DOD TO REVIEW ‘AMERICA SUPPORTS YOU’

The Department of Defense is preparing to review its PR contract for the “America Supports You” campaign, a taxpayer-funded program which touts non-profit groups supporting U.S. troops that is under Pentagon investigation.

The program has drawn scrutiny by the media and the Defense Dept., which is investigating the relationship between the independent military-run paper Stars and Stripes and the ASY campaign.

A business relationship between the two entities caused consternation in the S&S newsroom after the paper learned and reported last fall that S&S had awarded a $499K PR contract to Washington, D.C.-based Susan Davis International to support the ASY campaign.

A spokesman for the Office of the Secretary of Defense told O’Dwyer’s that Susan Davis International’s contract has come up for renewal. He confirmed that the contract is with the Defense Dept.

Michelle Shortencarrier, a former Pentagon public affairs director who handles the ASY work at SDI, did not return a call.

The Pentagon said it expects to issue an RFP this week to find a D.C. area firm to provide a national strategy and outreach program for ASY.

The top two editors for Stars and Stripes said in December that they formally requested “immediate, full and complete disclosure” of their own newspaper’s dealings with the ASY campaign. The Pentagon’s Inspector General’s office is auditing the deal.

LUDLAM JOINS H&K

Will Ludlam joined Hill & Knowlton Feb. 11 as executive VP of its northwest region (Seattle, Spokane and Portland). He had been managing director of Porter Novelli’s western operations.

Ludlam began his career at The Rockey Co., which H&K acquired in `00.

He has counseled Microsoft, Hewlett-Packard, Washington Mutual, Bristol-Myers Squibb, Airco Gases and Centers for Disease Control. Ludlam reports to Paul Taaffe, H&K’s CEO.

Peggy Armstrong, who was press secretary to former Washington, D.C. Mayor Anthony Williams, has joined the International Dairy Foods Assn. as director of communications. She takes over the spot held for the past 11 years by Susan Ruland, who left for Powell Tate/Weber Shandwick in November.

IDFA represents an industry with $90B in annual revenues.

SITRICK REPS BATTERED MBIA

Sitrick & Co. is handling crisis duties for struggling bond insurer MBIA Inc. that reported a $3.5B pre-tax write-off for its insured credit derivatives portfolio.

The Armonk, N.Y.-based MBIA registered a $1.9B net loss for `07 compared to an $819M ‘06 profit.

MBIA is dealing with the collapse of the subprime mortgage market. Bloomberg reports that meltdown has resulted in $146B in losses and markdowns at banks and securities firms since Jan. 1.

Fitch, on Feb. 5, announced that it was putting MBIA’s “AAA” bond insurance ranking under review for a downgrade.

The ratings company says it is reviewing MBIA’s rankings due to a worsening outlook for the subprime mortgage market.

MBIA CEO Gary Dunton said that the bond insurance business is “paying the price” for expanding beyond its traditional municipal bond turf to riskier ventures.

CAPLAN FIGHTS FOR EXXON VALDEZ VICTIMS

Caplan Communications launched “The Whole Truth” campaign to support the effort of victims of the 1989 Exxon Valdez oil spill to recover punitive damages from ExxonMobil.

The U.S. Supreme Court has slated Feb. 27 as the date for oral arguments in ExxonMobil’s appeal of a lower court’s decision to grant $2.5B in damages to more than 32,000 commercial fishermen, native Alaskans, businesses and towns that were impacted by the spill into Prince William Sound.

Alaska’s Governor Sarah Palin filed a “friend of the court” brief on Jan. 29 backing the award of damages.

Talis Colberg, Alaska’s Attorney General, said in a statement that if Exxon succeeds in blocking the damages it would deny Alaskans the “compensation to which they are due” and “reduce the incentive for those who use our coastal waters to operate in a careful and safe manner.”

The campaign’s website is at www.wholetruth.net.

Patrick Doherty, an ABC News veteran and producer of “Good Morning America,” has joined Kwittken & Co. as managing director. He also handled ABC’s affiliate service, directing editorial coverage, coordinating satellite feeds and overseeing live shots.

