INDEPENDENTS POST
SOLID '04 RESULTS.
Independent PR firms posted a strong comeback in `04 as 28 of the top 50 enjoyed double-digit gains in fee income. There were seven “decliners” in the group.

Edelman, the largest of the 117 independents, reported an 11.9% spurt in fees to $230.4M. That puts Edelman in range of the $233.4M in fees that it earned in `00 before the recession rocked the PR sector.

Edelman employed 1,749 at the end of last year, compared to 2,319 four years ago.

Ruder Finn, the No. 2 firm, posted a 13.4% growth in fees to $89.7M. Peter Finn singled out development of the firm’s Asian healthcare/pharma, financial services, auto and crisis PR capabilities among `04 highlights.

Qorvis Communications (No. 7) registered a 25.4% hike in fees to $15.3M. CEO Michael Petruzzello said the Washington, D.C.-based firm received boosts from new clients (Sugar Assn.), recovery in the Northern Virginia high-tech market, and an additional income stream from its new media center. Saudi Arabia, also, continues to spend big at Qorvis.

A&R Partners (No. 9) showed a 26.1% rise in growth to $11.7M. President Bob Angus described `04 as a “perfect storm” year. “We were able to keep our team intact during the tech downturn, so we were well-positioned to benefit with the market’s upswing,” he said. Virgin Electronics was a key addition to A&R’s `04 client list.

ICR leads way

Integrated Corporate Relations showed the biggest gain among the top 50. It was up 58.1% to $8.5M driven by rebounds in the IPO market and corporate finance area, said co-CEO Tom Ryan from the firm’s Westport, Conn., headquarters. He is bullish on `05 because the firm added a dozen new clients in December.

Kaplow Communications was the No. 2 percentage gainer (+49.5 percent to $5.8M) among the top firms. Liz Kaplow attributed growth to increased spending from existing clients, such as eBay, Target and Avon mark. “We are the little-engine-that-could that really took off,” she said. KC added LeapFrog, Netflix, Constellation Brands and St. Ives.

Other big gainers were Davies, up 41.6% to $4.4M; Cerrell Assocs., up 41.2% to $4.3M, and EG&A, up 31.8% to $3.9M.

Morgan & Myers had the biggest decline in fees, falling 13.6% to $4.3M. CEO Gary Myers said although the firm didn’t lose any clients, it was hurt by across-the-board spending cuts from accounts like Altria Group.
(this story continues on page 7)

GRUBMAN SUED FOR $6M.
Brenda Loughery, the longtime business associate for Lizzie Grubman PR, has sued Grubman for $6 million saying the publicist reneged on promised deals, including a partnership in the firm.

She worked with Grubman for seven years before leaving in December. Loughery claims Grubman promised to make her a partner while Grubman was incarcerated for assault and Loughery helped run the PR firm.

Loughery also says she was promised a producer role on Grubman’s MTV reality show “PoweR Girls” –– slated for a March 10 debut –– along with an equal partnership in a clothing company, among other claims.

Loughery has sued Grubman in Manhattan Supreme Court, seeking $1M for each of her six claims against the publicist.

Grubman’s lawyer denied Loughery’s allegations.

TAGLIARINO TO HEDGE FUND.
Scott Tagliarino, executive VP and head of the business/financial practice at Rubenstein Assocs., has been named director of communication at Elliott Assocs., a New York hedge fund that was founded in 1977.

Tagliarino, who worked on the Elliott account at Rubenstein, was previously at PanAmSat Corp., and was managing director of Gavin Anderson & Co., GM of Hill & Knowlton/N.Y., and president, corporate and public affairs, Edelman PR Worldwide.
Previous posts were at Fleishman-Hillard and in the Los Angeles offices of Burson-Marsteller and Ogilvy & Mather.

Elliott and sister fund, Elliott International, with additional offices in London and Hong Kong, manage $4.3 billion+ in capital.

Tagliarino said that hedge funds and private equity firms are the “new wave of investment opportunity for institutions and wealthy individuals.”

U.K.-based Huntsworth and Incepta Group, parent to the Citigate PR firms, have agreed to merge, creating a $250 million marcom entity.

Grayling and Global Consulting Group are among PR properties of Huntsworth, which is headed by Peter Gummer, a founder of Shandwick who would become chairman of the combined entity.

Hill & Knowlton’s Charlotte Dent has joined Al-Jazeera to handle PR for the launch of the English-language version of the Arab satellite TV operation.

The station will staff 300 and go live by the end of ‘05, targetting the world’s one billion English speakers.

