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Internet Edition, May 17, 2006, Page 1


Hill & Knowlton has enlisted in the State Department’s PR efforts in Afghanistan, where the “war on terror” and “war on drugs” are colliding.

The WPP Group unit was selected from an RFP process begun in February as the State Dept. looked for a firm to lead a complex $3.8M PR effort targeting Afghan citizens and stakeholder groups to dissuade farmers from cultivating poppies and boosting the global drug trade.

Wendy Hutter, director of U.S. business development/marketing for H&K, said the firm had not yet been notified by the State Dept. and declined to comment.

Under the government’s “full and open competition” process, competing firms for the account are not divulged.

Poppy production has surged since the U.S.-led coalition in 2001 toppled the Taliban regime, which was averse to poppy growing. Last year, 86 percent of the world’s heroin came from Afghan poppies.

Based on the work outlined in the RFP, H&K is required to deploy communications efforts through seven Afghan provinces, in the Dari and Pashto languages, as well as to maintain three communications professionals with Afghan experience to build capability within the Ministry of Agriculture, Ministry of Interior, and Ministry of Counter-narcotics.

It also wants the firm to develop communications offices for each ministry, each with a trained and skilled Afghan staff of at least two people.

The Rendon Group has worked on anti-poppy PR for the U.S. government in Afghanistan in the past.


Utah is looking for a PR firm to develop a media campaign to cut underage drinking by half in the Beehive State.

The firm will alert parents/guardians about how alcohol consumption harms a teen’s developing brain and increases the chance of addiction later in life.

The Utah Dept. of Alcoholic Beverage Control Commission wants parents to move beyond the notion that drinking is a “rite of passage.”

The PR firm will encourage them to become more involved in their kids’ lives. That is a “powerful influence in a child’s decision to remain alcohol free,” according to the RFP (#NO6576).

The one-year budget is pegged at $1.4M. The contract may be extended on a year-to-year basis for four additional years.

The campaign is to begin by Aug. 25.


Interpublic CEO Michael Roth reported a first-quarter $182M net loss compared to $151M for the year earlier period. Revenues were flat at $1.3B.

IPG, according to Roth’s May 9 statement, “must build on top line momentum, as well as focus on addressing costs.” He warned that the bar on organic revenue will be high for the next two quarters due to clients lost in 2005. That makes organic revenue growth “challenging.”

Professional fees – mostly related to IPG’s restructuring – were up 21 percent to $91M. Roth expects a decline in those fees for the full year.

IPG’s stock trades at $9.93. The 52-week range is $13.40 and $9.08.


A U.S. District Court judge has tentatively dismissed a wrongful termination lawsuit filed by Doug Dowie, the former head of Fleishman-Hillard’s Los Angeles office.

Dowie claimed he was being scapegoated by F-H to cover up illegal payments made by the Omnicom unit to politicos.

Michael Faber, Dowie’s attorney, called the dismissal “bizarre.”

Dowie and John Stodder are waiting for a jury’s verdict on charges they bilked the Los Angeles Dept. of Water and Power of more than $300K.


Three CPA professors, shown the 2005 audit of PRSA, dispute key parts of it, particularly PRSA’s policy of booking dues as cash rather than deferring the income over the next 12 months.

“The standards of accounting call for full, fair and adequate disclosure,” said professor Phil Wolitzer of Long Island University, adding: “I don’t particularly see it here.”

The CPAs, two of whom were quoted in a Feb. 9 Wall Street Journal article critical of Omnicom’s financial statements, said the income should be booked “ratably” over the course of the year.

Doing so would cut PRSA’s claimed “net assets” of $2,637,058 by at least $1.6 million to a little over $1M. Assets would thus be a comparatively small percentage of PRSA’s annual costs of $9.9M.

The other professors consulted were Edward Ketz of Penn State and Charles Mulford, Georgia Tech.

(continued on page 7)

Internet Edition, May 17, 2006, Page 2


Fleishman-Hillard has won a competitive pitch to develop a multiyear PR plan highlighting the National Capital Region’s preparedness for a disaster.

Funds for F-H’s contract (budget is about $100K) are drawn from a federal Dept. of Homeland Security grant, according to Brian Worthy, a public information officer for Fairfax County, Va., which issued the RFP on behalf of the region.

Eleven firms pitched, including BETAH Associates, Inc., Comunicad, Inc., CRT/tanaka, Leapfrog Solutions, Mind & Media, Inc., MRC3 Media, Ogilvy PR Worldwide, Terrorism Research Center Inc., Weber Shandwick, and Widmeyer Communications.

The Fairfax County Office of Public Affairs is overseeing the contract.

Worthy said F-H has been charged with developing a strategic communications plan for the NCR, which encompasses Washington, D.C., and surrounding areas in Virginia and Maryland.

