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Internet Edition, July 21, 2004, Page 1

The U.S. Dept. of Agriculture's Food, Nutrition and Consumer Service unit has selected Porter Novelli to revise its Food Guide Pyramid program.

Seven PR firms responded to the RFP. PN edged Fleishman-Hillard and Hill & Knowlton for the account that is worth $1.6 million for the initial "task order."

Patsy Palmer, chief contracts officer, told O Dwyer's that more USDA money may flow PN's way as additional task orders may be assigned to the firm through July 6, '07.

PN is charged with developing a new food guidance system to help today's carb-conscious and obesity-aware consumers make healthy eating decisions. The updated Pyramid is due next year.

PN developed the Pyramid in `91 to represent the principles of balance, variety and moderation. The PR firm claims the Pyramid is one of the most recognizable symbols in the U.S.

Rob Gould, general manager of PN's Washington, D.C., office, called the new food guidance account a "landmark" win.

Old Navy has put its PR account up for review because the San Francisco unit of the Gap Inc. wants to take a fresh look at its communications efforts, Dan Orsborn, senior partner at Select Resources International, told O'Dwyer's.

Orsborn, who heads the review, said much has changed since DeVries PR won the Old Navy account in `99. The retailer, which opened its first stores in `94, now has more than 800 outlets.

Orsborn gave DeVries good marks for PR, and expects the Interpublic unit to defend the account.
He would not give the size of the Old Navy budget, other than to say that it represents a "significant" chunk of money and will be national in scope for the firm that promises to deliver "break-through" communications.

Madeline deVries has yet to be reached.
Orsborn is at 310/453-9200.


WPP Group's Martin Sorrell has asked Merrill Lynch to do due diligence on the books of Grey Global Group. JP Morgan and Goldman Sachs are Grey's investment bankers.

The move comes as Publicis Groupe CEO Maurice Levy pulled out of the acquisition sweepstakes of the New York-based ad/PR shop.

Levy told Le Figaro that Publicis could well afford the $1.3 billion price tag on GGG, but such a deal did not make strategic sense. "Deals should not be made just to move up the world rankings," he said. Levy added that he is happy that Publicis is a solid No. 4, well above rival Havas.

Levy, a personal friend of GGG CEO Ed Meyer, said he had been interested in doing a deal for GGG prior to his firm's acquisition of Bcom3. The Frenchman said he would take a look at pieces of GGG in the event that it decides to auction off its businesses.

Cohn & Wolfe has edged six competitors to handle PR for Spirit Airlines, the Ft. Lauderdale-based low-fare airline which is the country's No. 14 carrier.

Bennett & Co., based in Altamonte Springs, Fla., had the account and Edelman was a finalist against C&W.

Liz Beck, senior VP and managing director of C&W's consumer practice, heads the account, based in New York. The firm noted key team members as Robert Downling, senior VP and MD of the firm's corporate group, and SVP Jeremy Baka.

Spirit, which flies to 16 cities and is privately held, sold $450M worth of tickets last year.

C&W is charged with helping the carrier attract both leisure and business fares and with kicking off a national media relations campaign.

In a statement, Spirit's senior director of marketing and communications, Lynne Koreman, touted C&W's branding and creative experience, as well as its corporate work.

Internet Edition, July 21, 2004, Page 2


Fleishman-Hillard was blasted in a lengthy Los Angeles Times article July 15 with overbilling allegations by seven former Los Angeles staffers over its controversial work for the city's Department of Water and Power.

A day after the piece ran -- the firm put Doug Dowie, who headed the Los Angeles office at the time in question -- on paid leave until an internal investigation of the overbilling charges is concluded.
The firm is under investigation by county and federal authorities after an audit questioned bills and "pay-to-play" charges surfaced because of F-H's ties to the city's mayor, James Hahn.

The Los Angeles Daily News reported July 16 that city attorney Rocky Delgadillo will file a suit claiming F-H defrauded the city. The attorney's inquiry found what "appears to be far more than sloppy billing," according to a spokesman. "It appears to be outright fraud against the ratepayers."

Richard Kline, F-H western region president, said the firm is telling employees and the press that it does not accept or condone the type of behavior alleged in the reports. "We take these allegations seriously and are investigating them," he told O'Dwyer's.