F/W/V ALLEGES 'PAY FOR PLAY.'
French/West/Vaughan says it has literally put Raleigh, N.C., on the PR map but is considering a move out of the city because of what it sees as “pay for play” practices at work with city contracts, said firm president Rick French.

The accusation against competitor Capstrat, which recently won a lucrative contract review over F/W/V, were dismissed by Capstrat president Ken Eudy as baseless and without any proof.

The charge was investigated and the city manager said the proposal process was fair, although French contends the review was not thorough enough.

French, in an interview with this NL, charged that political donations and favoritism have arisen with regard to some public contracts. He singled out Capstrat for emerging as the winner of the seven-figure advertising and PR contract for the new Raleigh Convention Center as the source for his charges.

“I am as disgusted with this as anything I have ever seen in this business,” he said of the alleged unfair business practices.

French is livid over the award of the contract to Capstrat, which French says does not have the experience of F/W/V for such an assignment, a charge Eudy brushed aside.

Had better ideas

Eudy told O’Dwyer’s that the selection committee for the convention center account touted Capstrat’s proposal and presentation as more researched upfront and also said that Capstrat’s team had better ideas. “They said we presented them with more energy, passion and commitment than the other firms,” he said.

Eudy noted F/W/V partnered with a media buying firm for the convention pitch as Capstrat has its own media buying unit.

French said they teamed up with an outside shop because it handles the Greater Raleigh Convention & Visitors Bureau media buying assignment and he saw that as an advantage.

French said he received scores of support e-mails and calls after a city official leaked a scathing e-mail from him to the Raleigh News-Observer, which ran an item last week about his verbal protest of the convention center contract.

Capstrat is the incumbent on a $7.4M social marketing account under review for North Carolina, a pact which French is not pitching. But Eudy said the new account is the firm’s only pact with the City of Raleigh.

City officials have reached out to F/W/V, French said, in an effort to “mediate” his grievances. The firm currently holds one city contract, he acknowledged, without providing details.

He said he plans to take the next 120 days to look at building a new headquarters outside of the city and to further discuss the issue with officials. French also said he has forwarded his detailed concerns to the city manager to get a more thorough probe of the contract award.

Eudy pointed out that his firm built its reputation on a strong public affairs element, which he saw as crucial to winning the convention center pitch.

CLS&A PROMOTES |
REFORM AT ARAB BANK.
Chlopak, Leonard, Schechter and Assocs. is promoting Arab Bank’s commitment to become a “beacon of transparency and sophisticated finance in the Middle East and around the world,” according to a statement the PR firm is distributing from Shukry Bishara, AB’s chief banking officer.

Bob Chlopak, CEO of CLS&A, would not comment on its work for AB, which has been tainted by alleged terror ties.

AB ironed out a deal with the U.S. Office of the Comptroller of the Currency on Feb. 25. That pact shut down AB’s banking activity, while allowing it to do to trade and corporate finance deals.

In December, the bank was sued in Brooklyn federal court for allegedly bankrolling terror organizations.

The suit branded AB the “paymaster” to Hamas, Palestinian Islamic Jihad, al-Aqsa Martyrs’ Brigade and the Popular Front for the Liberation of Palestine.
The Dilenschneider Group fended off those charges for the Jordan-based financial institution with more than $32 billion in assets.

TDG Reid Gearhart, at that time, handled media relations. He has not yet been reached.

COLUMBIA HONORS
DAN EDELMAN.
The Columbia Graduate School of Journalism announced March 2 that Daniel Edelman will receive its first Dean’s Medal for Public Service on April 16.

The medal honors extraordinary lifetime achievement by Colombia J-School grads for their contributions to society through professional accomplishments and civic involvement.

“There could be no better initial recipient than Daniel Edelman, who is both a world leader in this field and an outstandingly generous and public-spirited man,” said Nicholas Lemann, dean of the school.

Edelman, founder of the No. 1 independent PR firm, also was cited for his work with charities such as Chicago Cares and Greater Chicago Food Depository.

He also serves on the board of the Chicago Project for Violence Prevention and the Committee for Economic Growth of Israel.

THOMSEN JOINS
GAMING TRADE GROUP.
Holly Thomsen joined the American Gaming Assn., the trade group for the $27 billion casino gambling market, on March 7 as director of comms. She replaces Naomi Greer, who held the spot for the past seven years.

Thomsen was at The WadeGroup, Washington, D.C., where she was responsible for the AGA's issues management, media relations and executive communications activities. She also handled communications for the Global Gaming Expo, the industry's biggest annual conference.

Thomsen did stints at Cohn & Wolfe, which had handled the AGA business, and Goddard Claussen Porter Novelli, where she concentrated on international trade, environmental and tort reform matters.

