considerably larger salaries,
and much better benefits that the auto industry offers.
He said The Associated Press has lost five out of its last
seven auto writers to working for the PR arms of the automakers.
"The strange result is that you go to a press conference
one week, and you're standing next to somebody who's asking
questions, and the next week they're standing next to the
executive receiving the questions," he said in an interview
with the host of "On the Media," which airs on
Since many publications are dependent on automobile ads,
it does have "a chilling effect on coverage,"
but it varies by the news organization, he said.
The auto industry definitely places ads in media outlets
that they perceive as providing a friendly or conducive
environment for their products, he said.
AUTHOR OF ANTI-SUV
Adam Penenberg, the author of "Tragic Indifference:
One Man's Battle with the Auto Industry Over the Dangers
of SUVs," claims an article about him was pulled by
an editor at Fast Company out of fear of alienating
John Byrne, editor-in-chief of FC, said Penenberg's charge
was untrue, and accused him of trying to get publicity for
his new book, which recalls when Ford Explorers equipped
with Firestone tires were involved in a growing number of
fatal rollover accidents.
WDSI, a Fox TV station
in Chattanooga, Tenn., is shutting down its news
department. The station will continue to televise local
news during its 10 p.m. time slot, but it will originate
from WTVC, the local ABC affiliate.
Rupert Murdoch is consolidating
operations of his two New York-area TV stations, with plans
to move most operations of WWOR (Ch. 9) from Secaucus, N.J.,
to the Fox Channel 5's studios on East 67th street in Manhattan.
American Style, a
magazine for craft enthusiasts and collectors, is going
bimonthly after 10 years as a quarterly.
The April 2004 edition, the first in the new publication
cycle, went on newsstands Feb. 24.
Hope Daniels, who is editor-in-chief, said the magazine
will undergo a number of editorial changes over the coming
year, including an expanded "Arts Travel" department.
The magazine, which has a circulation of 60,000, was started
by The Rosen Group, a Baltimore-based company, in 1995.
Pearson, which owns
The Financial Times, said the "outlook
for our business newspapers remains uncertain" due
to the decline in advertising.
The London-based publisher said ad revenues at the FT,
which had an operating loss in 2003, fell by 4% in the first
two months of the year.
in Austin, Tex., celebrated its third birthday on
March 6 with an issue of more than 100 pages and nearly
The magazine was started by Zarhun Dean, 32, who was born
in Afghanistan and immigrated to the U.S. when he was eight
years old after his father, a pilot of the Afghani airline,
fled the country during the Russian occupation.
The magazine covers everything from art, architecture,
beauty, community, cuisine, entertainment, and fashion.
Dean, who is editor, is in the process of hiring a managing
editor, according to Michelle DeCrane, VP/marketing.
Dean can be pitched at 512/474-4711.
Bob Schieffer, who
hosts "Face the Nation" every Sunday on CBS,
said a good interview is when the person being interviewed
"makes some news, when he says something that he hasn't
Equally important, is when that person gives a good explanation
of what it is he stands for or what it is he has taken a
certain position on, Schieffer told the Poynter Institute.
His favorite follow-up questions are: "What do you
mean by that?" and "Well, give me some examples."
Discovery Home &
Leisure Channel in Silver Spring, Md., will undergo
a transformation when it debuts as Discovery Home Channel
on March 29.
Programming categories on DHC will include decorating,
landscaping, entertaining, home improvement and how-to subjects
of particular appeal to women.
David Karp, SVP/general manager, oversees the programming.
Media Industry Newsletter
started a new monthly report on advertising.
Ann Cooper, former creative editor at Adweek and
founder of Advertising Age's Creativity Magazine,
was named editor of the Advertising Report, published by
Potomac, Md.-based PBI Media.
The Ad Report will consist of ad statistics, interviews
with leading ad agency executives, media planners and corporate
marketers and will cover the brands and people on the radar
and under the radar.
Cooper can be reached at acooper@pbimedia. com, or 212/621-4833.
Edition, March 17, 2004, Page 7
WREN NETS $6.4M IN STOCK
John Wren, CEO of
Omnicom, netted $6,494,050 on March 1 and 2 by selling 40,000
shares at $81.03 and 55,000 shares at $80.11, respectively.
total value of $7,647,250 was offset by the cost of exercising
120,000 options at $12.10 each on March 1.
