Edition, Aug. 11, 2004, Page 1
BK CEO TURNS
TO TRUSTED PR HAND.
Burger King, which
bid adieu to its CEO last month amid a plan to reverse the
company's fortunes, has tapped a corporate turnaround exec
to head its PR unit in a bid to overcome what Business
Week sees as "a dull menu, dirty stores, and debt-laden
has brought in Steven DeSutter as SVP of corporate comms.
of the Miami-based company.
spokesman from BK's PR firm, Coltrin & Assocs. (the
firm was hired last year), said DeSutter takes over for
VP Rob Doughty, who has left.
was SVP of TurnWorks, an equity and advisory firm focused
on righting corporate ships headed by BK's newly minted
CEO Greg Brenneman. DeSutter left that post in 2002 to head
corporate comms. at PricewaterhouseCoopers Consulting during
its restructuring. PwC was headed by Brenneman who
also had a key hand in Continental Airlines turnaround in
the 1990s at the time.
BW pointed out in a July 7 piece before Brenneman's appointment
in mid-July titled "Burger King's Whopper-sized Woes,"
Bradley Blum was the company's ninth CEO in 15 years.
EHRLICH TAKES LEAVE
AS WAMU REGROUPS.
Bill Ehrlich, EVP in charge of PR and internal comms. at
Washington Mutual, is taking a sabbatical from the company,
a spokeswoman confirmed.
Ehrlich, who joined the Seattle-based company in 1990,
hands over his duties to Adrian Rodriguez, manager of corporate
PR. Tara Williams, a WM spokeswoman, told this NL Ehrlich
is scheduled to return in April.
The departure comes as WM in July slashed its earnings
forecast for the year and said it will shutter its 53 commercial
banking operations by the end of October. It announced layoffs
totaling 3,700 employees.
The Wall Street Journal pointed out July 30 that
the closures come as Washington Mutual's "core mortgage
business is in trouble" because of rising interest
rates and a cooling of the refinancing boom. The paper notes
restructuring moves reinvigorated speculation that the company
may be an acquisition target.
Robert Argento has
been named national media director at Euro RSCG Magnet.
He had consulted on the Evian business at the PR firm owned
by France's Havas, the No. 6 ad/PR combine.
IPG CUTS LOSS TO $5.4M,
Interpublic trimmed its second-quarter loss to $5.4 million
from $13.5 million, and recorded its first-quarter of organic
growth (0.3 percent) since '01. Overall revenues jumped
three percent to $1.5 billion.
CEO David Bell said he is pleased with IPG's "progress
in closing the growth gap with the competition." He
called the ad/PR combine's restructuring program "essentially
Bell said IPG's PR units, which include Weber Shandwick,
GolinHarris and MWW Group, posted "strong top line
IPG picked up new business from Dell Computer, Old Navy,
Pfizer's Viagra and Sony PlayStation during the quarter.
Its significant losses were Circuit City, Pier One, HSBC
and John Deere.
The company's head count shrunk to 43,900.
Wall Street sent IPG stock price to a 52-week low on Aug.
6 ($11.73) as its shares were downgraded by CIBC World Markets
from "sector outperform" to "sector perform."
Cheryl Procter-Rogers of HBO, Rosemont, Ill., was nominated
for president-elect of PRSA over Maria Russell, treasurer.
Jeff Jullin reportedly was picked for secretary over Tom
Vitelli. Art Stevens of New York was not nominated by the
RULE BY APRs CONTESTED;
49 NEW APRs.
The 31-year rule of PRSA by its accredited members is again
PRSA/Cleveland has proposed letting any board member of
a chapter, section or district serve in the Assembly. The
bylaw change has the backing of PRSA president Del Galloway
and the national board.
Expressing support for the change are presidents of four
of the five biggest chaptersNational Capital, Georgia,
New York and Chicago. Colorado, seventh biggest chapter,
is "disappointed" that the subject has been brought
up again after last year's battle in which "decoupling"
lost by only five votes.
Meanwhile, the Universal Accreditation Board, made up of
representatives of PRSA and nine other groups, reported
that 49 of 68 candidates (72%) had passed the new accrditation
process in its first year ending June 30. Forty-one are
In calendar 2002, 274 of 488 candidates passed.