Frank Fahrenkopf is CEO of the AGA. He chaired the RNC during Ronald Reagan's Administration.

BLOGGERS OFFER
PLACEMENT TIPS.
The Publicity Club of New York’s March 2 panel on weblogs and their impact on the PR profession featured presentations by four bloggers—Jay Rosen, associate professor of journalism at New York University; Lockhart Steele, managing editor of Gawker.com; Elizabeth Spiers, editor-in-chief of MediaBistro.com and founding editor of Gawker.com, and Jennifer Chung, co-founder of The Gothamist.

Here are excerpts from the discussion, which was moderated by Peter Himler, president of PCNY and media director of Edelman PR:

Media turned upside down

Jay Rosen: “The media world is being turned, to some degree, upside down by changes in media and in communication generally that are driving change all over the world.

In the world of journalism, the world of the press, it simply means the press isn’t owned by a few anymore. It is still owned by The New York Times, it’s still owned by Newsday, it’s still owned by major media. But it also has new owners, individuals; people who were formally part of the audience are now part of the press because weblogs, because of citizens’ media, generally.

Blogging is going to change the world and is in fact changing the world right now. And that is the evolution of all the tools of mass media, from professional hands and corporate hands into public hands.

The digitization of media also has been the democratization of media tools. You can edit digital video on a home computer, you now have a TV studio in your living room and it’s that effect where the rapidly falling cost and difficulty of communications is turning ‘the audience,’ which is what I call the public, into producers and media themselves.”

Need news links

Lockhart Steele: “One thing that is different about blogs versus other media is blogs exist in large part because people have boring jobs and they want something to look at when they’re sitting at their desks.

As a result, the way media is presented in blogs is necessarily different from a magazine article. The idea on a blog is to be quick and fast and just to give someone a link to more information. So rather than write 500 words, a really good blog post on Gawker would be maybe two sentences, and then underneath that ... you have a hyperlink.

People come to Gawker to see what Gawker is saying about things that are going on in the media world.

I think one of the problems that publicists have had in the past when they have tried to pitch to blogs or interact with blogs is they might send a blogger, for instance, a press release.

Now, to a blogger, that is almost a singularly useless piece of information because it’s going to be written in a way that is unappealing to their audience. It’s probably not going to have anything that they can link to and so a blogger gets a press release and basically says, ‘Well, what am I gonna do with this?’

I write about real estate and I interact routinely with the publicists at all the major N.Y. real estate firms.

The ones that are smart will send me a link to a property on their website and say, ‘Hey, here’s an interesting property that went on the market today, why don’t you link to it?’

It’s an example of someone looking at what we do and tailoring what they are talking about to our medium versus a publicist who sends me a press release announcing a property sale.

If you really want to get inside bloggers’ heads, realize that every time they’re thinking about what to write about they are also thinking about what to link to.”

Opinions count

Elizabeth Spiers: “The way publicists tend to look at blogs is that they are not as important as print and so the willingness to tolerate bad coverage on a blog seems to be higher even though in my experience from writing for print and blogging it’s much more difficult to place items on blogs because they do tend to be written by people who have a point of view and they are essentially opinion columns.

So when you are pitching a blogger, you’re asking for their unvarnished opinion. They don’t need news items in the same way that print people do.

To me, the website gets probably an equal amount of traffic as the magazine, traffic in terms of unique users versus subscriptions readers for the magazine, so at least in terms of volume you’re talking about a similar audience. Although I would wager the web audience is probably a little bit younger.

Mediabistro is essentially a trade publication online, with a gossip component which we only recently added because we are trying to figure out how to expand into the news without significantly escalating our cost basis. We thought blogs would be the best way to do that.”

Know the site

Jennifer Chung: “Gothamist is very different from what these people do. I am not an academic. This is not a professional job, I work in advertising, I have a background in brand consulting and Gothamist just became a hobby that I do before and after work with another friend.

And now it’s become just this sort of free-wheeling discussion between other people who are very excited about New York and want to talk about current events, music events, interview people, sports, anything that’s interesting happening in New York.

Now we have sites in Chicago, D.C., San Francisco, Los Angeles, Boston, Seattle, Toronto and London and we are going to be launching a couple more sites this year.

It’s sort of hard for me to figure out how to approach publicists because I’m a curious person. I’m interested in everything but not everything is right for Gothamist.

As Elizabeth said, we are opinion writers and sometimes the best press releases we get from publicists are ones who seem to be people who actually read our site and have a sense of what our readers would be interested in.”

We have over 20 people who work on our site on different catergories.