Wren, who rarely appears on the insider trading list, made
his previous appearance more than a year ago by exercising
23,800 options at $10.15 a share on Jan. 21, 2003.
June 13, 2002, he purchased 20,000 shares in the open market
at $55 a share to show his confidence in the company after
a Wall Street Journal exposé about OMC's accounting
practices had sent the stock reeling. It declined over a
period of days from the $70's to the mid-$30's .
WSJ had said that OMC's agency buying spree, costing $800
million and more yearly, made it hard to track the origin
of its profits. There were also concerns about the sudden
resignation of Robert Callander, the head of OMC's audit
committee, which sparked rumors that financial irregularities
might be involved.
Questioned Accounting Policies
WSJ, which has not done a comprehensive story on OMC since
then, said there were reports Callander was "unhappy
with management's limited disclosure to the audit committee
about the entity (Seneca) that holds many of OMC's former
internet assets" (such as Razorfish and Agency.com).
posting letters on Yahoo complained about sales of the stock
by insiders. The Yahoo site, from June 12 back to May 31,
2000, showed no instances of OMC insiders buying stock on
the open market. The 89 insider transactions included 70
sales or planned sales, 12 exercises of options, and six
acquisitions via restricted stock. [Restricted stock is
stock presented to the recipient at the market price, the
"restriction" being that the recipient must stay
with the company the next several years.]
Reinhard, CEO of the DDB unit of OMC, sold 45,000 shares
for $3.6M earlier this month.
During the most recent six months, OMC insiders have purchased
5,000 shares and sold 250,000, according to Yahoo.
CASINO FORTUNE HIRES 5W PR.
5W Public Relations has picked up Casino Fortune, a six-year-old
online gaming company that CEO Ronn Torossian tells O Dwyer's
represents a $500K win for his New York-based firm.
has hired Kevin Mercuri to oversee media relations and event
planning for CF. Mercuri had handled government relations
and PA for the Interactive Gaming Council in Washington,
D.C., and had worked at PR21 and Hill & Knowlton.
says CF is the charter member of his firm's gaming division.
He expects to announce another casino client within 45 days.
5W PR counts the Christian Coalition of America, Bad Boy
Entertainment, and Israel's Ministry of Tourism as clients.
TEXT 100 HEADS REPORTING
AD PR UNITS.
Text 100, San Francisco,
subsidiary of Next Fifteen Communications Group, the largest
reporting PR unit of an advertising agency, had fees of
$38.7 million in 2003, a gain of 10.1%.
highest on the list is Access Communications, which is still
partially owned by Interpublic. Its fees declined 24% to
50 PR units of advertising conglomerates including WPP Group,
Omnicom, IPG, Publicis and Havas are not reporting any specific
numbers this year on orders from their parents.
parents have said the Sarbanes-Oxley Act of 2002 makes it
too dangerous to report because they have operations throughout
the world and accounting rules differ from country to country.
GAAP (generally accepted accounting principles) for each
country would be too expensive, they say. Companies can
report non-GAAP figures but they have to reconcile them
to GAAP, says SOX.
100, whose parent is publicly held, has clients such as
Adobe, Borland, IBM, Kodak, Xerox and Yahoo. It has six
offices in the U.S. and 19 owned and affiliated offices
of the 20 reporting ad agency PR units had gains in double
digits while only two had declines in double digits.
firms in the top five were Dorland PR, up 30% to $6.1M;
Crosby Marketing Comms., up 18.6% to $4.1M, and Dye, Van
Mol & Lawrence, down 6.2% to $4 million.
gain among the top ten was racked up by Vox Medica Healthcare
(formerly Signova), up 42.4% to $3.6M.
Edition, March 17, 2004 Page 8
Omnicom and Interpublic
have now followed WPP Group in reporting the misleading
statistic called "net debt," which is long-term
debt minus current cash and short-term investments.
It's an illogical number, and non-GAAP as IPG admits, because
long-term debt and short-term cash should not be mixed,
analysts tell us.
OMC, IPG, WPP, Publicis and Havas are laboring under crushing
debt and want to downplay its importance. Debt totaled $13.2
billion at the end of the third quarter of 2003, according
to their balance sheets.