F-H’s work involves development of the plan, not implementation.

The RFP was issued in January after federal and local institutions were lambasted for the Gulf Coast response to Hurricane Katrina. “It is clear from the pointed questions raised after Katrina that many members of the public and the media remain unaware of the NCR’s disaster preparations,” read that document.


Kalee Kreider, a former Fenton Communications senior VP, has joined Al Gore’s Nashville, Tenn.-based braintrust as communications chief.

She has significant environmental bona fides, earned from stints at Greenpeace and the National Environmental Trust.

At Fenton, Kreider did PR for Energy Future Coalition, Environmental Media Services,, Win Without War and True Majority.

Kreider is to help Gore handle the media as his book, “An Inconvenient Truth,” about the dangers of global warming, is released this month.

She also could play a PR role if the former Vice President poses a challenge to Sen. Hillary Clinton for the Democratic nomination for president.


McDonald’s has established a “global moms panel” to get input on lifestyle initiatives, restaurant communications and children’s well-being.

The nine-member group includes women from the U.S., U.K., Argentina, China, Germany and Italy.

The American contingent includes Bonnie Blair (Olympic speedskating champion), Michele Borba (author of “12 Simple Secrets Real Moms Know”), Kim Carter (librarian and Parent Teacher Assn. president) and Laura Lopez Cano (artist and recent fellow at the National Hispana Leadership Institute).

The panel works with Mary Dillon, McDonald’s global chief marketing officer.

JSH&A Public Relations, which was founded in ’89 by GolinHarris Communications’ veteran Jonni Hegenderfer, does PR for the moms program.


The National Scenic Byways Program, a federal government project encompassing 30,000 miles of scenic and “All-American” roads in the U.S., is seeking the help of a PR firm to develop a public awareness plan for its Duluth, Minn.-based operations center.

Under the Federal Highway Administration, the NSBP Resource Center promotes, plans and preserves the national network of historic and scenic byways. It has allocated a $125K budget to hire a firm for development of a three-year plan to “help bring public exposure and increased recognition to the ‘America’s Byways’ brand,” according to an RFP obtained by O’Dwyer’s.

The Byways program, which was created in 1991 and gained steam in the 1990s, includes roadways based on trails with archaeological, cultural, historical, natural and recreational features. The 518-mile Seaway Trail through New York and Pennsylvania from the St. Lawrence River to Lake Erie, San Juan Skyway (Colorado), and the Historic National Road, the first federally funded road in the U.S. (Maryland), are among the highlights on the Byways list.

Proposals are due June 6. Henry Hanka ([email protected]) is taking questions. Finalists will be offered a $2,500 traveling stipend to pitch in Minn.


Edelman is promoting the European Food Safety Authority report re-confirming the safety of low-calorie sweetener aspartame on behalf of Merisant, which markets aspartame-based Equal and NutraSweet.

The EFSA study followed a report by Italy’s Ramazzini Institute that linked aspartame consumption with an increased risk for leukemia and lymphoma. The EFSA determined that the Ramazzini investigation contained flaws that brought into question the validity of its findings.

A New York Times editorial (Feb. 21.) cited the Ramazzini report and recommended that readers concerned about the safety of aspartame try products sweetened with sucralose (Splenda). RF|Binder Partners handles Splenda, a product of Johnson & Johnson’s McNeil Nutritionals unit.


Qorvis Communications is representing the Agricultural Coalition for Immigration Reform on the immigration overhaul debate.

The firm is pitching Craig Regelbrugge, co-chair of ACIR, and his message that the U.S. requires a “steady supply of agricultural laborers to keep American agricultural products affordable for the American consumer.”

Regelbrugge also is senior director of government relations at the American Nursery & Landscaping Association.

The nursery and landscape industry employs 600K people during peak seasons. The ANLA has posted a tip sheet called “How do you respond when the Dept. of Homeland Security shows up at your farm, ranch or business?” Cooperate, but ask for identification is among those tips. The ACIR is a group of ranchers, businesses and farmers working to overhaul the H-2A temporary and seasonal alien agricultural worker program.

Internet Edition, May 17, 2006, Page 3


The average daily circulation of more than 700 print newspapers tracked by the Newspaper Assn. of America saw an average 2.5 percent decline in readership for the six months ended March 31. That sag comes as more readers have turned to the web for news.

The San Francisco Chronicle and Los Angeles Times posted declines of 15.6 percent and 5.4 percent respectively, while USA Today and the New York Times rose slightly at 0.1 percent and 0.5 percent. The Washington Post took a 3.7 percent hit and the San Jose Mercury News, a McClatchy Co. paper on the block, dropped 7.7 percent.