Jason Schlossberg, president of K&C, believes Doherty’s access to top TV people will be a big value to clients. Doherty is a member of the Democratic Leadership for the 21st Century group and the U.S. Equestrian Federation.

NAM FILES SUIT VS. LOBBYING DISCLOSURE

The National Assn. of Manufacturers has filed a lawsuit to prevent enforcement of a provision of the Honest Leadership and Open Government Act of 2007.

The powerful trade organization of industrial giants believes the First Amendment rights of its members are threatened by Section 207 of the law requiring disclosure of names of those who pay more than $5,000 to finance lobbying activity.

The group fears members may not “express their opinions in the legislative process” if they have to “go on the record.”

John Engler, NAM President, raised the possibility that a company could be a target of a terror attack if it bankrolls lobbying in support of “hot button” issues such as global warming or nuclear power.

In his statement, Engler said: “For example, anti-globalization forces are increasingly resorting to violent means to oppose both political leaders and officials in the private sector who support transnational economic development."

Engler also believes “taking policy positions that are unpopular with other groups may lead to boycotts, political pressure, shareholder suits, or other forms of harassments.”

Sen. Joe Lieberman of Connecticut said the measure was passed to thwart “stealth lobbying campaigns.”

EDELMAN TAKES STAKE IN Rx DEBATE

The National Assn. of Chain Drug Stores plans to blanket the Washington, D.C., regions with ads created by Edelman’s Blue Worldwide unit to stress the importance of local pharmacies to the healthcare systems.

Steven Anderson, CEO of the group, unveiled the program Feb. 4 at NACDS’ conference in Florida. He said NACDS wants to “turn up the volume” on the central message that drug stores are essential to the nation’s overall health.

The ads target Capitol Hill, executive branch, media and opinion leaders inside the Beltway.

The $750B industry, according to Anderson, is expected to be targeted for cuts.

With a new president headed for Washington, Anderson expects a “renewed debate” on the direction of the country’s healthcare system.

The ad campaign carries themes showing the convenience, accessibility, and expertise of local pharmacists along with how they counsel patients to take their medications as prescribed.

H&K’S NEWBOLD MOVES TO MS&L

Vicki Newbold, managing director-corporate communications in Hill & Knowlton’s London office, has moved to Manning Selvage & Lee.

She assumes corporate duties from Kate Steele, who slides into the U.K. new business director position.

MS&L, which is owned by France’s Publicis Groupe, counts Procter & Gamble, Coca-Cola, Diamond Trading Co. and Philips as clients.

Newbold has repped Shell, AOL Time Warner, Vauxhall, SABIC and bmi/ British Midlands Airways in the areas of corporate reputation. MS&L has 80 pros in London. Stuart Wilson is CEO of the operation.

KEKST GUIDES SMITHFIELD AMID UNION PUSH

Kekst and Company is handling communications for meatpacking giant Smithfield Foods as it wages a public and legal fight to paint labor union PR effort critical of a plant in North Carolina as racketeering.

Smithfield filed a suit against the United Food and Commercial Workers in October under the federal racketeering statute known as RICO citing the UFCW’s PR campaign against what it calls anti-union tactics and alleged dangerous working conditions at Smithfield’s Tar Heel, N.C. plant.

The company said Feb. 5 in a statement distributed by Kekst that it made that move “in order to seek relief from the extortionate corporate campaign perpetuated by the UFCW and their agents over the last several years.”

The suit, among other allegations, says the union killed an “incomparable marketing opportunity” for Smithfield by convincing Oprah Winfrey to not have a celebrity chef promote Smithfield hams on her show.

Smithfield seeks $17M and a court order barring the union from issuing press releases or using other PR tactics targeting the company.

Kekst partner Adam Weiner and analyst Lindsey Estin are handling media for Smithfield.

