Edition, Aug. 4, 2004, Page 1
LIBYA SIGNS $1.2M PR PACT.
Libya, which says
it has junked its weapons of mass destruction program for
better ties with the U.S., has given Fahmy Hudome International
a $1.2 million one-year pact to improve that nascent diplomatic
Fahmy Hudome, who served as Associate Deputy Secretary of
Energy in the current Bush White House, heads FHI. She began
the Libyan work on July 1, the one-year anniversary date
of FHI's incorporation.
will approach U.S. Government officials, think tanks, "influentials,"
and NGOs on behalf of Col. Muammar al-Qaddafi's regime.
is to "advance U.S.-Libyan relations, visibility, credibility,
rapprochement and normalization," according to her
Hazleton joins Hudome at FHI as an associate. She worked
in Spencer Abraham's Michigan office when he was Michigan's
told O Dwyer's she could not comment on FHI's client work.
FHI's contract with Libya includes a $265K office set-up
cost. That covers a $200K initial consulting fee, $30K office
fit-out, $25K for equipment and $10K for stationery and
H&K SPEAKS UP
FOR ATA AIRLINES.
ATA Airlines, the nation's No. 10 carrier, has hired Hill
& Knowlton because it "wasn t getting its share
of voice" in the cutthroat airline market, Vicki Higgins,
director of market development, told O'Dwyer's . "As
a low-cost carrier, we had handled PR internally,"
Indianapolis-based ATA, however, felt a need to step up
its presence in priority markets, such as New York, Chicago,
Los Angeles and San Francisco.
Higgins, who said ATA considered a "long list"
of PR firms for its account, would not give a budget figure.
ATA lost $64 million on $387 million in first-quarter revenues.
The company anticipates second-quarter red ink because of
a decline in military charters that were needed last year
to support the Iraq invasion.
H&K/New York is responsible for ATA's corporate positioning,
media rels., IR and consumer promos.
Anne Fetsch, advertising
director of PR Society of America and with PRSA 15+
years, has left the staff. PRSA refused to comment. John
Robinson and Gale Spreter now comprise the marketing department.
GRAHAM OUTLINES F-H
Fleishman-Hillard has tightened its time sheet certification
measures, plans to set up a whistle-blower hotline and has
hired an outside "ethics expert," amid allegations
it overbilled the city of Los Angeles for PR work. CEO John
Graham, in an e-mail to staff that was distributed to the
press July 29, said he will personally meet with the firm's
California staff and plans to schedule conference calls
with each of the company's offices and affiliates.
The firm is conducting an internal probe alongside of a
joint local-federal probe into its work for the Department
of Water and Power and political contributions to Los Angeles
Graham said in the e-mail that F-H will eliminate all contributions
of corporate funds to candidates or ballot issues and has
instituted a three-part approval process for any solicitation
of political donations from F-H employees or the firm itself.
The firm is also overhauling its process for departing
staffers, putting responsibility for all exit interviews
in the hands of talent department liaisons in its St. Louis
GolinHarris has named
Eric Lochner EVP and operations director of its southeastern
region. The former VP at CareerBuilder.com is based in Washington,
D.C., where he will focus on business development.
The Chicago-based unit of Interpublic is sporting a new
logo these days. The firm has dropped both the slanted line
between Golin and Harris, and the word "international"
from the corporate moniker. A new website is in the works
at the 48-year-old company.
Edition, Aug. 4, 2004, Page 2
MALONEY & FOX
TRIES ON WONDERBRA.
Wonderbra has selected Maloney & Fox, New York, to handle
the celebration of its 10th anniversary.
Marina Maher Communications had launched Wonderbra, a part
of Sara Lee Corp.'s Hanes unit, with great fanfare, earning
it a PRSA Silver Anvil.
Ken Jacobs, who joined M&F last year, is senior counselor
on the account. He had worked on Wonderbra when it was at
MMC along with fellow M&F staffer Mona St. Leger.
Marina Maher told O Dwyer's that her firm handled the launch
of Wonderbra's Spring `03 line, but then Sara Lee Corp.'s
new management team decided to bring PR in-house.
MMC, said Maher, was later asked to pitch for the 10th
anniversary campaign, but the firm declined to participate.