Time Warner’s AOL unit is cutting 1,300 employees and closing a call center in Jacksonville, Fla., in a bid to rebalance its work force.

AOL claims better online service has reduced the need for human contact by either phone or e-mail. It says eight million users a month use its online tools, while 5.5M people contact an AOL service rep.

The company has 18.6M subscribers, which is down from a 26.7M peak in ’02. That plunge is due to customers switching to broadband from dial-up.

AOL is also reducing staff in Utah and Tucson. The cutbacks represent seven percent of its workforce.


Jeff Smulyan, CEO of Emmis Corp., has put together a $570 million buyout package for the radio broadcaster. The company plans to establish an independent panel of directors to consider the bid by Smulyan, who owns a 17 percent Emmis stake.

Indianapolis-based Emmis owns 25 radio stations in markets such as New York, Los Angeles, Chicago and Phoenix. The broadcaster is in the process of selling its TV station group, having lined up takers for 13 of its 16 stations.

Emmis' 2005 revenues were up 10 percent to $387M. Operating income tumbled to $39M from $73M due to a weaker radio ad environment and higher promotion/programming costs.


The Columbia Journalism Review says the White House “PR offensive” about the press not reporting “good news” coming out of Iraq is an “affront to those reporters who are risking life and limb to cover this story.”

In its May/June editorial, CJR says the fact that Iraq lacks the basic services for a civil society to function is news by any standard.

The President, when he talks about progress in Iraq, fails to mention that oil and electricity production and the availability of household fuel are lower than they were two years ago. The number of Iraqis killed by insurgents has tripled during that period. Nearly nine-in-ten Iraqis (87 percent) “want a concrete timeline for a U.S. withdrawal,” notes CJR.

The magazine concludes: “Indeed, let’s have all the context in Iraq.”


New York's Edward Cardinal Egan promises to make “exclusive” appearances on the Catholic Channel that Sirius Satellite Radio plans to launch in the fall.

The 24/7 operation will feature call-in shows in which viewers can comment upon Church policies and current events.

There will be programs offering religious guidance, sacred music as well as a daily mass from St. Patrick's Cathedral. Vatican Radio will get airtime on the CC.

The new station joins Sirius' other religious programs including FamilyNet, the broadcast arm of the North American Mission Board of the Southern Baptist Convention, which features Pat Robertson's "700 Club."

Sirius is the home of shock jock Howard Stern.


Rolling Stone notched an American Society of Magazine Editors award for reporting excellence for its “The Man Who Sold the War” piece written by former CIA official James Bamford that profiled John Rendon. The article ran Dec. 1.

The Rendon Group CEO heads the Pentagon’s “go-to” PR operation. It was hired by the military shortly after the Sept. 11 attacks.

RG “produced” the liberation of Kuwait City and kept the Iraqi National Congress “relevant” during the run-up to the second invasion of Iraq by U.S. forces.

The reporting category “honors the enterprise, exclusive reporting and intelligent analysis that a magazine exhibits in covering an event, a situation or a problem of contemporary interest and significance.”

Said ASME: “Reporter James Bamford delves deep into the crossfire of the war of information and imagery to expose the work of the most secretive– and effective – tacticians of the endless Iraqi conflict. ‘The Man Who Sold the War,’ a massive reporting effort that includes a rare interview with General John Rendon, provides a glimpse into covert trading of rumors and information in order to go to war.”

The ASME award ceremony was held May 9 at New York’s Lincoln Center. The awards are a partnership with Columbia Univ. Graduate School of Journalism.


Yahoo has merged its Spanish language operation with NBC Universal’s Telemundo Hispanic TV network to form the Yahoo Telemundo website. The revamped site replaces Yahoo! en Espanol and

The deal provides Yahoo access to Telemundo’s original “telenovela,” news and sports programming, while Telemundo benefits from the tech prowess of the Internet powerhouse.

More than 11.5M Hispanics visited all Yahoo sites in March. Yahoo en Espanol attracted 500K-plus visitors.

Time Warner has purchased Liberty Media’s 50 percent stake in Court TV for $735 million. Court TV, which will generate ’06 revenues of nearly $300 million, will be merged into TW’s Turner Broadcasting System group.

(Media news continued on next page)

Internet Edition, May 17, 2006, Page 4


The General Accountability Office reports that fear of terrorism, shortage of Arabic speakers and assignment of public diplomacy officers to “temporary duty in Iraq” are hampering U.S. outreach to the Arabic world.

American embassies have been turned into fortresses as 80 percent of them rate a terror attack as either “critical or high.”

Erection of concrete barriers, restrictions on pagers/cellphones and requirements for armed escorts, however, have the “ancillary effect of sending the message that the U.S. is unapproachable and distrustful.”