(Continued on page 7)
Edition, Aug. 11, 2004, Page 2
F-H HIT FOR K.C. WORK.
Fleishman-Hillard is taking a media hit for its failed campaign
on behalf on Enterprise Rent-A-Car to defeat a $4 a-day
car rental tax to help pay for part of a $250 million arena
in downtown Kansas City. Voters okayed the tax on Aug. 3.
Supporters of the arena make little distinction that the
campaign was handled by F-H's St. Louis office, and not
its 100-member strong Kansas City unit. An aide to Mayor
Kay Barnes, who staked her career on the project, told the
Kansas City Star that F-H "should stay out of
issue campaigning, not because of ethics but because they
are incompetent." Steve Glorioso, according to the
paper, was referring to F-H's new ethics policy announced
in the wake of the Los Angeles overbilling story.
Betsy Solberg, F-H's regional president, believes her firm
is unfairly being singled out and made a scapegoat of by
opponents. To her, F-H was doing only what it is supposed
to do, which is representing the interests of clients.
Anne St. Peter, GM of F-H/K.C., said even though her office
had nothing to do with Enterprise it is time to move on.
She is buoyed by support from people who recognized the
"rough and tumble world of politics and business."
St. Peter noted that none of F-H's key K.C. clients (Hallmark
Cards, Negro Leagues Baseball Museum, Burns and McConnell,
Gold Banc Corp and Teva Neuroscience) plan to drop the Omnicom
unit because of the political work.
The K.C. Star noted that F-H's "much-vaunted PR process
has come into question," especially in light of the
double-whammy loss at the polls. F-H also lost a vote to
allow riverboat gambling in Rockaway Beach, Mo.
IRAQ SIGNS CLEARY GOTTLIEB.
Iraq's Ministry of Finance has hired Cleary, Gott-lieb,
Steen & Hamilton to help gauge the financial claims
on the country from the Saddam Hussein era.
The New York-based firm will verify an estimated $120 billion
in claims from creditors in 67 nations.
Those obligations include grants given to Hussein's regime
from Saudi Arabia, Kuwait, Qatar and the United Arab Emirates
to finance Iraq's war with Iran.
CGS&H was hired by Kuwait in the aftermath of the Persian
Gulf War to assess financial damages from Iraq.
The firm is required to register as a lobbyist on behalf
of Iraq's Ministry of Finance because it will meet or communicate
with U.S. officials about Iraq's financial obligations.
CGS&H has handled the sovereign debt restructurings
of more than 25 countries, including Russia, Mexico, Indonesia,
Chile, Madagascar, South Korea and the former Yugoslavia.
It will work closely with Iraq's accountant, Ernst &
FAVRE TAKES SNAP
Green Bay Packers quarterback Brett Favre has signed on
as a pitchman for Snapper lawnmowers, Howard Cosgrove, senior
VP at Lindsay, Stone & Briggs, told O Dwyer's . The
Madison, Wis.-based firm arranged the match.
Cosgrove said LS&B has done branding projects for Snapper,
and handled opening day festivities for the football team's
opening of the "new Lambeau Field" (a $300 million
expansion project) in '03.
Cosgrove could not go into details about how Simplicity
Manufacturing, Snapper's parent, plans to use the legendary
quarterback. "That hasn t been worked out yet,"
he said. Favre is supposedly a lawn mowing enthusiast who
looks forward to cutting the grass at his home in Mississippi
during the off-season.
NEW YORKERS TENSE
ABOUT GOP CONFAB.
More than eighty percent (83 percent) of New Yorkers are
not happy that the Republicans will hold their national
convention in the Big Apple (Aug. 30-Sept. 2), according
to a phone survey conducted by 5W Public Relations.
The poll of 536 people who either live or work in New York
was conducted Aug. 2-3, which was after Homeland Security
Secretary Tom Ridge's warnings about a possible terror attack
on the New York Stock Exchange or Citigroup headquarters.
New Yorkers say they are unhappy with the GOP convention
because of security issues/traffic congestion/closed streets
(cited by 53 percent), "too many out-of-towners"
(27 percent) and because "I hate Republicans"
Ronn Torossian, CEO of 5W, said the survey shows that New
Yorkers expect mid-town Manhattan will be turned into a
tense "war zone." He also said that ads by former
NYC Mayor Ed Koch urging New Yorkers to make nice with the
Republicans, and speeches by current Mayor Mike Bloomberg
have not gained much traction.