Diana Greenwood, daughter of former L.A. Times editor Noel Greenwood and a year-long F-H staffer on the DWP account in '99, told the Times practices like submitting false time sheets were "wrong, unethical and done on a regular basis" at F-H.

F-H, which has hired a libel lawyer, said the charges go against company policy and are now being investigated. If there is wrongdoing, Kline said, "aggressive, appropriate steps will be taken."

The Kurdish Democratic Party has retained Barbour Griffith & Rogers as its lobbyist to ensure that Iraqi Kurdistan maintains its autonomy from Baghdad in the new Iraq Government.

The four million Kurds–protected by U.S. and British fighter jets–have enjoyed self-rule from Saddam Hussein's regime since the end of the Persian Gulf War in 1991.

The Kurds, who comprise 20 percent of Iraq's 25 million population, fear they will lose their quasi-independence if democracy comes to Iraq. The Shiites account for 60 percent of Iraq's people.

The KDP also wants the return of oil-rich Kirkuk --which Saddam Hussein had "Arabized" as the capital of the region -- to Kurdistan. The city lies just outside the boundary of Kurdistan.

"This issue is a time bomb," Massoud Barzani, leader of the KDP, told the Washington Post July 11.

The KDP and the Patriotic Union of Kurdistan field an army of 70,000 fighters, which is twice the amount of the planned Iraqi army.

BG&R chairman Ed Rogers, who was deputy assistant to the first President Bush, is KDP's chief lobbyist. He is assisted by Keith Schuette, a founder of the International Republican Institute.

Robbie Vorhaus, founder and president of New York-based Vorhaus & Co., has shut down the firm as a PR agency, resigned its consumer accounts and is changing the business model to a virtual consulting company.

"It got to the point where it wasn t fun anymore," he told O'Dwyer's, citing several reasons for the move, including spending more time with his young children and the industry climate of the last few years. "People like Lou Capozzi [of MS&L], Margie Booth [M Booth & Assocs.], Amy Binder [RF Binder & Partners] and Ray Kotcher [Ketchum], to name a few, come from PR and are born to do this. I came out of working for Dan Rather." Vorhaus added he has resigned from the Council of PR Firms.

"We ve been at the lowest levels of people since I started the firm fifteen years ago," he said. "We had the dot-com boom, Y2K, the dot-com crash and 9/11, all in the last ten years, and the business hasn't really recovered ... After everyone got over the initial shock, I think they understood, for the most part, why I made this decision to transition the agency."

The firm's staff of about 20 was alerted to the move two months ago. He said a few staffers will remain aboard on a contract basis as the company works on various consulting projects.

Clients of the firm included Domino's (which has put out an RFP for the work), Lipton, Russell Stover, and Unilever's Bertolli brand.

Vorhaus said he is in talks with CNN to make more appearances, is working on a book and producing a movie.

"I began to feel like I was living someone else's life," he said. "People ask me, ‘Do you feel badly now that you didn t sell to a larger agency and work for them when you had the chance? It's clear to me, that [kind of] life was and is not for me."


M Booth & Assocs. has landed a three-year, six-figure pact to promote gourmet food and beverage brands from European Union countries in the U.S.

The E.U.-backed campaign, funded by a consortium of trade groups from France, Italy, Portugal and Spain, is the first of its kind to band together brands from different countries to be promoted by category, rather than individually, said Joan Bloom, co-director of M Booth's lifestyle and travel group.
Wines (Spain), cheeses (Portugal), olives and olive oils (France), meat products (Italy), pasta and desserts, and vegetables/specialty products are the six culinary categories 39 participating companies fall into for the campaign.

Bloom told O'Dwyer's M Booth beat out three or four finalists in a review, after being recommended for the project. Madrid-based marketing consultancy Arum is co-ordinating the multi-year campaign on the European side.

Bloom heads with account with Joan Brower, also co-director of the lifestyle unit.

Internet Edition, July 21, 2004, Page 3


A new TV network aimed at the coveted 18-24 age demographic, whose disposable income is estimated at more than $200 billion annually, will make its debut on U.S., U.K. and Canadian college campuses this September.

The U Network (TUN), which features programming from student artists, will provide a variety of shows ranging from drama, comedy, music, art and politics. It will also feature the first national collegiate news show.