For instance, the GAO reports that the U.S. Information Center in Pakistan averages one visitor a day because many past visitors were “humiliated by the embassy’s rigorous security procedures.”

Karen Hughes, the Undersecretary for PD and PA, wants to step up development of “American Corners” outside Embassy compounds, but one official described that plan as doing PD “on the cheap.”

The GAO found that the State Dept. falls well short of filling “language-designated” jobs. Nearly 40 percent of those posts in the Arab world are held by people not fluent in Arabic. An additional problem: few PD officials want to serve in the Muslim world. During State’s summer posting cycle, jobs in the Muslim states received 3.7 bids per-position compared to 8.9 bids for jobs elsewhere.

The GAO reports that the U.S. Arab-language magazine, Hi, had few readers. An official in the Cairo embassy said he distributed 2,500 copies of the magazine to newsstands. At least 2,000 were returned unsold.

Hi, which was supposed to create a positive image of the U.S. among Arab youth, has been put on a hiatus.


MWW Group has tapped Baseline Magazine senior writer Larry Barrett as the first member of the firm’s “content creation team,” based in San Francisco.

MWW president Michael Kempner said Barrett will be focused on staying abreast of trends and breaking developments in business and technology to create content and counsel clients.

Prior to five years at Baseline, Barrett was senior editor and writer for CNET Networks in a five-year career. Earlier, he was a technology reporter for the San Jose Business Journal.


Laurie Luhn has been promoted to director of booking for FOX News Channel, overseeing the weekday and weekend editions of “Fox News Live” and managing booking units in New York, Washington and Los Angeles.

She had been director of booking for FNC's D.C. bureau and has been with the network since its inception in 1996, after starting a career in PR in Austin.

Douglas Harbrecht, executive editor of BusinessWeek Online, has joined The Kiplinger Organization in Washington, D.C., as new media editorial director. He will focus on content and design of, the portal which includes the Kiplinger’s Personal Finance and Business Forecasts websites.

Harbrecht had been with BusinessWeek since 1986, when he began as a Washington correspondent. He moved to the digital side in 1999 after serving as Washington News Editor.

Whoopi Goldberg is the latest entertainer to enter the radio arena. The actress has signed on to host a morning-drive radio show, “Wake Up with Whoopi,” for Clear Channel Communications starting July 31. The program will run from 5 to 9 a.m. nationwide on adult contemporary stations. CC noted that the morning daypart has struggled to pick up female listeners in recent years.

Anderson Cooper will do five reports for CBS News’ “60 Minutes” program beginning next TV season. CNN, in turn, will have the one-time rebroadcast rights to the program. Cooper will remain anchor of CNN’s “Anderson Cooper 360.”

Liz Anderson, who has ten years of Los Angeles TV news experience, has opened LizMedia in the City of Angels. She is calling her venture a "television-to-go" boutique production company that will round up the best talent in the city to get results. Prior to opening LM, Anderson was a senior producer for Medialink. More info is at


The New York Times has expanded its “Automobiles” section online to follow the boost of its print edition. Exclusive content like car reviews, video features and a directory of car clubs are part of the update.

Rotating topics include “Motoring,” which includes consumer advice on buying, leasing, insurance and maintenance, “GreenTech,” environmental auto issues, “Wheelspin,” news for car enthusiasts, “Handlebars,” focusing on motorcycles and scooters, “Technology,” “Collecting,” and “Design.”

Poker Pro Magazine said it will launch a European edition in September to tap the burgeoning poker market overseas.

The publication will be sold at retail outlets like One-Stop Stores, Rippleglen, and Balfours, and will be available at casinos and cardrooms in English-speaking Europe.

The magazine’s publisher, Dan Jacobs, said it will hit newsstands with the largest circulation of all poker magazines in the U.K.

News Corp.’s site, which has more than 75 million registered users, will offer free downloads of Fox TV’s hit show, “24.”

Burger King is sponsoring the programming because a lot of its customers spend time on the social networking site, according to Gillian Smith, BK’s senior director of media. MySpace says future programming may not come exclusively from Fox, its sister company.

News Corp. paid $650M for MySpace last year.

Internet Edition, May 17, 2006, Page 5


The Worldcom PR Group, a global network of independent firms, said the top issue keeping midsize PR firm owners up at night is the recruitment and retention of good employees, according to a survey of its members. Maintaining client relationships/client satisfaction was second, followed by business wins and profitability, cost of doing business and employee benefits.

Seventy-two percent of the more than 50 senior PR execs responding to its annual survey have clients who are “optimistic” about their respective business climates for the remainder of 2006.

Worldcom found the most important client deliverables from PR firms, according to survey respondents, were “strategic counsel” and “publicity,” followed equally by “marcom support” and “lead generation.”


A group of marketing firms and services company have banded together to offer a $100K grant of communications services to product a cause marketing campaign for a non-profit entity.