MLB RAPPED FOR AXING HOF GAME

Major League Baseball is facing grassroots pushback stemming from its decision to drop the annual Hall of Fame Game that has been played in Cooperstown, N.Y. since 1940.

Bob DuPuy, MLB’s COO, announced Jan. 29 that the June 16 contest between the Chicago Cubs and San Diego Padres at Doubleday Field will be the last played there. He gave scheduling difficulties for junking the exhibition game.

The Freeman’s Journal, Cooperstown paper, has launched an online petition drive urging MLB to reconsider its decision to respect the traditions of the national pastime.

“More than any other American sport baseball draws strength from its traditions,” says the petition.

Craig Muder, sports editor of the Utica Observer-Dispatch, doesn’t want to hear about the “arduous bus trip to central New York.” He blasts both MLB and the players union for stiffing the fans of the game.

A “Save the Hall of Fame Game” blog has been launched to highlight 17 reasons for keeping the game.

The HoFG reminds “spectators and participants alike that baseball is a glorious game and an undeniable part of American culture and identity.”

The blog notes that legends such as Joe DiMaggio, Hank Aaron, Jackie Robinson, Ted Williams, Babe Ruth, Stan Musial, Roberto Clemente and Duke Snider played in Cooperstown.

The blog dismisses MLB’s scheduling problems with Cooperstown, noting that schedule-makers have figured out how to pencil in games in Japan, China (next month), Mexico, Memphis, Orlando and Puerto Rico.

Hall of Fame president Dale Petroskey is exploring opportunities for Doubleday Field.

They include scheduling a day for top Japanese and South Korean teams and hosting New York State’s high school baseball championship series.

WASH POST NAMES NEW CEO, PLANS CUTS

The Washington Post Company has promoted VP of advertising Katharine Weymouth to CEO of Washington Post Media, a new unit of the company encompassing the Washington Post and washingtonpost.com.

She also serves as publisher of the Post, the fifth member of the Graham family to hold that title.

Weymouth, 41, joined the paper in 1996 as assistant counsel and moved to Washingtonpost.Newsweek Interactive after two years to be associate counsel.

She later became director of the advertising department’s jobs unit in 2002 and was named director of advertising sales in April 2004.

Weymouth is a great-granddaughter of Eugene Meyer, who bought the Post in 1933.

Bo Jones, Jr., who has been publisher of the Post since 2000, was named vice chairman of the company and succeeds Donald Graham as chairman of the paper.

On his promotion, Jones said that a voluntary retirement incentive program will be offered in March to some employees of the newspaper “in light of the current economic environment and to assure the future strength of the business.”

The paper said it will close its College Park, Md., printing plant in early 2010, after two presses are moved to The Post’s Springfield, Va., plant.

Jones joined The Post in 1980 as vice president and counsel.

Both Weymouth and Jones are attorneys.

SUN-TIMES GOES ON AUCTION BLOCK

The Sun-Times Media Group has officially put itself on the auction block in a bid to rebound from the sharp decline in advertising.

Cyrus Freidheim, CEO, says the company will evaluate “strategic alternatives” such as the sale of any or all of its assets. Joint ventures and strategic partnerships also will be considered.

Freidheim’s statement praises S-TMG’s “solid portfolio of publications and websites that deliver the highest quality journalism to the communities that we serve and great value to our advertisers.”

S-TMG is the parent of the Chicago Sun-Times and 120 community papers and websites in the Chicago area.

The company has been in a cost-cutting mode of late with a plan to reduce operating expenses by $50M.

Tammy Chase is IR director at S-TMG.

BINN BUYS PHILLY STYLE

Jason Binn, who publishes glossy lifestyle magazines in New York, Aspen, Hamptons, Boston, Los Angeles and Washington, has acquired Philadelphia Style from socialite Dana Spain-Smith.

The deal also includes online publications DC Style and ACConfidential.com.

PS publishes seven times a-year and has a circulation of 70K. Its audience has household income topping $250K and liquid assets of more than $1M.

PS publisher John Colabelli and editor Sarah Schaffer will remain in their posts, according to a report in philly.com.