"I recommended Ken," she said. Weber Shandwick,
which has Sara Lee brands, also pitched.
M&F is a unit of Waggener Edstrom.
BOOTH GETS E-COMMERC
E TRADE WORK.
M Booth Assocs. has picked up the PR account for the Merchant
Risk Council, a group set up by retailers with an online
presence to encourage consumers to buy goods over the Internet.
Booth was referred for the work by client American Express,
which is on the board of the MRC. Backers include Apple,
Yahoo!, Expedia, Best Buy and a swath of other vendors and
financial institutions (it counts 6,500 members).
"The goal is to get out the word that e-commerce is
actually safer than traditional shopping," said sr.
A/E Matt Hantz. MRC contends that many online merchants
have more safeguards than traditional retailers.
The combine also works with the FBI, Secret Service and
U.S. Postal Inspectors to track down cyber criminals.
APCO TOUTS INDONESIA.
APCO Worldwide is spreading the word that Indonesia, the
world's most populous Muslim nation, is a staunch U.S. ally
committed to combating terrorism.
Barry Schumacher, who handles the Indonesia account, told
O Dwyer's that APCO will arrange a trip for Indonesian notables
to Washington, D.C., following the country's presidential
vote run-off on Sept. 20.
APCO will set up meetings with people on Capitol Hill,
and conduct media outreach for its client. The group will
talk about diplomatic ties, democratic reform and cooperation
on the terror front, Schumacher said.
Indonesia's anti-terror image received a jolt on July 22
when a court ruled unconstitutional a law used to convict
more than 30 people for the Oct. `02 bombing of a Bali nightclub
that killed 202 people.
COHEN JOINS COHN &
Barbara Cohen, who has more than 20 years of consumer PR
experience, has been named senior VP at Cohn & Wolfe.
She reports to Liz Beck, managing director of the New York
Cohen was senior VP at Cairns & Assocs., handling Swarovski
Crystal, Snuggle Fabric Softener and Universal Studio's
At Ogilvy PR, Cohen was responsible for Perrier Group,
Coca-Cola, BP and Panasonic Batteries.
Cohen spent a decade at Ketchum, where she helped snag
a PRSA Silver Anvil for Dole Food's campaign promoting consumption
of five helpings of fruit and vegetables a day. She also
ran "The Art of Ketchup" program for Heinz USA.
IABC's KISTLE URGES
"Communication with members and leaders needs to be
timely, two-way, frequent, open, trustworthy and credible,"
said IABC chair David Kistle of Padilla Speer Beardsley
in the July/August Communication World.
Kistle, when told it appears these principles weren t followed
when IABC was sued by its former CEO Elizabeth Allan May
1, 2003, said they don't apply in a lawsuit.
IABC staffers and leaders didn t tell the full board about
the suit until January, 2004. Members were told in early
A trial is set for November. Also being sued is ex-acting
president Louis Williams.
IABC on July 28 filed a reply to the third amended complaint
of Allan in which she charged that Williams made defamatory
remarks about her while working at the h.q. of IABC in San
Francisco from January to June, 2001. Allan is seeking copies
of e-mails by Williams to the entire membership as well
as 8,000 individual e-mails he said he sent.
The reply again denies culpability by IABC and says that
any problems that came up at IABC were created by Allan
Kistle said he and other IABC leaders are following the
advice of lawyers in not discussing the case. He said he
believes in good communication as he defined it in CW but
that litigation is "an exception."
He spent seven days recently traveling in the Far East
in behalf of IABC, visiting Bangkok, where a new chapter
is being formed, and Kuala Lumpur, where there was a conference
The Ragan Report, which had two pages on the lawsuit
July 12, said it will now only cover "major developments."
Contributing editor Dave Murray wrote July 19 that, "No
matter how good a legal case Allan has against IABC and
Williams, this episode is only going to make everybody unhappy"
and that "any monetary award Allan receives can t possibly
make up for the humiliation she claims to have felt over
Williams' remarks at an industry conference session."
Murray feels "the whole thing is dismal and unpleasant
to write about." A discussion of the case on the members-only
"MemberSpeak" chatroom on the IABC website had
drawn a record 748 views as of Aug. 2.