Participants include Medialink (broadcast and broadband services), Peppercom (PR), Quality Letter Service (print and direct marketing), Bemporad Baranowski Marketing Group (branding), Slam! Media Group (A/V production) and U.S. Newswire.

The “BBMG It’s How We Live Grant” is looking for applicants who can show the potential for impact on a targeted cause and business goal, commitment level of its team, availability of existing communications channels, and cultural relevance, among other criteria.


BRIEFS: New York-based lifestyle marketing firm Cornerstone has added a PR unit under the direction of Ed James, formerly a SVP for the Morris and King Co. Cornerstone focuses on marketing music, film and consumer products to the 15-34-year-old demographic. ...Bari George, former national advertising director for Planned Parenthood Federation and a VP for Beneson Janson Advertising in Los Angles, has set up By George & Co. in New York to focus on communications for the non-profit sector. George noted “fragile finances and traditional formulas” have limited non-profit messaging. She said the new firm has the team to counter that trend. 917/523-5029, ...Three-year-old integrated marketing and PR firm Public I Partners in Princeton, N.J., has relaunched as Resound Marketing. ...The Abernathy MacGregor Group is advising Sheboygan, Wisc.-based L. French Automotive Castings through Chapter 11 bankruptcy. ...CooperKatz & Co. marked its 10th anniversary on May 1. The firm was started in 1996 by Burson-Marsteller vets Andy Cooper and Ralph Katz with the Association of National Advertisers as its only client. The two cited the firm’s independence as a key factor in its success as it grew to 18 employees and $2.8M in billings in 2005. ...Allen & Caron, an Irvine, Calif.-based IR and financial comms. firm, has opened a Paris office under Patrick Lauriére.


New York Area

Dentsu Communications and De Plano Group, New York/Benihana, for a strategic and internal communications campaign as the restaurant chain refurbishes about two dozen restaurants with a “contemporary Japanese look and feel.”

HWH PR/New Media, New York/Dotster, Inc., Internet domain registration, for PR.

MMG Mardiks, New York/Midwest Airlines, for ongoing PR.

Peppercom, New York/J.H. Cohn, independent accounting and consulting firm, as AOR for integrated marketing.

5W PR, New York/, real-time financial info for investors, for PR and financial communications programs.

HLD/Blankman PR, Rockville Center, N.Y./ Cholestech Corp., to promote its branded medical diagnostic products.

Travers Collings & Co., Elmira, N.Y./Hardinge Inc., $290M material-cutting company, as AOR for IR.
Mason Onofrio PR, New Haven, Conn./The United Illuminating Co., electricity utility, for media relations, event management and strategic comms.

Lutto & Associates, Allendale, N.J./Leica Sports Optics, as AOR for PR.


Fitzgerald Communications, Boston/NetEconomy, financial technology services, for international communications, Voxant, open distribution network for online video news, for “introduction” of the company and ongoing PR.

DPR Group, Cary, N.C./Supply Chain Consultants, supply chain software and consulting, for PR.

Boardroom Communications, Plantation, Fla./ Avisena, healthcare management, for PR, public affairs and media relations; Forkosh Development Group, for its Solis Resort, Spa & Residences (Sunny Isles Beach, Fla.).

The Zimmerman Agency, Tallahassee, Fla./ Launching the Magic Johnson Travel Group, travel consortium.


Alexander Marketing Services, Grand Rapids, Mich./Wood Classics, teak garden furnishings, for strategic planning, direct marketing and PR.


CTA PR, Louisville, Colo./Far East Energy Corp., for production of a corporate profile for its IR program.

LCO Communications, Beverly Hills, Calif./Imperia Entertainment, for PR and media relations at the Cannes Film Festival (May 17-27) in support of its feature film “Say it in Russian.”

The Phelps Group, Santa Monica, Calif./Los Angeles Orthopedic Hospital; New Balance Los Angeles and FrontRunners, for an integrated marketing campaign, and CarMD, for PR, website creation, SEO, and print advertising.

Correction: A new client of Cognito was misspelled in the 4/26 edition. The client is Pyxis Mobile, not Phyxis Mobile.

Internet Edition, May 17, 2006, Page 6


Mindshare Interactive Campaigns, Washington, D.C., has acquired Texas-based web consulting shop RampWEB, which focuses on web accessibility services for government agencies and contractors, universities and non-profits.

Mindshare said it adds capability to make websites more accessible and compliant with federal law (Section 508) and international guidelines.

Kathleen Wahblin, CEO and founder of RampWEB, takes the title of director, user experience at Mindshare.

Jim Thatcher, who helped develop the federal 508 standards, and John Slatin, founding director of the Accessibility Institute at the Univ. of Texas at Austin, will continue their affiliation with RampWEB under Mindshare.


