KATZ WINS CAL. RAIL SAFETY PACT

Katz & Associates has won a competitive process to develop a PR campaign promoting safety at rail crossings in commuter-heavy Orange County, Calif.

The O.C. Transportation Authority issued an RFP in October to develop a rail safety education and public awareness outreach push under legal mandate from county and federal officials.

Katz defeated Caltrop (Los Angeles), Keena Thomas Communications (Mission Viejo), MBI Media (Covina), Rozcreative (San Diego), Schubert Flint Public Affairs (Sacramento) and Westbound Communications (Orange) for the $378K contract.

The county’s Metrolink commuter rail handles four million passengers a year and is expanding through 2010. The increased service combined with federally mandated noise reductions poses a risk for accidents at its 52 rail-highway grade crossings in the populous county. K&A is a 22-year-old public affairs and PR firm headed by Sara Katz, a former aide to Gov. Pete Wilson and San Diego Mayor Susan Golding. It has offices in San Diego, Sacramento and Seattle. The firm will handle special events, media outreach and other aspects of the education campaign with the goal of increasing rail safety awareness and curbing trespassing.

OCTA also awarded an on-call PR pact capped at $100K to Arellano Associates of Chino, Calif.

PRETTO MOVES FROM CITI TO AIG

Christina Pretto, key spokesperson for Citigroup, is moving to American International Group next month, according to Nick Ashooh, senior VP-corporate communications at AIG.

Ashooh told O’Dwyer’s AIG is “looking forward to benefit from her long experience.”

Pretto, who assumes the VP-corporate media post, joined Citi in `01. She takes the spot vacated by Chris Winans, whom AIG recruited from Lehman Brothers in `05. A Citi staffer said Jon Diat has slid into Pretto’s spot.

Pretto had been handling media calls regarding Citi’s plans to cut 50K staffers from the payroll, and fending off reports that the board wants to bounce chairman Sir Win Bischoff, who replaced the ousted Chuck Prince last December.

AIG, which has received a U.S. bailout, went into crisis mode Dec. 10 following a Wall Street Journal piece claiming that it owes Wall Street $10B for speculative deals that went south. The company issued a statement to say its “multi-sector credit default swap portfolio” is clearly spelled out on page 117 of its Form 10-Q for the period ended Sept. 30.

CAPOZZI EXITS PUBLICIS

Lou Capozzi, 61, has stepped down as chairman emeritus at Publicis Groupe’s PR and corporate communications group. He will continue as an honorary senior counselor at the French combine’s MS&L unit.

Capozzi is president of International Communications Consultants Organisation and adjunct professor at New York University’s school of continuing and professional studies master’s degree program in PR.

Capozzi joined MS&L in `90 as creative director. He became CEO in `97 after Kirk Stewart left for Nike and ran the firm for seven years before moving to the parent company.

Launching his career in `69 as publicity trainee at Hill & Knowlton, Capozzi worked at Bankers Trust, Ketchum, Aetna and Ayer PR prior to MS&L.

BAILEY TAKES REINS AT GMA

Pamela Bailey, a longtime public affairs and trade group executive, is stepping down as CEO of the Personal Care Products Council to helm the Grocery Manufacturers Association, the powerful D.C. group of food, beverage and consumer products companies.

Bailey takes over in January for interim president/CEO Manly Molpus, former VP of corporate affairs for The Kroger Co. who headed GMA for 16 years and was called back in July when Cal Dooley exited GMA for the American Chemistry Council.

Bailey led the office of communications planning in the Reagan White House and was special assistant to the President and deputy in the White House public affairs office. She also held top PA posts at the Dept. of Health and Human Svcs and advised Presidents Ford and Nixon.

Bailey headed the PCPC, the trade group for the cosmetics and personal care products industry, since 2005 and earlier led the Advanced Medical Technology Assn.

COURT HELP SOUGHT FOR TRANSCRIPT

Senior members of the PR Society, frustrated at numerous attempts to obtain the transcript of the 2008 Assembly and believing members have a right to it, last week filed a request for help from the New York County Supreme Court.

Judge Jacqueline W. Silbermann has been asked to order the Society to make the transcript available to members as a downloadable PDF on the Society website.

Cited is Section 621 of the New York State non-profit corporation law that enables members of a group to obtain access to books and records that are being denied to them by leaders.