GOLFING ACROSS MONGOLIA.
Atamira Communications is handling PR for Andre Tolme, the
35-year-old civil engineer from New Hampshire who has just
golfed across Mongolia.
Tolme divided the treeless steppes of Mongolia into 18 holes.
He figured par was 11,800 for the 2.3 million yard course.
That's equal to the distance between New York and Oklahoma
Using only a three iron, Tolme played "the front nine"
last summer, and completed "the back nine" two
weeks ago. He shot a 12,170.
Tolme has told various media that he golfed Mongolia because
he wanted to.
He described his strategy to New York Times sportswriter
Dave Anderson as you hit the ball, go find it and then hit
it again. He lost 509 balls.
Tolme traveled with a Mongolian caddie in a jeep stocked
with food, water and a tent.
Atamira, which is in Atlanta, will handle a media tour
and sponsorship opportunities for Tolme.
He appeared on "The Today Show," and will be
on "The Tonight Show with Jay Leno" on Aug. 4.
Atamira also handles book and movie rights.
Edition, Aug. 4, 2004, Page 3
'LIBERAL BIA' FOUND
IN NY TIMES.
The New York Times public editor has sided with individuals
who believe the newspaper's liberal viewpoint has resulted
in one-sided coverage of many issues, especially gay rights,
gun control, abortion and environmental regulation.
"The fattest file on my hard drive is jammed with
letters from the disappointed, the dismayed and the irate
who find in this newspaper a liberal bias that infects not
just political coverage but a range of issues from abortion
to zoology to the appointment of an admitted Democrat to
be its watchdog," said Daniel Okrent, who acts as the
reader's representative, in his July 25 Sunday column. "If
you think the Times plays it down the middle on any of them,
you ve been reading the paper with your eyes closed,"
He said newspapers have the right to decide what's important
and what's not. But their editors must also expect that
some readers will think: "`This does not represent
me or my interests. In fact, it represents my enemy. So
is it any wonder that the offended or befuddled reader might
consider everything else in the paperincluding, say,
campaign coveragesuspicious as well?," he wrote.
Okrent said Times publisher Arthur Sulzberger Jr. defends
the paper's liberal viewpoint as being "urban."
"He says that the tumultuous, polygot metropolitan
environment the Times occupies means `We re less easily
shocked, and that the paper reflects `a value system that
recognizes the power of flexibility, " wrote Okrent.
Okrent said many also believe the news pages cannot retain
their credibility unless all aspects of an issue are subject
to robust examination.
For example, he said it is "disappointing to see the
Times present the social and cultural aspects of same-sex
marriage in a tone that approaches cheerleading." He
pointed out the "potentially nettlesome effects of
gay marriage" have been virtually absent from the Times
since the issue exploded last winter.
FOX NEWS BLACKLISTS JOURNALISTS.
Fox News Channel's media relations department is blacklisting
journalists who write negative things about the network,
according to Alec Ben Block, a reporter for TV Week.
David Bauder, a TV reporter in New York for The Associated
Press, who has reported on FNC regularly, got cooperation
until he published an article about Paula Zahn, who had
quit Fox to join CNN.
"Why we re not dealing with him is that he treated
us completely unfairly," Irena Briganti, an FNC publicist,
was quoted as saying. "He took a story, when we were
just doing our job, being a resource, and made (the Fox
publicist) a part of the story."
Mike James, who operates NewsBlue, a TV news industry website,
has also been blacklisted for calling an FNC anchor a "bonehead"
in his publication.
David Folkenflik, a media reporter for The Baltimore
Sun, was blacklisted three years ago for pointing out
that FNC correspondent Geraldo Rivera was not at the scene
of a battle in Afghanistan when he claimed he was. He was
"Media relations people are not servants to the media,"
FNC publicist Robert Zimmerman told TV Week, adding, "You
know, everyone tries to hold us accountable. The reporters
should be held accountable for what they do. A lot of media
relations people won t do that. Well, we do."
Figure, a lifestyle magazine aimed at plus-size women,
is switching from quarterly to bimonthly publication next
The year-old magazine has reached its targeted circulation
rate base of 400,000 copies, according to Geri Brin, Figure's
Backed by Charming Shoppes, the Pennsylvania-based retailer,
the magazine is sold on select newsstands and at its parent
company's Lane Bryant, Fashion Bug and Catherines stores.