Kevin Foley, who launched broadcast PR company KEF Media Associates in Chicago on May 1, 1986 "with no employees and no clients," marked the firm's 20th year with a party at its expanded headquarters, now in Atlanta.

A former account group manager for Burson-Marsteller and Ketchum, Foley moved the company to Atlanta in 1993 and oversaw its growth to nearly 40 employees with corporate clients like Coca-Cola, Home Depot, State Farm, Purina, and agencies like Manning Selvage & Lee, Cohn & Wolfe, Ketchum, Weber Shandwick, Golin Harris and CKPR.

Bob Cohn, founder of Cohn & Wolfe, Ellen Hartman, managing director of Weber Shandwick's Atlanta office, and Bill Marks who heads up GCI Group’s technology practice, were among attendees.

“The founding principle was to apply our understanding of the PR discipline to the practice of producing and placing sponsored news content for our clients,” said Foley, who has staunchly defended the broadcast PR sector in the face of recent criticism.

BRIEF: Carly Norausky, business development ma ager at MLR Design in Chicago, has joined WestGlen Communications as a senior account director in the Windy City. She has agency experience with Fleishman-Hillard and Margie Korshak Inc. ...Bob Hill, executive producer for News Broadcast Network, won four Telly Awards at the annual confab. Hill earned silver for an American Society of Anesthesiologists VNR on gastric bipass surgery, and three bronze awards. ...Denham Springs, La.-based Metro Press Clipping Bureau won a $5,654, one-year contract with the Louisiana Governor’s Office to track national and local newspaper coverage. ...Marcus + Co., a Boston-based company which develops award and retention programs, has been tapped to manage judging for the 2006 Oracle Titan North American Partner Awards. Marcus will develop scoring sheets and judging kits, oversee the process and certify results. Winner will be announced at Oracle’s OpenWorld event in October.



Gabrielle Acevedo, VP at Euro RSCG Magnet, to Kwittken & Co., New York, as managing director. She was in Magnet’s corporate and financial practice. Carrie Gilman, A/E, Joele Frank, Wilkinson Brimmer Katcher, has joined as an associate.

William Kelly, independent consultant, to pharmaceutical company Inyx, Inc., New York, as VP of IR and corporate communications. Prior to 10 years handling a variety of pharma sector clients, Kelly was a full-time consultant for Bristol-Myers Squibb and earlier was a VP for J.P. Morgan & Co.

Monica Talmud has left Matlock Advertising & PR for a senior A/E post at Bridgewater, N.J.-based R&J PR. She handles Integrity House and The N.J. Fire Sprinkler Advisory Board.

Bradley Blakeman, president of Kent Strategies, to Gordon C. James PR, Washington, D.C., as a senior advisor. Blakeman was director of scheduling for President Bush’s transition team in 2000 and later served on the president’s senior staff from 2001-’03.

Melissa Thompson, VP of corporate communications for Interstate Hotels & Resorts, to O’Charley’s Inc., Nasville, Tenn., as VP/corporate comms. Prior to Interstate, she held comms. posts at the American Hotel & Lodging Association.

Donald Kirchoffner, has departed Exelon after five-plus years as VP of corporate communications to become assistant VP of communication for North Central College, Naperville, Ill.

Mary Abood, VP of corporate communications and IR at Penton Media, to Ferro Corp., Cleveland, as director of corporate comms. She previously led communications for Advanstar Communications. David Longfellow, VP of investor and government relations for $2B tech company Agere Systems, joins Ferro as director of IR.

Steven Barrett, a veteran ad exec, to GPS Industries, Vancouver, B.C., as marketing and comms. director.


Howard Pulchin, who began his PR career at Edelman in the late 1980s and rejoined in 2000, has been named GM of the firm’s New York consumer marketing practice. In between Edelman stints, he was director of communications for Guinness Bass Import Co. and spent seven years at Cohn & Wolfe as VP/group manager. Christina Smedley, who has been “deeply involved” in the firm's work for Starbucks, Unilever and Georgia Pacific as eastern region creative director, has been named executive VP, strategic planning and program development director for that region.

Ronald Seeholzer to VP of IR for FirstEnergy, Akron, Ohio, succeeding Terrance Howson, who is retiring after 30 years.

Erika Schmidt to president and chief operating officer, The Frause Group, Seattle, Wash. Schmidt was the first employee to join Bob Frause at the firm’s inception in 1998. Frause takes on the role of chairman/CEO as part of a plan to divide responsibilities and “lead the firm as a team.”