(Media news continued on next page)

SOURCE MEDIA
NAMES NEW EDITORS.
Jeffrey Kutler has joined Securities Industry News as editor-in-chief, and Marion Asnes was named editor of Financial Planning magazine.

Both publications are published in New York by SourceMedia, which was formerly called Thomson Media.

Kutler was with Institutional Investor, which he joined in Jan. 2000 to oversee banking and technology coverage. He was also executive editor of American Banker, where he spent 20 years before joining II.

Asnes was previously an editor and writer at Money magazine, where she helped shape the magazine’s coverage of personal finance, retirement, estate planning and health.

TIERNEY NAMED
OP-ED COLUMNIST.
John Tierney was appointed an op-ed columnist at The New York Times.

Tierney, whose columns will appear twice a week, starting in April, will replace Bill Safire, who has retired.

Tierney, who joined the Times in May 1990, has been a general assignment reporter, a staff writer for the Sunday magazine and a columnist.

He wrote the weekly “Political Points” column during the 2004 presidential campaign, and the “Big City” column about New York, which ran for eight years, first in The Times Magazine and then twice a week in the “Metro” section.

He is the author of “The Best-Case Scenario Handbook” (Workman Publishing, 2003), a work of humor, and is also co-author, with Christopher Buckley, of “God is My Broker: A Monk Tycoon Reveals the 7 1/2 Laws of Spiritual and Financial Growth” (HarperPerennial, 1998).

KANDEL IS RETIRING FROM CNN.
Myron Kandel, whose commentaries became a mainstay on CNN’s “Moneyline,” will retire as financial editor of the cable network on March 11.

Kandel, who turns 75 on March 14, was the first person hired in New York on Jan. 28, 1980 by Ted Turner’s new network, which went on the air on June 1.

Kandel helped start “Moneyline,” a daily business newscast that was recently replaced by “Lou Dobbs Tonight,” a general news program.

Kandel is a past president of the N.Y. Financial Writers’ Assn. and the Society of American Business Editors and Writers.

BAILEY RESIGNS
FROM CRAIN'S BUSINESS.
Jeff Bailey has resigned as editor of Crain’s Chicago Business.

CCB’s associate publisher David Snyder will oversee the paper’s editorial department until a replacement is found.

Snyder, 43, was editor of CCB from Aug. 1993 until Jan. 2000.

Bailey, 46, joined CCB in Nov. 2003 after a 20-year career with The Wall Street Journal.

PEOPLE________________
Deborah Howell, the Washington, D.C., bureau chief and editor of Newhouse News Service, is joining The Washington Post as ombudsman, replacing Michael Getler.

Paul Field, a former associate publisher of The Sun, a London tabloid, was named editor-in-chief of The National Enquirer, which is relocating its editorial office to New York from Boca Raton, Fla. by the end of March.

MORE THAN 1,000
NEW MAGS in '04.
Samir Husni’s soon-to-be-released Guide to New Magazines will show 1,006 new magazines were started in 2004.

Husni, chairman of the journalism department at the Univ. of Mississippi, told Keith Kelly of The New York Post that the top categories are: Crafts, 125; food, 104; metro/regional, 83; home, 59; sports, 57; auto, 41.

He said sex, once the top new category, has dropped out of the 10 list, with only 20 new entries this year.

PLACEMENT TIPS__________
Cookie, an upscale parenting magazine, will start publishing this fall.

Fairchild Publications said the magazine will be about children’s products, with articles that talk to 25- to 45-year-old parents about topics like where to travel and how to incorporate their child into a sophisticated lifestyle.

The first issue is expected to hit newsstands in October. The magazine will be published six times a year with a circulation rate base of 300,000.

Pilar Guzman, a former senior editor at Real Simple, is editor of Cookie.

New West magazine was started Feb. 21 at www.newwest.net by Jonathan Weber, who was editor in chief of The Industry Standard, which folded in Aug. 2001.

Stack is a newly launched magazine dedicated to helping high school athletes safely and effectively improve their athletic performance.

Starting next month, it will be distributed for free to more than 300,000 high school athletes in 52 major cities including New York, Boston, Philadelphia, Chicago, Houston, Los Angeles and San Francisco.

Stack will offer step-by-step training programs by nationally renowned coaches and trainers, nutrition advice and sports skills.

The magazine, planned for eight times annually to coincide with the months of the school year, was conceived by former athletes Nick Palazzo (Harvard football, 1999-2002), who is publisher, and Chad Zimmerman (Carnegie Mellon football, 2000-2003), who is editor-in-chief.

Zimmerman and Palazzo are based in Cleveland, Oh. Zimmerman can be pitched at 440/442-8319 ext. 102, or by e-mail: chad.Zimmerman@ stackmag.com.