SPIN PUBLISHES ON MYSPACE

Spin has teamed with MySpace to produce the music magazine’s first digital issue, which includes links to artists’ MySpace pages and to the iTunes music store to buy the tracks featured in the issue. The next 12 issues of the magazine will be available for free digital download at myspace.com/spinmagazine.

Spin’s president, Tom Hartle, said the music and magazine industries are in a “state of turmoil” and sees the digital publication as a “major step forward.” He said the digital magazine drew more than 250K page views in the first week after a “soft launch.”

The issue also includes digital audio and video samples, as well as advertisements hyperlinked to the companies that buy space.

MySpace says it hosts more than six million sites for major, independent and unsigned music artists.

Digital publisher Texterity handled the project for Spin.

MURDOCH’S WSJ PLAN CALLED RISKY

News Corp. CEO Rupert Murdoch is engaging in a risky strategy with plans to make the Wall Street Journal a more mass-market paper to compete with the New York Times, according to Crain’s New York.

The weekly says Murdoch’s conflict with the Times is personal. He and his top aides refer to the NYT as “sanctimony central.”

Consultant John Morton told Crain’s that if the WSJ becomes more of a general interest it “diminishes its standing as the business newspaper.”

Murdoch could always trash his mainstream vision of the WSJ as he did by backing away from talk of making the online version of the paper free.

VANITY FAIR CANCELS OSCARS BASH

Vanity Fair has canceled it annual over-the-top Oscars party that was slated for Feb. 24 in support of the striking Hollywood writers.

Editor Graydon Carter had planned the 15th party to begin with an invitation-only dinner for 170 “A-listers” at Craft in Century Center.

He told the New York Times that the bash would probably top out at 700 by the early morning.

Hollywood publicist Leslee Dart is saddened that the shindig is getting the kibosh. Clients started calling Dart a month ago looking for help to get into the party. To Dart, the VF affair is a “crown jewel.”

Carter ruled out reviving the party in the event the Writers Guild of America and production companies settle. He expects many “bruised feelings” and does not think that it is appropriate for a “big magazine from the East to come in and pretend nothing happened.”

Karl Rove, the top Bush administration strategist and senior advisor to the president, has joined FOX News as a contributor.

Rove was formerly a member of the Board of International Broadcasting and taught at the LBJ School of Public Affairs at the Univ. of Texas at Austin.

(Media news continued on next page)

INDUSTRY STANDARD IS RE-BORN

The Industry Standard officially re-launched on Feb. 4 to document the “new Internet age,” according to its general manager Derek Butcher.

The online-only publication has “abandoned the traditional media model based on a large editorial staff,” he wrote to visitors at the site.

The Standard favors a “new paradigm that values commentary from thought leaders and perspectives of our community.”

Butcher believes the “prediction section” of the Standard ranks as its “most groundbreaking aspect.” 

It relies on input from the community and collects the sum of “collective intelligence.” 

Butcher wrote: “Prediction markets have proven to be remarkably powerful tools for gauging events and trends, and we think that the addition of this technology to the site will provide a very special type of meaningful interaction.”

The initial prediction is that 44 percent of Standard readers believe Yahoo is going to accept Microsoft’s takeover bid.

Intel is the charter sponsor of the Standard’s launch.

People ______________________

Wonya Lucas, GM and executive VP of The Weather Channel Networks, is slated to exit to become chief marketing officer for Discovery Communications, parent of the Discovery Channel.

She joins DC on March 24 in Silver Spring, Md.

Lucas was responsible for corporate strategy/development, and strategic marketing for The Weather Channel and weather.com, and operations and programming for The Weather Channel, The Weather Channel HD, Weatherscan, The Weather Channel Radio Network, and newspaper syndication.

She was previously with Turner Broadcasting System in posts like SVP of marketing for CNN Networks and VP business operations and network development for TBS, TNT, Turner Classic Movies and Turner South.

Jessica Sibley, VP of multimedia sales at the Wall Street Journal, has been named senior VP and worldwide publisher of BusinessWeek.