Mode, which tried to carve a niche out of the plus-size
market, ceased publication in 2001 after five years, and
Grace went out of business last fall after about
18 months on newsstands.
GETS A FACELIFT.
Vegetarian Times is being relaunched by Active Interest
Media, which acquired the title last fall.
The magazine, which is approaching its 30th year in business,
is going from "hippie-chick to hip and chic,"
according to the Rosen Group's Diane Stefani, who is handling
PR for the publisher.
She said the new VT will have a softer, more feminine design
and appearance, recipes, a new editorial team, and newsstand
distribution will double by 100,000, with increased number
AIM's chairman/CEO, Efrem Zimbalist III, is banking on
the trends in the U.S. to live a healthier lifestyle, said
Stefani. "Surprisingly, more than half the readers
of VT do not follow a strict vegetarian diet. They are referred
to as `flexitarians, and turn to the magazine for overall
health concerns," she said.
Ziff Davis Media
has started a print version of ExtremeTech, an online site
for technology do-it-yourselfers. It will provide expert
knowledge on how to design and upgrade PCs and related technology
systems, networking, security and video games.
The Washington Post Co.'s
free commuter newspaper, Express, is upping its daily
circulation from 150,000 to 175,000 copies.
Christopher Ma, publisher of Express, said the next step
is to extend Express audience to college campuses and to
other urban locations with heavy daytime foot traffic.
New York magazine
will publish four daily oversized special issues covering
the Republican National Convention.
Maer Roshan, former editor-in-chief of Radar, was
named editio of all four issues plus the Aug. 26 special
issue on the RNC.
The dailies will cover parties, events and delegates with
tongue-in-cheek items such as "Who's been seen eating
where," and "Who's been spotted buying red ties
at Brooks Brothers."
has acquired CableNewser, a blog founded last January by
Brian Stelter, an 18-year-old college student.
Mediabistro's editor Jesse Oxfeld said Stelter will cover
the networks and the big three cable stations for TV Newser,
the blog's new name.
(Media news continued
on next page)
Edition, Aug. 4, 2004, Page 4
MATUSIC REJOINS DJN
TO COVER OIL NEWS.
Karen Matusic, who has been a senior editor at Energy
Intelligence magazine, has rejoined Dow Jones Newswires
as a special writer for DJ Energy Service, which provides
real-time news, prices, data and analysis for oil, power,
and natural gas markets.
Matusic, who will be based in the newswire's Washington,
D.C., bureau, will cover the domestic and foreign politics
of oil, and write stories about oil market trends and developments,
according to Richard Levine, executive editor of Dow Jones
Newswires, who said Matusic has a "depth of her sources
among members of OPEC, oil company executives and people
in the markets."
CHESLA UPPED TO M.E.
OF BOND BUYER.
Nicholas Chesla, who previously led a team that writes The
Bond Buyer's market column, was promoted to managing
He will oversee the daily paper's coverage of public finance,
its affiliated web-based products, and management of the
The paper, which is owned by Thomson Corp., is read by
underwriters, issuers, institutional investors, bond counsellors,
credit enhancers, rating agencies and investors.
Amy Resnick is editor-in-chief of the New York-based paper,
which has reporters in seven regional offices throughout
PASTORE MOVES UP
TO EDITOR OF CIO.
Richard Pastore, who joined CIO magazine in 1991
as a staff writer, was appointed editor, and Allan Holmes,
previously editor-in-chief at Federal Computer Week,
was named Washington, D.C., bureau chief.
Pastore, who is based in Framingham, Mass., will oversee
day-to-day operations of the editorial team as well as the
print edition of CIO.
Holmes will write and edit features pertaining to government
IT as well as security and risk managements. He will also
oversee content for both CIO and its sister publication
NEW EDITORIAL DIRECTOR.
Christopher Napolitano, 40, was promoted to editorial director
of Playboy magazine, replacing James Kaminsky, who
Napolitano, a Playboy staffer for 16 years, was features
editor before being named executive editor last year. He
will continue to be based in New York.