The 117 independent PR firms on page 7 that proved their numbers with free and readily available documents including the top page of their income tax returns and W-3s showing payroll totals are a credit to the PR counseling industry.

They show how honest and transparent a large part of the industry is. We hope more will join the list and will continue to collect proofs of agency size throughout the year, starting a separate list.

Agencies that go through this process will be able to display a certificate attesting to the fact that they have had their numbers verified.

Only three of the top 50 firms from the previous year’s list skipped this year’s. We lost 18 from the list of 112 but added 23 new or returned firms.

It’s shameful that 21 of the 25 biggest PR operations from the 2000 ranking (units owned by ad conglomerates Omnicom, WPP, Interpublic, Havas and Publicis) are not in the rankings.

That puts a big and unjustified hole in industry statistics. Blaming Sarbanes-Oxley for this is specious. Staff and payroll totals are compilations and have nothing to do with GAAP (Generally Accepted Accounting Practices). More often, it’s GAWI (Get Away With It accounting).

Ten big firms owned by the ad groups reported 14,890 employees for 2001, the last year they gave out statistics.

The only clue we have about their employment is the PRSA members in the firms. These totaled 492 in 2001 and 268 in 2004, a decline of 45%. Did the firms fire PRSA members at a greater rate than non-PRSA members? What is the staff total of the ten now? Only the firms know and we hope they will provide this total and set the record straight.

Law firms are ranked by the number of lawyers on staff. Martindale.com lists thousands of law firms that provide this statistic. This is the minimum that all firms should provide prospective clients.

In a way, we’re glad the ad group PR units are not in a combined independent/ad-owned ranking.

The skyrocketing fees of the ad group PR firms, totaling in the hundreds of millions, were the result of frenetic acquisition activity by their parents using cash and a lot of stock. The Council of PR Firms, which assumed control of the rankings of its members, helped boost the numbers by allowing ad commissions and all sorts of other activities to be counted as “PR.” The CPRF required no proofs whatever of fees and staff totals, accepting the word of the CFO. Account lists also were not required.

The rankings got thoroughly distorted through such practices. A casualty of the numbers ban is the marketing programs of the ad PR units since they can’t claim geographical or special skills rankings.

Correction: We mistakenly said here on 2/23 that members of the Council of PR Firms had spent $379,000 on a 20-page ad/editorial supplement in the Jan. 24 Advertising Age. We calculated the 51-time page rate for the section and came up with $379K. But the CPRF said its members only paid for seven full pages of ads at about $20K each and three more pages of half and quarter-page ads.

The total cost for space was $160,000. Ad Age itself paid for the ten pages of copy that were written by Paul Holmes, said the CPRF, adding that other costs were minor since the ads were already created.

Bob Bell, the printing broker who was sued by Editorial Media & Marketing Int’l in 1998, half-owned by Paul Holmes, for not returning ad mechanicals and other materials, is now publisher of Sport Z Magazine (Nissan/Datsun Z cars). He said he went broke fighting the suit but has regained financial health and owns a 5,000-sq. ft. house in Larkspur, Colo.

The EMMI suit ended in 2001 when EMMI was dissolved. Kara Ingraham, 50% owner of EMMI, filed suit in New York Supreme Court saying the new Sabre Awards of Holmes was damaging the CIPRA Awards of EMMI. Debt of EMMI was put at $200K by Holmes and another $120K was owed in payroll taxes.

Bell said he never collected the $56K he felt was owed for two issues of the former Reputation Management magazine, but he never paid anything to EMMI either.

“Couple wins $1M award from Merrill Lynch” ran a headline in the March 1 New York Post. A panel of the National Assn. of Securities Dealers found ML guilty of using a rating system that overvalued many companies. Gary and Lisa Friedman of Boca Raton said ML used its analysts and ratings to bolster its investment banking business.

The verdict, which ML disputed, puts more attention on analysts conflicted by their personal holdings and their allegiance to the investment houses that employ them.

NIRI and the CFA Institute find no fault with analysts personally owning stock they write about but “independent” analysts (who don’t work for investment houses) say this is a bald conflict of interest that shouldn’t be allowed. The ML decision can be used by other investors, says Securities Arbitration Commentator.

Unethical PRSA, which is conducting a membership drive in February and March that saves new members the $65 initiation fee, is lying by failing to tell prospects that they will be second-class citizens, ineligible for the national board or national office until they pass a $275 accreditation test.

The voluminous promotional materials, touting all sorts of benefits, should disclose this information under the section called “leadership opportunities.”

– Jack O'Dwyer