The network already has a commitment from 100+ campuses representing over 11 million viewers, and additional contracts are being signed daily.

"We will quickly become the minor league to the entertainment industry," says TUN founder/CEO Shane Walker. "Film festivals don t give student artists the exposure they deserve. The U Network will bring this untapped talent to the industry, the public and to the students peers worldwide," he told O'Dwyer's .

He said about half of TUN's in-house programming will be co-produced with college students majoring in film or TV. The other half of the network's shows are produced completely by college students.

"Our programming is free to all colleges and universities and is of the highest standards and quality," said Walker. "In every focus group we held, the students were extremely dissatisfied with the options they had for TV programming. We intend to change that," he said.

Walker said TUN is receiving work from students all over the world. "You name it; they are producing it -- short films, feature films, digital animation, documentaries, experimental, music videos, dance and even cutting-edge theater," he said.

The network, a privately held corporation, will air on college channels that reach the university and most surrounding communities.

The complete slate of programs is available on the network's website (

TUN will hold a news conference in September in Washington, D.C., to unveil more plans and programming.

Aside from its Muncie, Ind., headquarters, it has a Washington, D.C., bureau in Leesburg, Va., and is opening production studios in Orlando, Fla., and a European office in London.

PR for TUN is handled by Phil Kent and Dave Scott, who run 815 Communications, Atlanta.


About 45 employees in the operations and editorial department have accepted voluntary buyout offers at Newsday, according to publisher Ray Jansen.

The cutback includes 17 editorial staffers, including Fred Bruning, a feature writer; Leslie Davis, foreign editor; Bob Fresco, reporter; Dave Behrens, "Part II" features writer; Phineas Fiske, editorial writer, and Bill Zimmerman, editor of the "Student Briefing" page.

The Long Island, N.Y.-based daily newspaper, which is owned by The Tribune Co., Chicago, recently put its top circulation executive, Robert Brennan, on administrative leave after it was revealed the paper's circulation had been overstated.

Newsday employs about 3,000 full- and part-timers.


Thompson Corp. and websites for the Washington Post and Newsweek are collaborating on a web-based advertorial section focused on medical research and clinical trials.

The so-called Clinical Trials Center will be hosted on and, and is billed as a site for those interested in participating in trials. The companies point out that lack of volunteers remains the single largest obstacle to bringing new therapies to market. They believe a combination of advertorials and a targeted ad campaign on both news sites will attract participants.

Three sponsored subsections include FAQ, "Recruiting This Week," and a customized, state-by-state paid listing of trials from Thompson's CenterWatch.

Ogilvy PR Worldwide last month aligned more closely with London-based WPP Group sister firm Shire Health Group to set up a unit to attract trial participants for companies.

Your Diet, a special issue published by People magazine, which recently went on newsstands, may be published four times next year by Time Inc. as a standalone magazine if reader response is strong.

Elizabeth Sporkin, People's assistant managing editor for special issues, is editor of YD, which has articles about dieting and weight loss.

The Kansas City Kansan's new publisher and editor, Kim Sexton, made a promise to use every resource available at the newspaper to "create an intense interest in the products and services" that both advertisers and non-advertisers provide in the Greater Kansas City area.

"The power of the press can help business if wisely used," said Sexton, who pledged to do what "I can with my pen to help."

Sexton ([email protected]) is interested in getting ideas for making things better in the area.

Jason Pontin, 37, former editor of Red Herring and The Acumen Journal, was named editor-in-chief of Technology Review, the emerging technologies magazine published by Massachusetts Institute of Technology in Cambridge. He succeeds Robert Buderi, who becomes editor-at-large.

(Media news continued on next page)

Internet Edition, July 21, 2004, Page 4

The Wall Street Journal wants to speak to "decision makers," Atlanta bureau chief Doug Blackmon told 250 at a joint meeting of the Georgia chapter of PRSA and the Atlanta Press Club June 29.

Blackmon said the WSJ wants to deal with those who can speak substantially on a topic.

He urged the PR people present not to be afraid of the WSJ, saying it does a number of "softball" profiles of companies and executives that pose no threat to the subjects.

He said that sometimes a company may still be smarting from a negative story by a news medium and then avoids this medium for too long a time.

Blackmon said that while other factors may be involved, the chief factor is bound to be money.
He cautioned PR pros not to pretend they know things when they don't.