But their real debt, counting payouts owed to purchased
agencies, long-term leases, and adjusting for movements
of client funds through them on the way to media, is two
to three times higher than the figures reported on their
balance sheets, financial experts say.
Uses Misleading Figure
We wouldn't mind the bogus "net debt" calculation
if all reporters were financial experts or had expert financial
But even the Wall Street Journal got snookered by the "net
debt" game of IPG March 10.
"Media & Marketing" reporter Brian Steinberg
had a boxed headline on an IPG story that said: "Debt
of $500 million is down $1.2 billion from the end of 2002."
Nowhere in the story does it point out that this is IPG's
"net debt" dream.
The company's total debt actually went from $2.63 billion
at the end of 2002 to $2.47B at the end of 2003. That is
on page six of the press release.
On page two is the statement that as of Dec. 31, 2003,
"net debt stood at $469M, down from $1.7B" at
the end of 2002. That's as far as the WSJ read.
IPG says its cash was $2B at the end of 2003 vs. $933M
a year earlier. But IPG, as usual, gave no balance sheet
with its earnings report. Maybe IPG has the $2B cash simply
because it is not paying its bills.
The balance sheet will be filed with the SEC on March 15,
the last possible day (75 days after the close of the quarter),
and too late for this NL's deadline. OMC also files at the
Not providing a balance sheet with earnings is a practice
condemned by NIRI and analysts.
IPG is a bear when it thinks the WSJ has made a mistake.
It twice publicly charged the WSJ with being inaccurate
in 1999-2000. The stories related to the restructuring of
Lowe Lintas and the purchase of a unit of Caribiner. We
wonder if IPG will insist on a correction of this mistake...
IPG, OMC and WPP have
run up a large credibility debt by refusing to face the
press in press conferences for many years. Analysts
are blocked from face-to-face meetings by the practice of
WPP, in its 31-page
2003 financial report of blinding complexity, refers to
"average net debt," a rolling figure that
changes all the time based on influx of client money. Ad
agencies generate huge amounts of funds they re supposed
to pass on quickly to the media. There can be large swings
in year-end cash and therefore, the size of "net debt,"
analysts point out. The opening page of the WPP report makes
no mention of debt, which at $3.21 billion (says Yahoo),
is the biggest of the Big Three. Instead, we get "headline
operating profits," "headline profit," and
"profit before tax" along with the "reported
diluted earnings per share up 136%"...
The WPP (and IPG and
OMC) reports are one long argument to see things "their
way." Lehman Brothers (8/28/02 NL) rapped WPP
on a half dozen counts, saying it disagrees with the way
WPP figures its debt, earnings, return on capital, and free
cash flow (FCF should have been "zero" in 2001
and not the 504 million pounds claimed.) WPP spends 150-200
million pounds yearly on share buybacks that are used to
pay staff, meaning this should be a staff cost, not a buyback,
says Lehman...the complexity dodge is a favorite tool of
the big CPA firms. The "intricate" tax-dodging
(legal) and tax-evading (illegal) schemes of KPMG, Ernst
& Young and PricewaterhouseCoopers are under investigation
by the IRS, said a front page Feb. 25 Wall Street Journal
story. The schemes, "close to the murky line separating
permissible from fraudulent tax shelters," were produced
in "high volumes" and "marketed with techniques
usually associated with credit cards," said the WSJ...
Newsweek's Allan Sloan
had the best take on the Martha Stewart conviction.
If you re pulled over by a cop who says you were doing 70
and you answered you were doing 50, you could go to jail
if someone in the car says you told them you were doing
70. You have lied and "obstructed justice" even
though the incident was of little consequence. No adult
would get off if the feds went after them the way they went
after Stewart, Sloan says. Stewart, the victim of poor legal
advice, spoke too much at the beginning and not enough at
the end (when she should have taken the stand in her own
defense). We hope this case will not be cited as a reason
to avoid speaking out in public. Subjects have to know when
to talk and when to be silent...
The 20 PR units of
advertising agencies ranked by O'Dwyer's show that ad agency
units can supply client lists, payroll totals and
employment figures if they want to. Appearing on ranking
tables is one of the best ways ad agency PR units can market
themselves. The nearly 50 PR units owned by the ad conglomerates,
in following orders not to release any statistics, have
abandoned a major marketing tool.