She handled New York, New England and Europe for the WSJ.

At BW, Sibley directs the magazine’s sales team and heads all advertising-based revenue for its multimedia products. She was previously with Forbes Inc.

Barbara O’Dair, executive editor at More magazine, has been named the second current executive editor of Reader’s Digest.

She shares duties with Tom Prince, who recently joined the magazine from Martha Stewart Living Omnimedia.

O’Dair was a senior editor on the launch team at Entertainment Weekly, deputy editor of Rolling Stone, editor of US magazine and executive editor of Details, among other posts.

ORGANIC STYLE IS REVIVED ONLINE

Organic Style, which was published by Rodale Inc. from `01-`05, has been revived as an online publication to chronicle the “green” era.

Eco-entrepreneur Gerald Prolman bought the OS brand from Rodale and is behind the re-launch.

Prolman promises the born-again pub will feature items on “truly inspirational” people including growers, artisans, environmentalists and humanitarians.

The premier issue has stories about sustainable flower growing in Ecuador, cotton farming in India and a tribute to civil rights icon Rosa Parks.

TRIBUNE SELLS STUDIOS TO BUY PROPERTY

Tribune Company said it will purchase properties currently leased for the Los Angeles Times, Newsday, Baltimore Sun and Hartford Courant after receiving an option to purchase the real estate for $175M through the 2006 restructuring of the properties’ owner TMCT, LLC.

Chicago-based Tribune is selling its Tribune Studios and related real estate in Los Angeles, which it acquired in 1988, to Hudson Capital, for $125M and plans to use the proceeds as “part of a like-kind exchange” when it closes on its acquisition of the TMCT properties, expected in April.

MANHATTAN MEDIA STAKES TOP N.Y. CLAIM

Rubenstein PR is distributing a release from Manhattan Media claiming that it is the king of the borough, the “media capital of the world.”

MM publishes New York Press, Our Town, City Hall and Avenue, which combine for a circulation of 176,500.

That's 20K more than the New York Post, 70K more than the Daily News, as well as above the Wall Street Journal (110K) and the New York Times (152K).

Tom Allon is CEO of MM.

KOPPEL MOVES TO M+R

Andrea Koppel, a CNN veteran, has joined M+R Strategic Services in D.C., to head its communications division.

The 20-year broadcast veteran served as foreign service and Capitol Hill correspondent of the Time Warner unit.

Bill Wasserman, M+R president, believes Koppel’s experience will be an “invaluable resource” as the firm moves to “leverage the media in order to influence public dialogue and policy decisions on critical issues.”

M+R has worked for the Campaign for Tobacco Free Kids, Save Darfur Coalition, Susan G. Komen for the Cure, Habitat for Humanity and Oxfam America.

Tina Barseghian, a magazine writer and author, has been named editor-in-chief of Craft magazine, based in Sebastopol, Calif. Barseghian has written for the San Francisco Chronicle, San Jose Mercury News and penned the book “Get a Hobby! 101 Diversions for Every Lifestyle” (Harper Collins 2007). Current EIC Carla Sinclair is staying on for a transition period, but is stepping down to write a novel.

Policies of two of PR’s trade groups are in violation of the tax code as we read it.

The groups retain large amounts of interest-earning money instead of paying rightful taxes.

The trade group based on Maiden Lane (we no longer use the word “public” with this group because it has turned its back on the public, press and even members too many times) has $4.88 million in cash and savings that it is not paying taxes on.

Perhaps the taxes should be $1M or more. This money belongs to you, me and all taxpayers.

In the same boat is the Council of PR Firms. It has revenues and costs of about $1M and keeps $600K+ on hand. It, too, should be paying taxes on this.

The Maiden Lane Group (MLG) is a “business league” under the tax code and is supposed to act like a “chamber of commerce.” Its principal activity is supposed to be promoting an “entire” line of business rather than providing “particular services” to members.

Its services are supposed to be as open to non-members as members and it should charge both about the same for such services.