CHICAGO's -T HIRES
MARIN AS A COLUMNIST.
Carol Marin, a Chicago newscaster, will join The Chicago
Sun-Times as a political columnist Aug. 18.
Marin, who has been writing a column for The Chicago
Tribune, made news and inspired a debate about journalism
ethics in 1997 when she and anchor partner Ron Magers resigned
from NBC's WMAQ-TV to protest the hiring of Jerry Springer
as a news commentator.
She rejoined WMAQ last February and will continue as a
reporter for the station and as co-director of the DePaul
Documentary Project at DePaul Univ.
RETIRES AS COLUMNIST.
Jack Anderson has retired as a writer for the "Washington
Merry-Go-Round," a syndicated newspaper column.
Eleanor Clift, who has been a correspondent for the column
for several years, will replace Anderson, 81, who has Parkinson's
disease. Clift's byline will appear with Douglas Cohn, who
has been working with Anderson for 18 years, and has been
his partner for the last five years.
The column is syndicated by U.S. News Syndicate in McLean,
Va. K.J. Kennard said Cohn and Clift will "continue
their hard-hitting analytical column that has gained a reputation
for insight, historical analogy, and interesting twists
overlooked by other writers such as their exposure of the
stock market's burgeoning short-selling scandal."
The New York Times made the following new beat assignments:
Ed Wyatt was assigned to cover book publishing news
while continuing to cover news for the business section.
Laura Chang was named science editor. She takes over
in September from Rick Flaste, an associate editor, who
has been acting science editor for several months.
Jack Rosenthal, a former writer and editor at The
Times for 25 years, will replace Daniel Okrent as the readers
representative for the month of August. Okrent will return
after Labor Day.
Kristi Helm, previously Seattle bureau chief of The San
Jose Mercury News, has joined The Seattle Times
as tech enterprise reporter.
Becky Bisbee, busienss editor, said Helm will write on
timely and topical tech issues, the culture of technology
and significant developments that have broad impact on the
All In, a new magazine aimed at poker aficionados,
is attracting both readers and advertisers, according to
its 27-year-old publisher Bhu Scrinivasan, a former dot-com
entrepreneur who launched the magazine three months ago
at the World Series of Poker.
Scrinivasan can be reached at 206/624-5652.
Hoy, a Spanish-language daily paper for Chicago's
1.6 million Hispanics, has opened a news bureau in the city's
Little Village neighborhood.
The bureau's reporters will cover news and information
in the neighborhoods of Little Village and Pilsen, as well
as suburban Berwyn and Cicero.
Edition, Aug. 4, 2004, Page 7
INSIDER SALES HURT STOCK.
Stock of Omnicom,
off 18% this year to about $71 while the Standard &
Poor's 500 index has been about even, is being hurt by $24
million in insider sales and other factors, said Barron's
reports PR income of nearly $1 billion.
biggest PR unit is Fleishman-Hillard, which has been hit
with charges of overbilling by the City of Los Angeles (see
had fees of $345M and 2,288 employees in 2001, the last
time OMC allowed F-H or any of its units to publish its
investors are concerned about the costs of OMC itself (OMC
is the holding company for 1,500 ad/PR firms) including
bonuses and options for the top OMC execs, and a possible
jump in interest costs. OMC has debt of $2.6 billion, much
of which can be "put" back to the company.
has been a startling dip in new acquisitions, touching off
concern at an analysts teleconference July 27. OMC has depended
heavily on acquisitions for growth for many years. Another
concern is deteriorating operating margins, falling .06
to 14.3% in Q2.
Barron's article, by Dimitra Defotis, said investors
"were miffed this spring when John Wren, the well-respected
CEO, and two other insiders sold big chunks of stock."
netted $6.1M in March by selling 95,000 shares at around
$80. The shares, obtained by exercising options, cost him
$11 each. Allen Rosenshine, chairman of BBDO, netted about
$11M and Keith Reinhard, CEO of DDB, netted about $7 million.
insiders only purchased 1,000 shares in the first half while
has rarely appeared on the insider's trading list. On June
13, 2002, he purchased 20,000 shares in the open market
at $55 a share to show his confidence in OMC after the Wall
Street Journal criticized its accounting practices.