Jackson Describes Crisis

Glen Jackson, principal of Jackson Spalding, told how his firm handled PR on a salmonella outbreak at a Golden Corral restaurant.

The program included a press tour of the kitchen before customers arrived. Restaurant executive Charles Winston explained what had been done while the restaurant was closed.

Dana Tofig, education editor of the Atlanta Journal-Constitution, said company leaders may be in control of situations although they often think the media may control a story.

He advised honesty, knowing deadlines and knowing the different needs of TV.

More attention should be given to newspapers in a crisis, he advised, because they have the resources and space to do more coverage.

Counselor Lee Echols said assessing the situation accurately is the most important task in dealing with a crisis. Honesty, speed and solution are the three basic elements of a crisis plan, he added.

Tim Donahue, senior counselor of Porter Novelli, talked about the firm's work for Delta Air Lines.

Crisis plans are worthless unless they have been tested, he said. The CEO must be visible and available in a crisis, said Donahue.

The panelists advised companies not to run in the case of a crisis. Agency people should not allow themselves to be used as "pawns" by clients who don't want to tell the truth, was other advice that was given.

The Chicago Sun-Times, Newsday and Hoy have been censured and sanctioned by the Audit Bureau of Circulations for "fraudulent" circumvention of the organization's bylaws.

As a result, the papers are subject to more frequent audits over the next two years -- every six months, rather than annually -- and the publications figures will be excluded from ABC's influential reports of "top-line" circulation claims for one year.

The papers are also required to submit a plan of action for correcting their practices.

The ABC's board issued a statement saying the group and industry "do not tolerate rules circumvention, to say nothing of fraud."

Newsday and Hoy are published by Tribune Co. and the Sun-Times is put out by Hollinger International. The publications said last month that their circulation figures were intentionally inflated and their parent companies face lawsuits from advertisers.

Advertising Age reported July 12 that Ziff Davis Media overstated paid circulation for PC Magazine in 2002 and 2003. ZD says it follows reporting rules "to the letter."


Newspaper industry salaries have continued an upward trend in 2004, although not at the pace of 2003, according to the annual Newspaper Industry Compensation Survey. In data compiled from 502 daily papers, the survey, administered by the Inland Press Assn., found entry level reporters salaries increased 2.1 percent from the year before (the jump was 6.8 percent from 2002-03), while experienced writers saw a 2.8 percent hike and 2.9 percent jump in total compensation. That's compared with 7.1% last year.

Since 1995, experienced reporters have seen annual increases on average of 3.86 percent. Managing editors reaped a 5.8 percent boost in total pay.

Graphic artists at papers took the biggest hit in 2004, with a 5.7 percent decline from 2003, while national ad sales reps enjoyed a 9.1 percent boost.


Consumer confusion runs rampant in the technology sector, with terms like DVR, WiFi and megapixels leaving buyers at a loss for explanations. A new study by The Yankee Group and Parade magazine found, for example, while 16 percent of consumers think they own a digital video recorder, or DVR, only four percent actually do.

Seventy-one percent say they could explain a DVR to a friend, but only 36 percent say they could explain a TiVo, which is a DVR.

Parade GM Lamar Graham, a former technology columnist for the magazine, sees Americans having a ton of choices without information on those options, a problem he calls "digital confusion."

Plasma TVs and computers topped consumers wish lists, followed by HDTV, digital cameras and DVD players.

AWARD: The New York Festivals 2005 International TV Programming & Promotion Awards Competition is taking entries (domestic deadline is July 30; international deadline is Sept. 17, 2004).

The awards recognize the "World's Best Work" in news, documentaries, infomercials, promotion spots, music videos and more. Info.:

Internet Edition, July 21, 2004, Page 7


The Whoopi Goldberg/Slim-Fast dust-up was the talk of the Entertainment Publicists Professional Society-PR Newswire sponsored summer mixer in Los Angeles on July 15. Here is a sampling of comments:

"I think celebrities should be commenting on political issues if they feel strongly about it, however, if they have any endorsement deals that could be at risk as a result of them speaking up, then they may want to think twice," said Rita Tateel, president of Celebrity Source.

"Since political figures comment on celebrities, why can t celebrities talk about politicians?" asked publicist Lauren Rosenberg. "That's what makes this country great. Everyone has an opinion."