The $300 extra (+28%) that the group charges non-members for its annual conference ($1,375 vs. $1,075 for members) violates that principle.

The nearly 30 MLG workshops yearly that cost members $150 but are $250 (+66%) for non-members are also a violation. Ann Wylie’s “Communication Tool Kits” are $297 to members but $397 to non-members (+33%)—another violation.

Charging non-members significantly more can cause loss of the tax exemption, says page 373 of “Tax-Exempt Status for Assns.” of the American Society of Assn. Executives.

In one case, a research group lost exempt status because it only let members see its research. In this vein, MLG won’t allow non-member access to its online directory of members. Research is denied to non-members. A CofC must not conduct a business “of a kind ordinarily carried on for a profit even though the business is conducted on a cooperative basis or produces only sufficient income to be self-sustaining,” says the code.

We believe this section prohibits the CPRF from starting an e-mail service that will provide “thought leadership pieces” and “timely industry data” that “most practitioners, at PR firms, corporations and not-for-profit organizations” will get “value” from. This service involves a PR trade publisher and advertising will be solicited. It’s obviously in competition with the legit PR press. Tactics online of MLG is also covering news and selling ads, another violation. Groups are not supposed to run all sorts of businesses on the side. Ad sales in a periodical (and by inference, websites and e-mails) is an “unrelated business that exploits an exempt activity, the circulation and readership of the periodical,” says Publication 598 of the IRS.

Any payment of “cash” to members of a group is a giant red flag. Says the code: “In the case of cash payments, even an incidental amount of inurement to members may be enough to defeat tax exemption when it is applied for or challenged by the IRS.”

How about the $400K in cash that MLG has given to presidents-elect of the 110 chapters for the “Leadership Rallies” that were started in 2000?

The chapter officers each got $500 in cash to help defray expenses of a weekend in New York in June and many, if not all, also got reimbursed by their chapters. MLG has said the total cost of such weekends runs between $80K and $120K.

Another seeming violation is the lifetime free dues of the 20+ living ex-presidents of MLG (worth $225 yearly) and their yearly free passes to the conference (normally $1,025 each). “Elimination of dues of members” is specifically mentioned as a red flag by the ASAE (page 371). The $2.9M subsidy to APRs from 1982 to 2002 (expenses over APR income) seems to qualify as favoritism to certain members rather than boosting the entire industry. An interesting poll would be whether a cross-section of PR pros considers MLG’s overall effect on the industry to be positive or negative. Can a group retain a tax exemption if its effect on the industry is negative?

The CPRF has only 100 members (out of 10,000+ PR firms) after ten years. Groups are not supposed to be organized for an ostensible purpose while providing some other purpose. One group lost its exemption because its activities were primarily social rather than promoting a line of business.

Some members of the CPRF tell us what they are mainly looking for is new business leads.

CPRF is supposed to promote the “entire” counseling industry but its “Find-A-Firm” service only lists its 102 members, a violation of this principle. CPRF can list its members but it should also direct visitors to the several other listings of PR firms including the O’Dwyer’s Directory of PR Firms that lists more than 2,000 firms.

CPRF gets more than half of its dues from conglomerate PR firms and its ad-buying policies match those of the conglomerate PR firms rather than those of its independent members.

Porter Novelli’s move to 75 Varick st. (page seven) adds at least an hour’s commuting time to many of the 220 or so employees there. Those who live in New Jersey or Brooklyn may have shorter trips. Also inconvenienced are clients. Instead of a short walk from Grand Central Station, they face the prospect of finding a cab, a difficult feat anytime near rush hours. Blue chip clients will probably be met by limousines. GCT for decades was the prime location for PR. Hill & Knowlton, when it was the crown jewel of the industry, had offices at 150 E. 42nd st., 633 Third ave. (41st st.) and 466 Lexington (by GCT). It is now at 909 Third (54th st.). We wonder what Omnicom ad agency got PN’s space at 450 Lex?

--Jack O'Dwyer