(Continued on page 7)

PR HASN’T REALIZED PROMISE—BUDD

Public relations, which Fortune said seven decades ago is “one of the greatest opportunities for the contemporary business executive,” has not lived up to its promise, writes veteran PR pro John Budd in “Too Many Geese; Too Few Swans - An Unexpurgatorial Account of the Rise, Fall and Future of PR” AuthorHouse (April ’08).

Budd, one of the top executives at Carl Byoir & Assocs. for many years and then with Emhart Corp., wonders if practitioners have become mostly “implementers” rather than “influencers.” He believes that not only this generation but the next is “lost” in regaining PR’s proper role in the corporate executive suite.

“The current generation of communicators, with some notable exceptions, lacks the talent, the sophistication and the commitment” needed to be “chief communications officers,” he writes. “Who will relight the fervency and restore the soul of public relations?” Budd asks.

He quotes Williams College sociologist Robert Jackall, who “tramped miles of plant floor” in researching his 1989 book, “Moral Mazes.” and said PR people are “quintessential purveyors of advocacy, invading every corner of society, encouraging people to spend money, join organizations, rally to a cause or express outrage.” The downside of this activity, Jackall says, is that it “can place truth, trust and credibility at risk.”

Budd’s book is the result of an assignment by Ball State University to prepare a white paper on the past, present and future of PR. “Nothing less than a book length examination could offer answers,” says Budd, who has operated the Omega Group “think tank” for the past 19 years.

Budd delves into the contributions to PR of such figures as Paul Garrett of General Motors, Arthur Page of AT&T and W. J. Cameron of Ford and finds that current PR figures don’t measure up to them.

Be Counselors Like Da Vinci

PR pros should be like Leonardo Da Vinci and Bayard Castiglione, who counseled heads of state in the 1500s. Da Vinci was supported by princes “not for his skills as artist, inventor and engineer extraordinary, but for his counsel,” says Budd.

Rather than “chief communications officer,” he would like the top PR person to have the title of “advisor to the chief executive for public diplomacy.”

He feels that the use of PR as a term will continue to fade and “where it remains it will be tightly linked to marketing.”

The book mentions PR Seminar, now known simply as “Seminar.” Fewer than ten of its 200+ blue chip corporate members have PR anywhere in their titles.

Only five of the 50 largest PR firms as ranked by O’Dwyer’s use the term PR in their names.

Budd feels that PR people have “bloated self-images” in their professional organizations that are not mirrored in what they do for a living.

PR executives, he says, “perpetuate the mirage of PR, embracing its ceremonial standards—sitting at the feet of academic gurus at such elite watering holes as Vail and Boca Raton, or paying homage to the best selling management tutors—before returning to their decidedly more limited day jobs of brand management or marketing communications, ignoring, or not recognizing, the paradox.” PR executives must get out from under “administrative duties” and become “thinkers,” “analysts,” and “advisors,” he says. “When the CEO calls you in to discuss something that has not yet happened, then you may assume that your judgment, not your media wizardry, is being respected.”

AUDIT SAYS PA, PR MIX ‘INAPPROPRIATE’

The Defense Department’s public affairs and information operations did not have clearly defined structures which led to “inappropriate” funding between the PR and propaganda units, according to a Pentagon audit released Dec. 11.

The Defense Department’s Inspector General said in the 100-page, acronym-laden report that the failure to appoint a director for the Armed Forces Information Service for seven years allowed for that funding snafu, as well as other lapses like the loss of hundreds of thousands of dollars in property and funds wasted on unnecessary purchases at AFIS. The AFIS, which includes entities like the Stars and Stripes newspaper and Armed Forces Radio, is overseen by the Office of the Assistant Secretary of Defense for Public Affairs.

The report, requested by Assistant Secretary for PA Robert Hastings, was sparked in part by questions last October over funding for the “America Supports You” PR program, which has been administered under the public affairs unit’s purview but funded through the AFIS.

The Stars and Stripes newspaper was drawn into a controversy last year when it was reported that PR work for the ASY campaign was being funded from the paper’s budget, meaning public affairs funds went to propaganda operations, an apparent violation of federal law. The auditor’s report said a lack of separation of duties between policy, oversight and operations at AFIS led to that “adverse media attention.”