Internet Edition, May 17, 2006, Page 7

PROFS RAP PRSA REPORT (continued from page 1)

Ketz is author of nine books including Hidden Financial Risk. He has been quoted by the New York Times, Washington Post, BusinessWeek and USA Today, among others. His column, “The Accounting Cycle: Wash, Rinse and Spin,” is on

Mulford is co-author of Financial Warnings, and numerous papers in financial/accounting journals.
Both Ketz and Mulford supported the contention of the WSJ’s 2002 article that Omnicom should have taken a loss on its dot-com investments.

Said the WSJ Feb. 9: “The creation of the entity, Seneca Investments, appears to have been used by OMC to avoid an earnings charge of at least $89.5M in the first half of 2001, when it reported earnings of $246M, documents (from court) indicate.”

PRSA Release Claims Record Assets

A PRSA release April 25 led with the claim that its assets had grown 8% in 2005 to “the highest level in the Society’s 59-year history.”

The third paragraph noted that 2005 revenues fell 6.7% to $10.2M because of the cancelled annual conference in Miami Beach.

PRSA in 2005 deferred $963,082 in income when dues totaled $4.4M. Of the $963,082, $312,000 was for publications only. Another $651,082 was for dues paid in advance of a member’s anniversary dates or for payments for future seminars.

The Int’l Assn. of Business Communicators, which has date of joining (anniversary) billing like PRSA, deferred $1.5M of its $2.5M in dues in 2003. It reported net assets of -$715,854. Dues are “recognized on a straight-line basis over the period of membership,” says the IABC audit.

The New York State Society of CPAs, doing the same, deferred $4.6M of its $6.5M in dues in 2004.

Mulford said PRSA’s dues should be booked as earned over the course of a year and that “this is not a grey area at all.” The PRSA financial statements “do not reflect how the dues are earned,” he said.

Wolitzer said proper accounting “would not cost PRSA any money but would give members a better picture of the Society’s would utilize GAAP (generally accepted accounting principles) better for more transparency.”

Audits Miss Key Info

The CPAs pointed out that an audit may not address issues of keen interest to members.

PRSA has been reporting minimal amounts of staff time for its annual conference: $181,657 in 2005; $103,122, 2004; $108,197, 2003; $108,826, 2002.

Former officers and treasurers say actual staff time on the conference approaches $2M because of elaborate preparations needed such as lining up nearly 150 speakers each year; arranging for 40+ exhibits; creating and printing a four-color program of 80 pages or more; advance visits to cities, etc.

Members were told that the 2004 conference in New York had record profits of $580,284.

Only about 4% of members go to an annual conference 2005 president Judith Phair has said.

The 2005 board permanently cancelled printing of PRSA’s nearly 1,000-page directory of members, PR services, committees, bylaws, etc., saying the prime motive was that the new online directory is better and that cost was not the major factor.

Millions Removed from Categories

The CPA professors were not pleased by PRSA’s new “administration” category in which $2.6 million in 2005 expenses are lumped together after being removed from 13 categories of spending. A total of $2.2 million was removed in 2004.

For instance, publications cost $1,428,564 in the 2003 audit but this was restated to be $970,726 in the 2004 audit. Removed were $457,838 in costs. Similar reductions took place in the other categories such as the conference, Counselors’ Academy, PRSSA, awards program, etc.

However, the CPAs said there was nothing illegal about such a practice although the members are getting less information.

There are a lot of “gaps” in GAAP, said Wolitzer, who said PRSA should provide a footnote to the staff costs for the conference telling the members that only staff time at the actual conference is being counted. Time sheets should be kept during the year tracking number of hours worked on the conference, he said. Current practice is “not ideal,” he added.

$2,002,580 Removed from 13 Categories

Below are 2003 audited figures of PRSA for 13 categories of spending as reduced in the 2004 audit.

Category 2003 audit Restated Difference
Prof. Resources
PR Students Soc.
Media Relations





Partners Creative, a Missoula, Mont.-based marketing communications shop, beat four competitors for a $500K, two-year PR push to tackle the “misunderstood and sometimes controversial” topic of workmen’s compensation.

Three other Montana firms – Wendt Advertising & PR (the incumbent), G&G, and Flying Horse Communications – and The Carmen Group, a Washington, D.C.-based firm with a Helena, Mont., representative, pitched for the account.

The Montana State Fund, a non-profit agency set up to provide wokers' comp coverage to the Treasure State’s 28,000 businesses, was looking for a firm to tackle the issue and make it palatable for public education efforts.

Internet Edition, May 17, 2006, Page 8




Three accounting professors have analyzed PRSA’s financial reporting and come to many of the same conclusions that we have (page one).

PRSA’s reporting is not “full, fair and adequate disclosure,” says Phil Wolitzer of Long Island University, who also gives accounting classes to reporters for the New York Society of CPAs.