"Celebrities are people, they have a voice and they can say whatever they want to say," said president Scott Pansky, of EPPS. "They obviously have their own image they have to consider when they decide to speak about an issue."

"I think it's good only if they re informed," said Bobby Mardis, Fat Chance Films."If they re not informed about the issues, I think it's bad, because it may influence their audience who don t really know the issues, but they like Whoopi Goldberg."

"We have a celebrity who is currently the governor of California. We had a celebrity who was president. The only time people seem to be aggravated is when liberal celebrities voice their opinions," said Eileen Salmas, Media Distribution Services.

"I think too much attention is paid to the issue," said Rachel Parker, manager-media relations, Market Wire LA. "Anyone who has spent their life in the public eye has the right to use that influence if they choose to."

"Yes celebrities should be allowed to comment on political issues, because they re individuals just like anyone else and they re entitled to an opinion," said Lisa Holt, Business Wire, Los Angeles.

The lawsuit of Elizabeth Allan, former CEO of the International Assn. of Business Communicators, against IABC and former interim president Louis C. Williams and his firm, also names 20 "John Doe" defendants whose actual names are as yet unstated.

At least some of them appear to be IABC employees since the suit says the John Does "heard" words that were "slanderous" and that were spoken "both within and outside the workplace of defendants."

The entire lawsuit, including the texts of nearly 80 filings since May 1, 2003, is accessible on the website of the San Francisco Superior Court at

IABC has issued no press release on this lawsuit.

David Kistle, SVP, Padilla Speer Beardsley, and chair of IABC, could not be reached for comment. Julie Freeman, president/CEO of IABC, and Heidi Upton, PR manager, said IABC's law firm of Bragg & Dziesinski, has ordered silence on the matter.

The Amelia Island Tourist Board has awarded its estimated $800K ad/PR account to Virginia Beach-based BCF, Regina Duncan, president of the Amelia Island-Fernandina Beach-Yulee Chamber of Commerce, told O'Dwyer's . She said BCF beat incumbent St. John & Partners, Zimmerman Agency, and Jacksonville-based PR counselor Robin Shephard. Six of the 29 agencies that submitted their qualifications were asked to present.

Duncan said BCF's budget is based on 65 percent of hotel bed tax revenues, which amounted to $1.3 million last year. "We hope to get a bigger promotion budget this year," said Duncan.

Amelia Island is a barrier island off the coast of northeast Florida that was settled by the French in 1562 and developed by the Spanish. It boasts of 13 miles of beaches, 40-ft. sand dunes, golf, tennis, fishing, sailing and a Victorian seaport village.

BCF is to pitch Amelia Island as a year-round destination for leisure travellers and for group business meetings. The firm's travel experience includes work for Virginia Beach Convention & Visitors Bureau, Pocono Mountains and U.S. Virgin Islands.


Lee Lynch, who was deputy practice leader of Hill & Knowlton's health policy group, has moved to Edelman PR Worldwide to head its just-created health ally development unit. She is based in Washington, D.C., and reports to Peter Segall, general manager of the health policy and PA practice.

Lynch, before joining H&K in `02, was VP in Ogilvy PR's health & medical practice.


Harvard University is relying on Kekst & Co. to press its PR case against the No. 4 Russian energy company, which the school claims is bilking shareholders of dividend payouts.

The university says it is owed nearly $4 million in dividends from JSC Surgutneftegaz (Surgut). The university has invested $130M in Surgut's American Depositary Receipts representing preferred shares.

Harvard has filed a complaint with the American Arbitration Assn. on behalf of holders of Surgut's preferred shares. It charges that Surgut has shortchanged preferred shareholders $400M in dividends over the past six years.

Surgut management, alleges Harvard, denies preferred shareholders 80 percent of their rightful dividends because it claims that it would be an inefficient use of capital due to its shaky financial condition.

Its executives brush off Harvard's charges, recommending that its officials are misinformed about Surgut's dividend policies.

The New York Times, on July 3, called the Harvard/Surgut face-off an important test case of the rights of minority shareholders in Russian companies.

Kekst's Todd Fogarty and Kimberly Kriger represent Harvard.

Internet Edition, July 21, 2004 Page 8



The lawsuit promised against Fleishman-Hillard on grounds that it falsely billed the L.A. Dept. of Water & Power (page 2) will focus a lot of attention on the practices of PR firms.