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
Using only a three iron, Tolme played "the front nine"
last summer, and completed "the back nine" three
weeks ago. He shot a 12,170.
Tolme has told various media that he golfed Mongolia because
he wanted to.
Atamira, which is in Atlanta, will handle a media tour
and sponsorship opportunities for Tolme. He has been booked
on "The Today Show" and "The Tonight Show
with Jay Leno" on Aug. 4. Atamira also handles book
and movie rights.
Tolme is currently figuring out his next golf outing.
BOSTON SHIFTS TO HPS.
Dan Boston, the former VP-legislation and political affairs
at the Federation of American Hospitals, has moved to Health
Policy Source in Washington, D.C.
He joins from Baker, Donelson, Bearman, Caldwell &
Berkowitz, where he founded that firm's health policy practice.
The Hill, in its '04 rankings, rated Boston as one of the
top healthcare lobbyists.
HPS was founded in '02 by Monica Tencate, who served as
health policy director for the Senate Finance Committee,
where she was responsible for Medicare and Medicaid. Tencate
also served as health aide to Republican Sens. Bill Frist
(Tenn.) and Bill Roth (Del.).
Boston is a fellow GOPer, having worked for Sen. Mitch
McConnell (Ky.) and Reps Sue Kelly (N.Y.) and Joe Knollenberg
(Mich.). He also was a member of the Florida Presidential
Recount Team for Bush-Cheney 2000.
HPS has counseled Genentech, Biogen and American Healthways.
Edition, Aug. 11, 2004, Page 3
SUPP EDITORS LOOK
FOR NAT'L ANGLES.
Editors of the two largest syndicated newspaper supplements
-- USA Weekend and Parade -- look for story
ideas from publicists with a news angle that will have a
national interest to their readers.
Jack Curry, editor of USA Weekend; Fran Carpentier, senior
editor of Parade, and Colleen Curtis, managing editor/features
for The New York Daily News' new "Sunday Now"
section, familiarized publicists on the types of stories
they use at a Publicity Club of New York meeting July 28,
which was attended by 140 people.
Curry tries to come up with material on a national level
that will have a "high level of exclusivity and interest"
for USAW's 600 different papers across the country, which
distribute the magazine.
"There has to be a reward, there has to be something
special every week because basically the newspaper business
is in a little bit of trouble," said Curry.
"For a cover story, it has to cover things on a national
level that our competitors are carrying and our newspapers
are carrying or covering, but we have to come up with an
angle that's so good, so exclusive, so unique to USA Weekend
that it won t duplicate what the newspapers are doing, and
it won t be the same as Parade is doing," he said.
Curry urged the publicists to think of "anything that
can help us to get a national-level story that allows us
to serve our newspaper's need to have promot-able items.
If you have a local client of any kind you have to think,
'Where is the national aspect to this?"
He said publicists should be on the watch for stories about
"major pop culture events," such as "Spider-man,"
the Olympics, Super Bowl and things related to Thanksgiving,
Christmas, New Year's , and back-to-school.
"One of the things we try to do is use our clout and
the fact that we can deliver 25 million readers to get the
stars and to get the studios to do something for us that
they may not do even for Time or Newsweek
or for the local paper in which we re carried," said
for News Peg
Carpentier, who oversees features at Parade, said the ideas
behind a pitch should be "pertinent and fresh,"
and the clients, the causes, the products must be newsworthy
and national in scope.
She welcomes story ideas that are oriented to trends, personalities
in entertainment, health, science, technology, food, lifestyle,
the home, family and environmental issues.
"When you re getting ready to pitch, figure out whether
what you re pitching is a story or an item because we do
have places where your items can fit," she pointed
The bottom line when approaching Parade, which goes into
36 million homes across the country, is "We want real
people talking about real things, interesting things, and
I m sad to say this does not mean the new CEO of the top
Carpentier said it is a good idea for publicists to "personalize
your pitch...Let us know what experts, authorities, or victims
you can put us in touch with. Can you help us to arrange
a photo shoot?
Even if your good efforts don t win you a placement, they
will win our attention and start a relationship."