Dues should not be booked immediately but “ratably over the course of the year” as earned, says Professor Charles Mulford of Georgia Tech. He says this is “not a grey” area at all and PRSA has no option but to do it this way.

Mulford and Professor Edward Ketz of Penn State are the same CPAs who disagree with the way Omnicom accounted for the shift of 16 dot-coms to an off-balance sheet entity in 2001.

The Wall Street Journal thought that Omnicom should have deducted $89M from its first half earnings of $246M.

OMC is sticking to its guns, refusing to do so, citing lack of action from the SEC and approval from two CPA firms, Arthur Andersen and KPMG.

We don’t expect PRSA to mend its financial reporting ways either, unless it hears from enough members.

The $1 million in true assets that it has are a little more than one month’s costs, which are about $833,000 on $10M annually. This is very thin financial ice. By booking advance dues as cash, PRSA is running a sort of Ponzi scheme that depends on replenishment from renewing members.

The more candid IABC admits to deferred dues of $1.5M and admits its assets are -$715,854. PRSA, in the same manner, should “bite the bullet,” “face it,” “deal with it,” as the sayings go.

The worst news we got from the CPA profs is that audits simply don’t “reach down” into a lot of spending categories. Audits are a very poor way for members to learn what’s going on financially with their organizations, especially when the leaders refuse to make any comments or explanations.

If PRSA members knew that the loss on their annual conference is well over $1 million a year if staff time sheets were properly kept, they would no doubt demand changes. They might want to cut back on the conference, to which only 4% of members go (and at least half of these are forced to go since they’re in the Assembly, are speakers, or are on committees, etc.) and opt to get back their annual printed directory, which all 21,000 members used to receive. It’s spin of the worst sort to claim that the online directory is better than the printed one. The directory obviously was ditched because PRSA can’t afford the conference and the directory at the same time. Staff and leaders love the conference. The members don’t. There’s a lot of free-loading at the conference by leaders including the 17 directors who get all travel, hotels and meals paid plus free registration. More than 20 ex-presidents go free for life and don’t pay PRSA dues for life.

Prof. Ketz said PRSA is a “more leveraged organization” than is indicated. The Society signed a 13-year lease for 22,000 sq. ft. at 33 Maiden lane starting in Q2 of 2004 and owes rent of $5,859,234, having deferred payment of $422,701. Ketz feels this should be carried as “rent payable” rather than “deferred rent” to be “clearer.” PRSA, he said, should show the $5.8M remaining value of the lease on the asset side of the balance sheet and on the liability side as a lease obligation. It doesn’t change the equity balance but “it does reveal a more leveraged organization than is presented in management’s statements,” he said. Rent in 2004 at 33 Irving place was $241,000. It is $439,360 for 2006 to 2008 and jumps to $530,893 in 2009 and $549,200 for 2010 and thereafter.

Howard Blankman, former president of the Long Island chapter of PRSA and now retired in Florida, said it was the rank-and-file members of the chapter who revolted in 1989 and voted to leave PRSA, not the leaders. He said the members concluded they got little for $175 in national dues. “I believe the new group, which is focused on the concerns of the rank and file–as opposed to PRSA’s bureaucracy–is serving the needs of members much better than before,” he said...while PRSA had a 14- year gap between conferences in New York (1990 to 2004), many conferences and shows are in New York every year and some two and three times a year. The Javits Center gave us a list of 26 shows that use the Center yearly including FAME (fashion), meeting three times yearly; National Variety Merchandise Show, twice yearly; Int’l Gift Fair, twice yearly; Children’s Club (apparel), four times yearly; Int’l Beauty Show; Int’l Restaurant and Food Service Show; American Int’l Toy Fair, and Int’l Hotel/Motel and Restaurant not having its “international conference” in New York, PRSA is leaving nearly $1M in revenues on the table each year which it can ill afford to do.

Some New York PR pros are disappointed that only five PR pros made the list of “The Influentials” in the May 15 New York mag: Howard Rubenstein; his son, Steven; Dan Klores and his senior EVP Sean Cassidy (who is said to be running the Klores firm day-to-day while Klores is “making films”), and Ken Sunshine, who has his own firm and whose main accomplishment is “keeping clients like Leo DiCaprio and Justin Timberlake out of trashy media.” The Rubensteins are practically family of the magazine because Rubenstein Assocs. represents former sister company, the New York Post. However, heads of the big New York PR firms and New York corporate PR depts. are almost invisible these days because they make few or no public appearances, give no speeches, write no papers. They keep a low profile unlike past figures like Kerryn King, Ed Block, Herb Rowland, Ed Stanton, Jonathan Rinehart, John Hill, Dave Drobis, Paul Alvarez, Bill Novelli, Jack Porter, Bob Dorf, Kal Druck, Burt Hochman, etc.

--Jack O'Dwyer


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