Somebody is lying in this case and a courtroom is the place to determine who the liars are.

F-H exec Richard Kline quotes unnamed staffers as saying the charges of false billing are "unfounded and untrue."

Meanwhile, former staffer Diana Greenwood insists they are true and at least eight other as yet unnamed present or former F-H employees back her up.

A code of silence permeates the business world because anyone who speaks out can usually kiss their careers goodbye.

However, songbirds did come out of the nest at Enron, Worldcom and other companies with great effect. A few songbirds spelled doom for Arthur Andersen, which had 70,000 employees.

PR firms that get too much notoriety risk their futures.

For instance, Hill & Knowlton, the pinnacle of PR counseling for decades, took on too many of the wrong accounts in the 1980s and suffered for it.

These included the Bank of Credit & Commerce, nicknamed the "Bank of Crooks & Criminals"; "Citizens for a Free Kuwait" (99% funded by the Government of Kuwait); Scientologists, and the Catholic Bishops Council (for an anti-abortion drive that infuriated many of H&K's employees and made the firm the target of pro-choice groups).

If you want to understand what's going on here, look not to F-H but to its parent, Omnicom.

OMC and the other conglomerates are manic about max hours being billed out to clients.

F-H execs have got to "make their numbers" or face severe consequences.

The PR portions of the congloms are their worst- performing elements, according to their SEC filings.

Former employees of F-H told the Los Angeles Times there was "intense pressure" to fill out time sheets to the max allowed by the DWP even if all the hours had not been used.

PR units of Shandwick used to complain they had been "Slobomized," meaning Tony Slobom, CFO based in London, visited them and gave them the 25-25-25 drill (25% growth each year, 25% profits and 25 days on receivables). It was a punishing pace that caused many of the firms execs simply to quit. Their units were then merged with others until the 35 PR firms purchased by Shandwick had been crushed to about three (in spite of promises to keep all their names, staffs and cultures).

OMC, despite more than 40 quarters in a row of higher revenues and profits, is $69 a share or nearly $40 lower than its $107 high of late 2001.
No doubt OMC puts enormous pressure on its PR units to produce profits which it desperately needs.
OMC depends heavily on acquisitions to meet its own profit and revenue goals. It usually spends $800M+ yearly on such purchases although it cut back to $472M last year.

But its debt is now $2.61B (debt to equity ratio of .72) and $2.3B of that is in contingent convertible (CoCo) bonds whose underlying shares may have to be counted in per-share earnings.

Bloomberg specifically mentions General Motors and OMC as two companies with high CoCo bond debt.

The obsession with counting "hours" is something that amuses veteran PR counselors.

Before the dominance of "beancounters" at PR firms, the principal measurement was results.

"PR is best measured by the month," one said. "You have a monthly budget and you must get a certain number of placements, set up a certain number of events, write speeches, get photos published, etc., and the client is happy." Rough time sheets were kept for internal purposes only to guard against too much time on one account.

"We were hired for our 'flashes of genius and our 'creative sparks, not for piling up hours on researching media lists or planning an event," said one veteran.

"We didn t need to compile lists of editors because they were our friends that we had cultivated over the years .. .we served as 'story brokers' for reporters, calling them only when we had a good story," said another veteran.

The emphasis on hours-counting as the basis for billing has led PR away from the creativity that can catapult a client to national or local prominence for a comparatively low price and towards work that is more readily measured by time.

The lawsuit involving IABC, former paid president Lou Williams and ex-CEO Elizabeth Allan (page 7) is similar to the Fleishman-Hillard imbroglio in that a courtroom is where the truth about highly secretive doings may finally come out. IABC has abused the faith and trust of its members by hiding this lawsuit from them. The secretive, association-dominated culture of IABC must go. The culture of secrecy helped cause the $1 million loss on its failed TalkingBusinessNow website that is the root of the lawsuit. IABC members should read about this suit on the San Francisco Superior Court site (, case No. 419976).

The's .F. Court is a leader in making its proceedings open to the public via the web at no charge.

It's O.K. for IABC to demand that leaders and members not talk about this suit. But it should also urge them to read all about it. The courts of America are meant to be open to the public.

-- Jack O'Dwyer


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