The article triggered a drop in the stock from the $70's
to the $30's .
May 31, 2000 to June 12, 2002, a tabulation by Yahoo! showed
no insider purchases on the open market. The 89 transactions
included 70 sales or planned sales, 12 exercises of options,
and six acquisitions via restricted stock (stock at market
price that must be kept for a certain period).
Press Appearances Are Rare
has given only one major press interview since June 2002to
Bill Spain of CBS MarketWatch.
annual stockholders meeting, after many years in New York,
was held in Los Angeles in 2003 and in Atlanta in 2004.
factors hurting the stock, according to Barron's , include
poor local ad figures and a new accounting rule that could
force OMC to count the shares backing its contingent convertible
(CoCo) bonds in calculating earnings per share.
has decided to pay cash to bondholders rather than allow
them to convert the bonds to stock, which would cause dilution.
It is paying $27.50 per $1,000 of bonds as a "sweetener"
to those who purchased zero-coupon bonds hoping the stock
would rise. OMC is $36 below its high of late 2001.
OMC announced a 15% rise in per share profits in Q2 to $1.10
(net of $206M), the stock remained at the $71 level. Profits
were helped by acquisitions (almost exclusively increased
shares in firms previously purchased) and favorable foreign
had $2.6 billion of debt as of June 30, including $2.3B
in "puttable" CoCo bonds that allow investors
to demand a return of their cash. Debt of the five big ad/PR
conglomerates is $13.87 billion, according to Yahoo! ($2.29B
at Interpublic, $3.34B at WPP, $4.39B at Publicis, and $1.71B
at Havas). The WSJ article said that OMC's $800M+ spending
on acquisitions each year had made it hard to track the
origin of its profits.
spending was $472M in 2003.
$1M was spent on new acquisitions in Q2 while $145M was
spent for earnout and subsidiary payments and $1M on affiliates.
Randy Weisenberger said the acquisition activity was at
nearly an all-time low but that it would pick up. He said
OMC's lawyers are busy with Sarbanes-Oxley compliance and
that acquisitions are not made until OMC is satisfied they
will be worthwhile.
IS QUICK, EFFECTIVE.
Jane Genova, Westport, Conn.-based PR pro and writer, has
launched a marketing communications capability because she
says this is more in tune with what clients want.
She noted that the Aug.
1 Sunday New York Times had 26 ads for "marketing"
jobs but only nine for "PR." PR job listings in
the NYT, which were once 70-80 each week, have been around
10 or below for over a year.
"Since setting up
a marketing boutique, my communications consulting business
has started to thrive again," she said.
The problem with "PR,"
she said, is that prospects think it's a "long-term
build, expensive, and may not yield results."
"For too long,"
said Genova, "PR pros have focused on process and programs
and not on results obtained quickly, on a project-basis,
Genova ([email protected])
says PR pros who want to make the switch or add marcom to
their wares, must learn the language of marketing, its results-orientation,
its quick pace and its "now" focus.
With this orientation,
she says, "I am able to get the prospect's attention,
have instant credibility, and walk away with the business."
One of the things she
learned by attending an eight-week marketing and sales seminar
was that marketers aim to "get in and get out fast"
"I had to change
just about everything I thought I knew about approaching
prospects and about actually providing services and content,"
said Genova, adding: "Marketing uses the direct and
concrete rather than the indirect and abstract approach
of many PR pros."
Another marketing approach
is to keep identifying new markets. Marketing seems to find
many more "out there" than PR, she says.
Genova, who is now building
a brand name in marketing just as she once did in ghostwriting
books for business executives, says she monitors what is
going on in marketing and sales as well as PR.
She will use a combination
of PR and marketing techniques to help build awareness of
"Not every PR pro
has the temperament, mindset and instincts to enter marketing,"
she adds. "Those who do will find their careers having
much more runway left than they ever dreamed."
Edition, April 4, 2004 Page 8
Omnicom, which owns
PR firms doing about $1 billion in fees (Fleishman-Hillard,
Ketchum, Porter Novelli, Brodeur, etc.), is a "beleaguered
stock," according to Barron's (page one story).
Practically anyone who comes into contact with OMC is either
made a fool of or is had in some way.