While every editor at Parade has his or her own preference
on how to receive a pitch, Carpentier likes e-mail. The
formula at Parade is to send the e-mail to the person's
firstname_lastname@parade. com, and put in a real clear
Wants Local Angle
Curtis emphasized that "Sunday Now," which made
its debut on June 6, is a local publication, and all the
stories are targeted at readers who live within a 50-mile
radius of the city.
She said the new section has a mix of arts and entertainment,
with a lot of movie coverage.
It also has music coverage, book reviews, five food pages,
some fashion and style stories.
The section features "lots of celebrity pictures,"
which she pointed out are not something the publicists want
their clients included in.
She is not looking for "really racy coverage, we want
something that people can feel comfortable with, we know
because we see them on the subway; they take it around with
them during the week and refer to it."
who covers the non-profit beat for The
Atlanta Business Chronicle, also handles the weekly
Time Out entertainment and Corporate Caring calendar
columns, and compiles special sections for the Chronicle,
such as a Volunteer Inc. guide about how companies give
back to the community and the official guide for the BellSouth
As another part of her job at the paper, she is editor
of ATCOMM Publishing, a joint venture with the Atlanta Convention
and Visitors Bureau. She has to produce many of the ACVB's
visitors publications, including Atlanta Now magazine.
She told iCD Media that she prefers to get e-mail pitches.
She is at [email protected].
Lyric Wallwork Winnick, who writes the weekly "Intelligence
Report" in Parade magazine, is looking for "consumer-oriented
news," according to Fran Carpentier, senior editor
Winnick is interested in getting information about celebrities
who are involved with an issue, cause or something unusual.
She also likes surveys and "stuff that's out there
and doesn t get a fair hearing or that's ignored,"
Winnick, who is based in Chevy Chase, Md., can be reached
at [email protected].
(Media news continued
on next page)
Edition, Aug. 11, 2004, Page 4
SUES OWN NEWSPAPER.
Cox Enterprises, which owns 47.5% of The Daytona Beach
(Fla.) News-Journal, is suing the publisher of the daily
paper over sponsorship of a new performing arts center.
Cox, which is based in Atlanta, alleges the Davidson family,
the majority owner of the News-Journal, had misused corporate
funds in paying out $13 million up front to title a new
performing arts center. The suit also accuses the owners
of the paper of a conflict of interest.
Tippen Davidson, president/CEO of News-Journal Corp., is
also founder of the Seaside Music Theater, which will be
the primary tenant in the News-Journal Center, and Davidson's
daughter, Julia, who is a member of the paper's board and
an employee, also is the theater's managing director.
According to a memo from the paper's attorney, the sponsorship
deal was made to offset "the necessary ill will"
created by the practice of journalism.
"Our image as the grand patron of the arts is the
velvet glove within which we clothe the iron fist of our
journalistic independence," the attorney's memo said.
SHOP ETC. TO MAKE
Shop Etc., published by Hearst Magazines, will go
on newsstands Aug. 17 as a rival to Lucky, Conde
Nast Publications women's shopping magazine, which has just
increased its circulation rate base to one million.
Shop Etc., whose initial rate base is 400,000, will be
published three times this year and 10 times in '05.
The magazine will divide its sections into fashion, home
and beauty, and each section will feature content on products,
ideas, trends and shopping information.
It will also have three checkbooks with voucher offers
from fashion, home and beauty retailers. A column called
"Top Floor" will show products available only
to the Shop Etc. reader.
Mandi Norwood is editor-in-chief.
DM NEWS TO PUBLISH
DM News will publish a special 25th anniversary issue
in its Oct. 4 edition.
Tad Clarke, editor-in-chief, said the special edition will
contain an overview of the evolution of the industry as
well as articles written by industry pioneers and practitioners,
that will highlight the trends, brands, people, suppliers
and technology that marked the last quarter century in direct
Joe Fitz-Morris, who started Advertising News of New
York (ANNY), which later became Adweek, was the
first editor of DM News.
The special issue will be edited by Mickey Alam Khan, senior
editor and director of editorial and business development
for DM News.
Publicists can reach Khan at 212/925-7300, ext. 216, or
at [email protected].
Chicken Soup for the American
Soul, a magazine developed by Modern Media in Memphis,
Tenn., and the creators of the "Chicken Soup for the
Soul" book series, will make its nationwide debut with
a June 2005 issue.