The auditors recommended that he perform an independent assessment to determine whether the use of AFIS funding for public affairs programs violated public law and whether the use of PA contract services to support strategic communications efforts was appropriate.

Hastings told the auditors that internal reviews are underway to correct some of the concerns.

USDA STAFFER TO NAT’L RESTAURANT ASSN.

The National Restaurant Assn. has hired Beth Johnson, Acting Under Secretary for Food Safety at the Dept. of Agriculture, as executive VP for PA. The registered dietician also held the deputy chief of staff and senior advisor positions.

Johnson joined the USDA after a four-year stint at Fleishman-Hillard.

Her other jobs were staff member at the Senate’s Committee on Agriculture, Nutrition and Forestry, nutritionist at the Food and Drug Administration and associate director of food policy at the National Cattlemen’s Beef Assn.

Dawn Sweeney heads the NRA, which represents the country’s No. 2 employer with 13.1M jobs. Members of the NRA generate annual sales of more than $550B.

Johnson is to oversee the group’s government affairs, public policy and communications functions.

WAPO GRABS ALEXANDER

Andy Alexander, who was chief of Cox’s Washington, D.C., news bureau, which is being closed by the Atlanta-based media company, will be the new ombudsman at the Washington Post. He takes the position Feb. 2, replacing Deborah Howell.

Katharine Weymouth, publisher of the Post, says Alexander will bring his “30 years of experience in the news industry and will be an excellent advocate for our readers.”

He joined Cox/D.C. as a reporter in `76, become foreign editor in `89, deputy bureau chief in `94 and chief in `97.

Weymouth’s memo calls Alexander a “leader in promoting open government.” He will serve WaPo’s readers and become an “internal critic” of its journalism.

OSBERG GETS BUZZED

Greg Osberg, former president of Newsweek, has taken the CEO post at Buzzwire, mobile video outfit in Denver.

The 51-year-old executive is credited for launching the online version of the Washington Post Co.-owned newsweekly in an 18-year career there. Earlier, he was sales and marketing president at CNET.

Buzzwire helps clients publish video and Internet radio material on mobile device. It counts Verizon and AT&T as clients.

Osberg told the Wall Street Journal he took the post because “mobile media feels like the Internet in the early `90s.”

NEWSWEEK CUTS STAFF, RATE BASE

Newsweek, which is owned by Washington Post Co., is cutting ten staffers and extending its early-retirement that was accepted by 117 staffers earlier this year.

The magazine dropped its rate base from 3.1M to 2.6M. That is the amount of circulation that is guaranteed to advertisers.

Ann McDaniel, senior VP at WaPo Co., said appetite for both news and Newsweek is strong, but "we are living in tough times."

NYT CO. HITS H.Q. FOR $225M

The New York Times Co. expects to raise $225M in financing in the form of a sale-leaseback of its new headquarters building near the Port Authority in an effort to shore up its balance sheet.

That comes from “guidance” released Dec. 9 by the company ahead of the appearance of CEO Janet Robinson and CFO Jim Follo at the UBS global media and communications conference.

The NYTC owns 58 percent of the tower, and has hired Cushman & Wakefield to negotiate the financing deal.

Follo says the building proceeds will be used to pay down long-term debt. It provides a “unique opportunity for us to borrow at attractive rates,” he said.
The NYT is looking for “various alternatives, including revolvers, public offerings or private placement” to deal with the credit crunch and a challenging '09.”

The company is evaluating its liquidity requirements and is in discussion with lenders regarding debt maturing in '09 and '10.

Follo said there is no intention or need to replace the $400M credit facility that expires next year.

Robinson believes the company is ready for the softness next year. She said “through our revenue initiatives, expense cuts and the steps we are taking to improve our financial flexibility, the Times Co. is well positioned to weather the challenges next year is expected to bring.”

SWARTZ SUCCEEDS IRISH AT HEARST

Steven Swartz succeeds George Irish, 64, as president of Hearst Newspapers after a nearly three-decade run on Jan. 1.

Irish is to become VP and eastern director of the William Randolph Hearst Foundation in California and The Hearst Foundation in New York.

Swartz, 46, was made executive VP in `01. He will preside over 6,500 employees working at 16 dailies and 49 weeklies.