Particular victims are those who purchased OMC at $107 in
2001 and are sitting with a 36-point deficit.
They must be chagrined that CEO John Wren and two other
insiders sold shares worth $24 million in the first half
of 2004 while buying none. Why are they doing this if the
future is so great? Other victims are those who lent OMC
$2.3 billion at no interest, hoping the stock would soar
and they could convert bonds to stock at a big profit.
They are being soothed somewhat because OMC is being forced
to pay 2.75% interest on the bonds.
Startling is the news that OMC, a roll-up if ever there
was one (1,500+ different companies), only spent $1 million
on new acquisitions in the second quarter, which Wren and
CFO Randy Weisenberger said was a record low.
Analysts on a conference call July 27 were intrigued by
the sudden drop-off. Is this the end of the acquisition
road? asked several.
Weisenberger said OMC lawyers have been busy with Sarbanes-Oxley,
which will cost OMC $50M this year. Also, OMC never makes
a buy without the most thorough examination, he said. It
would rather not buy anything. Both Wren and Weisenberger
predicted a pickup in acquisitions in Q3 and Q4.
But among those shafted
by OMC are all the ad agencies and PR firms
it purchased that are no longer allowed to report their
billings and fees.
Why would any PR firm want to join the OMC family when
it will be deprived of one of its main new business toolsa
ranking by legitimate PR publications based on easily available
Douglas Carmichael, now the nation's accounting "czar"
(Public Company Accounting Board), told us in 2003 that
the congloms were wrongly citing SOX as the reason they
could not allow reporting of payroll and employee totals.
Such figures are mere "compilations" and not covered
by GAAP, he said.
Robert Benowitz, a securities lawyer with a specialty in
SOX and partner at Rick Steiner Fell & Benowitz, New
York, said the bill was designed to restore "public
confidence in the integrity of the financial markets"
and that there is nothing in it that blocks disclosure of
employee and payroll totals.
Benowitz, who was at the SEC for six years, said "Companies
must ensure that, among other things, the released information
is in compliance with their internal disclosure controls
and of course, is accurate, but that companies subject to
SOX should consult with their counsel on compliance with
The ad industry does
not pretend to tell the truth, the whole truth and
nothing but the truth about products. Its job is selling
and it does it well. But PR is about truth if nothing else.
A PR firm that cannot describe its size to clients and prospects
has raised questions about its integrity and honesty.
There are plenty of
knocks about OMC and the other ad/PR conglomerates
that investors talk about although we don t often see them
The $13.87 billion
debt of the Big Five is a heavy burden that could
get much heavier if interest rates rise.
officers" are depressing the entire ad/PR business
by giving agencies the "third degree," pinching
every penny, and demanding proof of effectiveness. New business
is at lower margins.
company model (which pays an extra layer of executives
huge sums) is getting on the nerves of clients.
who were sold out by the owners of their firms are
especially watchful of these sums and are demanding more
for themselves. OMC and the other congloms will have to
pay more to keep the creatives happy lest they open their
The word the
congloms fear is "independents," meaning
creative shops without all that overhead.
Attempts to buy up every last ad/PR firm and eliminate
the entire category of independents failed. There is an
economy of scale in media buying, at which the congloms
excel, but not in creative.
wasteful is the $50,000 each of the top ten conglom-owned
PR firms gives each year to the Council of PR Firms.
CPRF abandoned its goal of ranking all PR firms and now
has no visible mission. This is another power play that
resurgence may top out early, some forecasters say,
blocking ad agency growth.
OMC has a problem
with its biggest PR unit, Fleishman-Hillard, which
is charged with false billing by the City of Los Angeles.
F-H reported $345M in fees and 2,288 employees in 2001 but
no one outside of OMC and F-H knows what the numbers are
now. A clue might be that F-H's PRSA members dipped 33%
from 70 to 47 from 2001 to 2004. It's a poor clue, but the
The Big Five
ad/PR congloms have wooed Wall St. and snubbed the
trade and general press for years. The most painful example
is Wren taking OMC's annual meeting to the hinterlands.
Instead of undergoing the purifying lash of the press, the
five have dodged it by concentrating on the analysts, many
of whose companies do business with the five. But even Wall
Street is becoming disillusioned.