The magazine will have a distribution of 150,000 and will
be sold at Wal-Mart and other retailers.
It incorporates the now defunct American Magazine,
which was first published in winter 2002.
CSAS will cover family, food, fashion, home, health, travel,
lifestyle, entertainment and culture.
J. Mignonne Wright, the founder and former editor-in-chief
of American Magazine, is editor-in-chief of CSAS; Jack Canfield
and Mark Hansen, co-authors of the book series, are executive
Susan Magrino Agency, New York, is handling publicity for
Parade will introduce
a new column in the fall called "Parade Picks,"
featuring all items involved with home entertainment, movies,
books, CDs and DVDs, according to Fran Carpentier, senior
TV Guide is developing
a new weekly magazine that will focus on TV celebrities,
under the supervision of Steve LeGrice, former executive
editor of In Touch Weekly.
"Everyday Food," a TV program produced by Martha
Stewart Living Omnimedia, will begin airing on PBS stations
nationwide in Jan. 2005.
The first season will consist of 26 weekly episodes.
Each half-hour episode will provide solutions to everyday
cooking challenges and present easy-to-make recipes along
with tips and kitchen techniques.
Martha Stewart will not host any of the programs.
Plum, a specialty magazine
aimed at pregnant women ages 35 and older, will debut in
The magazine, a collaboration of Groundbreak Publishing
and the American College of Obstetricians, will appear once
a year, and it will be distributed free in doctor's offices.
in Washington, D.C., has acquired Washington HealthBeat,
a newsletter founded in 2001 by John Reichard, who will
remain as editor-in-chief of newly formed CQ HealthBeat.
Factiva, a Dow Jones/Reuters
company that tracks daily press mentions, reports
Teresa Heinz Kerry's "shove it" phrase to Colin
McNickle, the editorial page editor of The Pittsburgh
Tribune-Review, was the most cited Kerry campaign message
following the Democratic National Convention. The phrase
was mentioned 381 times in U.S. publications.
Daniel Day, former
Trenton-based bureau chief of The Associated Press,
has joined Stern + Assocs. in Cranford, N.J., as a media
45, presently Washington editor of The
New York Times, was promoted to associate managing editor
for news. He will move to New York in January.
LOFT GETS TWO NEW EDITORS.
Alberto Chehebar was named editor of Loft, a men's
lifestyle magazine for Hispanics.
Celeste Fraser Delgado was named managing editor of the
magazine's U.S. Hispanic edition, which is based in Miami
Chehebar, 35, who replaces Juan Rendon, was previously
co-owner of the boutique women's wear line Soye. Fraser
Delgado had been covering the Latin music industry for the
Miami New Times.
Loft, which was started in 2001, has a circulation of 80,000
in the U.S., with an additional circulation of 25,000 copies
of special editions in Mexico, 10,000 in Colombia, and 10,000
Isaac Lee is editor-in-chief of Zoom Media Group, publisher
of Loft and Poder Magazine.
David Ewalt was
named telecom reporter at Forbes.com.
has joined In Touch Weekly
as articles editor.
was appointed managing editor of Budget
previously fashion feature editor at Women's
Wear Daily, has joined Star
magazine as features editor.
Mark Yost, who
covered the auto industry for the Dow Jones Newswires for
10 years, has joined The St.
Paul Pioneer Press as an editorial writer.
Edition, Aug. 11, 2004, Page 7
the previous written and oral test (56% pass rate).
Carol Scott, of Kailo Communications Studio, Corpus Christi,
Texas, chair of the UAB, said the 488-member class was a
little larger than usual because many sought their APRs
before the new process was installed.
In 2001, according to
UAB statistics kept by Kathy Mulvihill at PRSA h.q., 303
of 442 candidates passed for a 68% pass rate while in the
previous year 213 of 393 passed for a 54% pass rate. The
pass rates for 1999 and 1998 were 59% and 58%, respectively,
when 265 and 258 new APRs were created.
The new process includes
a rigorous pre-exam requiring a collection of the candidate's
work, an interview conducted by three APRs and a computerized
multiple-choice test that is given at Thomsen Prometric
centers throughout the U.S. PRSA members pay $275 to take
the test while members of the other groups pay $385.