Those papers include Houston Chronicle, San Francisco Chronicle and Albany Times Union.

Swartz began a journalism career as a reporter for the Wall Street Journal, and was president of SmartMoney, a venture between Hearst and Dow Jones, before joining Hearst. He was responsible for Hearst's acquisition of Metrix4Media, search engine marketing, and was in charge of yellow pages operation since `06.

BEWKES FIRMS GRIP ON TW

CEO Jeff Bewkes will add the chairman title when Dick Parsons exits Time Warner on Dec. 31.

The employment contract of 56-year-old executive Bewkes gave him the option to resign if he didn't get the chairman position in early `09.

Bewkes is still trying to negotiate a deal to combine AOL with Yahoo, those talks have been ongoing.

NPR CUTS STAFF, PROGRAMS

National Public Radio, projecting a $23 million deficit from loss of underwriting and other revenues, said it will cancel two programs and cut 64 staffers.

NPR said it initially projected a $2M deficit for 2009 on a budget of $168M, but the economic turmoil ballooned that figure to $23M after sponsors backed out.

“Day to Day” and “News & Notes” will be pulled March 20 and NPR also said it wouldn’t fill several open posts and look to trim costs across its operations.

The workforce cuts amount to a seven percent reduction in NPR’s staff, which now numbers 889.

NPR said the cuts are necessary despite reaching near-record audience levels on-air and online. The media entity claims 26.4M listeners weekly and eight million users of NPR.org.

Although it has a significant endowment, legal restrictions limit its expenditure. “It’s crucial to realize that these programming changes are being driven by a loss in revenue, not relevance,” said Ellen Weiss, NPR’s senior vice president for news.

(Media news continued on next page)

FD NAMED IN $10M LIBEL SUIT

Financial Dynamics is one of three targets of a $10M libel suit brought by a U.S. law firm.

FD is being targeted for its work for Russian telecom Altimo, which is tussling with the Norwegian company, Telenor, over control of a joint venture.

FD’s London headquarters office distributed an open letter to Telenor’s board on Nov. 12 outlining allegations against the Norwegian company, a copy of which is on the Altimo website with FD listed as a press contact.

In that letter, Altimo’s chairman, Andrei Kosogov, charges, among other nefarious claims, that a “network of legal firms and public affairs agencies in Russia and the U.K. appear to have undertaken black PR campaigns in the media to try to discredit Altimo, its parent company Alfa Group, and its shareholders involving methods such as payments to journalists and newspapers for the publication of information.”

FD staffer James Melville-Ross, managing director of financial communications (UK), is listed as the primary contact at FD on the open letter.

The suit was first reported by the U.K.’s Daily Mail, which noted a dossier distributed in the Russian company’s name claimed evidence of “dirty tricks” against the Philadelphia law firm Marks & Sokolov, which handles clients in the Ukraine and Russia. The law firm says it hasn’t worked for Telenor.

Altimo is part of the Russian conglomerate Alfa Group, which is controlled by powerful Russian businessman Mikhail Fridman and also named in the suit.

FD, which declined to comment to the Daily Mail, has not been reached.

PENN WATCHES TRENDS AT WSJ

Burson-Marsteller CEO Mark Penn published his first online Wall Street Journal “Microtrends” column Dec. 11 with a piece about “mattress stuffers” who are “people who have lost their trust in the financial world and are preparing for the next meltdown.”

The MS crowd isn’t a bunch of “crotchety misers,” rather they are “Baby Boomers” who believed life (and the future) was sweet only a short time ago.

The financial shock now has them “stuffing their money into Treasury bills instead of into a tin cup.” They are purchasing U.S. Mint gold coins and paying for items with cash vs. charge cards.

Penn suggests that “dying post offices” convert P.O. boxes into safe deposit boxes to service TMers. He eyes the possibility of a “baby squeeze” as couples put off having a kid as the “ultimate consumer pull-back.”

Penn, who pens the column with E. Kinney Zalesne, sees a hunger for security hedges such as a “gun, some cash, a little gold and a small safe in the bedroom in case all the ATMs suddenly shut down.”

Penn wrote “Microtrends: The Small Forces Behind Tomorrow’s Big Changes” in `07. A paperback version is slated for the spring.

His column will appear weekly in the marketing section and deal with trends that he sees developing.