In another development,
the rule requiring five years of PR experience for exam-takers
may be dropped (page 8).
of APRs Challenged
The APR test statistics,
which Scott said "disappointed" the UAB, came
a couple of days after a new challenge emerged to the supremacy
of APRs at PRSA.
Only APRs have been allowed
to vote in the Assembly or hold national office since 1973.
Galloway told a teleconference
Aug. 3 that the board had reviewed the Cleveland proposal
to let non-APRs join the Assembly and "responded favorably."
He said the "real issue is good government-ensuring
representation throughout the Society and definitely at
the chapter, section and district levels."
Their board members are
"those who are most engaged and who will come to the
Assembly and make informed decisions," he said.
David Rickey, chair of
the board of ethics and professional standards, agreed,
saying the issue has been debated for several years and,
"like fine wine, we finally got it to the point where
New Test Gaining Momentum
Scott said that since
July 1, 2003, when the new exam process was launched, through
June 30, 2004, 360 candidates applied to sit for the exam;
171 took part in the Readiness Review; 148 advanced from
the RR; 68 took the exam, and 49 passed it.
"That's an average
of one application per day and one new APR per week,"
"We re gaining momentum
for the re-engineered exam and so far have received great
enthusiasm from the candidates who have taken it,"
"Even though a higher percentage of candidates are
passing the exam," she continued, "we are finding
that we still have potential candidates who are unsure about
the process and therefore hesitant to initiate their application.
"While we re disappointed
that our numbers aren t higher, we also recognize that it
takes time for such a significant change to be adopted.
We are confident as more candidates go through the accreditation
process and experience the ease of the computer-based exam,
our numbers will increase."
Say Time Needed
Everett Rogers, Ph.D.,
communications professor at the University of New Mexico,
commenting on the new test, said that "Individuals
in a social system do not all adopt an innovation at the
Rogers, an authority on
the diffusion of innovations theory (one of the theories
included in the new computer-based exam), said individuals
adopt over a period of time. The initial APR test-takers
are considered "early adopters" and "serve
a vital role in diffusion of the new APR process,"
Four years of preparation
and $250,000 went into creation of the new process. Most
of the money was supplied by PRSA, which maintains general
supervision of the program.
Members Left Out'
Christopher Lynch, immediate
past president of the Cleveland chapter, told the PRSA leaders
conference call Aug. 3 that many of the "best"
members of chapters, sections and districts can t serve
in the Assembly because they are non-APR. About half of
the presidents of PRSA's 110 chapters are non-APR.
Pamela Miles, president
of PRSA/National Capital, the biggest in PRSA with more
than 1,000 members, said its 11 delegates voted last year
to decouple the Assembly from APR and would do so again.
Jennifer Grizzle, president
of PRSA/Georgia, No. 2 with nearly 900 members, said the
chapter favors decoupling the Assembly and that she, herself,
also favors decoupling the board.
Burt Wolder, president
of PRSA/New York, No. 3 with 600 members, said the chapter
has long been in favor of decoupling the Assembly and board.
Steven Knipstein, president
of PRSA/Chicago, with more than 500 members, said the board
is in favor of decoupling the Assembly.
Jon Pushkin, of Pushkin
PR, Denver, president of the Colorado chapter, seventh biggest
and which has been a longtime foe of decoupling, said that
while he hasn t discussed the Cleveland proposal with the
board, "My personal opinion is that I am surprised
and disappointed this issue is coming up again.
PRSA has spent a significant
amount of time and energy on decoupling.
Every chapter has had
a chance to voice its opinion on multiple occasions, and
it has been voted on and failed twice in the past two years.
I believe it is time to move on to more important issues
facing PRSA and our profession."
F-H RE-OPENS LADY LIBERTY.
Fleishman-Hillard/Washington, D.C., handled media relations
for the re-opening of the Statue of Liberty. The National
Park Service, which runs the monument, and F-H put together
a ceremony for Aug. 3 with Interior Secy. Gale Norton, New
York Mayor Mike Bloomberg and CNN's Aaron Brown.
Edition, April 11, 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
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 in newspapers.
The $13.87 billion debt of the Big Five is a heavy
burden that could get much heavier if interest rates rise.
"Procurement 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.
The holding company model (which pays an extra layer
of executives huge sums) is getting on the nerves of clients.
The creatives 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 own shops.
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.
Particularly 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 failed.
The economic 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.