The WSJ identifies Penn as B-M CEO; Penn, Schoen and Berland president and advisor to both Clintons, Tony Blair and Bill Gates. It credits Penn with creating the term “soccer mom” in `96.

HEFNER LEAVES PLAYBOY

Christie Hefner, 56, is stepping down as chairman/CEO of Playboy Enterprises, capping a two-decade rule of the media company founded by her father, Hugh.

She will stay on as CEO through January and remain on the board until a replacement has been named.

Jerome Kern, board member, will serve as interim chairman and become temporary CEO in the event Hefner’s successor is not found by Feb. 1.
Hefner says she is finished with the corporate world. She plans to do public service/non-profit work and give speeches.

Kern heads his own consulting firm and was chief of On Command Corp., which provides interactive video to hotels.

Briefs __________________________

Crain Communication said Financial Week ceased its print run on Dec. 7 and has become an online-only publication. “Year over year, our Internet traffic has grown dramatically,” said Nancy Adler, publisher of the erstwhile weekly newspaper. "By focusing on delivering the news on the web rather than in print, we can keep our readers truly updated in today's volatile marketplace.”

Michele Promaulayko, executive editor of Cosmopolitan, has been named editor-in-chief of Rodale’s Women’s Health magazine.

Promaulayko was named EE of Cosmopolitan in July 2000 after serving as deputy editor for a year. She was previously one of the original editors of Teen People and began her publishing career at YM magazine.

Kate Marymont, vice president of information center content in Gannett’s U.S. community publishing division, has been named VP/news for the division. She succeeds Phil Currie, who is retiring after 40 years with Gannett.

Earlier, she was executive editor and VP/information center at the News-Press, Fort Myers, Fla. She was formerly executive editor of the Springfield (MO) News-Leader.

Time Warner’s Headline News cable network will debut a new weekend show led by syndicated radio show host and “money coach” Clark Howard on Jan. 3, 2009. The eponymous program aims to help viewers make sound financial decisions amid an “increasingly dire economy,” said TW. Two 30-minute shows will air back-to-back on Saturdays and Sundays at 6 a.m., noon and 4 p.m., including calls from Howard’s daily radio program, “The Clark Howard Show.”

The programs will also feature a “Money Coach” segment including a profile of callers’ finances, a consumer tip of the day and travel tips. Info is online at www.CNN.com/ClarkHoward.

What is PR’s role (or lack of it) in the current U.S. economic meltdown?

“Information opacity” is the “primary cause of the recent market setbacks,” wrote Pau Herrera, CEO of GrupoBPMO, Spain, in a column for odwyerpr.com last week.

From afar, and no doubt helped by it, Herrera has put his finger on the main cause of the economic slide although we would use a U.S. term—stonewalling.

“The Enron scandal showed how poor-quality information always ends up being seen for what it is and the resultant rumor mongering leads to a situation of explosive stress,” he further writes. He also noted how “information is choked off” as a crisis starts unfolding. “Tension and uncertainty exacerbate fear and suspicion.” While the U.S. worried about terrorism from abroad, Wall Streeters caused more terror among the entire population than foreign terrorists could ever dream of causing.

We agree that excessive secrecy is at the root of the economic meltdown. Corporate and government interests used PR as a bulwark against information flow rather than something that encouraged it. Much of PR morphed into lobbying and marketing and, at the behest of employers, abandoned its original promise of “answering press questions most cheerfully” (Ivy Lee, 1906). The press conference, long the main interface of organizations and reporters, all but disappeared. As for whose fault this is, PR can’t be any better than the people paying for it.

An indication of the quantity of money being spent on lobbying is in an article in the January Vanity Fair by economist Joseph Stiglitz. He says a $300M lobbying effort brought about the repeal in ’99 of the Glass-Steagall Act that separated commercial banking from investment (speculative) banking.

Commercial banks then embarked on high-risk investments much like Savings & Loans did in the 1980s when they won the right to bankroll projects other than homes. Some 1,700 S&Ls folded because of speculative excess.

Stiglitz, Columbia University professor who is called “the most quoted economist in the world,” says the SEC greased the skids of deregulation by allowing investment banks in 2004 to bump their debt-to-capital ratio from 12:1 to 30:1 or higher, thus “inflating the housing bubble.” He also whacks the Moody’s, Fitch and S&P rating agencies. SEC and others pitched self-regulation but Stiglitz says “self-regulation is preposterous…it can’t identify systemic risk.”

Corporations, fed up with dealing with the ornery press, turned many years ago to D.C. to get their way, employing not only their own trade associations but coalitions of associations. It no longer mattered what people thought as long as arms could be twisted in Congress. The best “marketing” was to pass a law requiring that your product be used (i.e., mandatory helmets for bikers).

Politics has now become the path to a lucrative “PR” career, replacing the press. Interning at a politician’s office, moving up to a paid job at the state or national level, and then to a job at a K st. lobbyist is the way to go.

There are an estimated 30,000 lobbyists in D.C. with $200,000 as the average pay. PR career adviser Ron Culp (12/10 NL) gave three examples of grads getting jobs via this political route. The National Capital chapter of PRS is by far the biggest with 1,400 members. No doubt many members started off locally and followed political leaders to D.C.

Another large section of “PR” became marketing, using press, promotions, events, web, direct contact with customers, indeed, anything at all, in service of the bottom line. PR firms that know their products and markets are thriving as evidenced by the O’Dwyer rankings that track their often 20% and 30% annual growth rates. Conglomerates OMC, WPP and IPG, their ad revenues slashed by the meltdown, are increasingly pushing their PR services.

Corporate PR has turned inward, says WPP’s Sorrell, mostly being used to fight “turf wars” at companies. Such internal political “battles” would “horrify” customers if they knew about them, he said (11/12 NL).

Our views of PR differ from those in PR Society literature but members of the PR Student Society tell us they are not allowed to deal with us—we must go through h.q. (which mostly doesn’t talk to us).

This blocking of students and professors (their PRS faculty advisers don’t respond to us either) from our viewpoints is exactly the kind of educational abuse fought against by the American Assn. of University Professors. It is wrong, says the AAUP website, when “instructors fail to present conflicting views on contentious subjects, thereby depriving students of educationally essential ‘diversity’ or ‘balance.” The AAUP is against students being “indoctrinated” rather than “educated.” It has committees that expose such abuses.

The Wall St. Journal, meanwhile, headlined on 12/12 that “College Bills Wallop Families” (many paying upwards of $50K a year) and the Center for College Affordability complained that bloated bureaucracies are wasting college funds. The ratio of non-instructional staff to teachers has gone from 4.5-to-10 in 1975 to 8-to-10 today, wrote Steven Malanga of RealClearMarkets in the 12/11 New York Post. He says governments are “overinvesting in public universities” and doubts the correlation between education and success. The real correlation, he says, is I.Q. and success.

The need for members of PRS to go to Court to get documents that should be readily available (page one) is a watershed moment in the Society’s history. COO Bill Murray says that neither the board minutes nor the executive committee minutes have to be made public. But two parts of the law say they do if there is “any action or proceeding” against a non-profit or its officers, directors or members” (parts f & g of Section 621)…a Murray e-mail that is part of the members’ complaint says the EC needs privacy “to encourage full and frank discussion of a wide range of matters, some of which may be confidential.” We dispute that. The EC, in the first place, should not be meeting an entire morning when the full board is present, as it was on Jan. 25 this year. It should not be hiding, except in a personnel matter, anything it is discussing...Murray says there were no minutes of the Jan. 26 (Saturday) all-day meeting because it was “a retreat” rather than a board meeting. Astoundingly, the directors spent a day listening to Glenn Tecker of Tecker consultants teach them how to be a “strategic board” (i.e., keep out of the hair of the staff). Whether the nine new directors will put up with such nonsense, including being forced to sign oaths of silence, remains to be seen. If the “09 Nine” have any guts, they will, as of Jan. 1, move to rectify systemic wrongs including rescinding the bylaw that lets the EC act in place of the board; erasing APR from the bylaws; barring chapter officers or directors from serving as Assembly delegates because too many of them are too cozy with national; allowing reporters to join PRS, and ordering Tactics to carry ads for O’Dwyer products. The nine new directors (alpha order) are Lynn Appelbaum, Kathy Barbour, Steve Grant, Catherine Huggins, Don Kirchoffner, Gail Liebl, Gary McCormick, Deborah Silverman and Gail Winslow-Pine.

--Jack O'Dwyer