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U.S. Bank Kills Phone Effort U.S. BANK HAS halted a controversial telemarketing program only two days after being sued by the Minnesota Attorney General for alleged privacy violations. The suit, filed on June 9 by Minnesota AG Mike Hatch, alleged that the bank improperly released customers’ private banking information to Memberworks, a Stamford, CT-based telemarketing company, for use in the sale of a health membership program. This data included names, marital status, home ownership, occupation, checking account number, credit card number, Social Security number, average account balance, account frequency information and credit limit, according to the complaint on file with the U.S. District Court for the District of Minnesota. In addition, U.S. Bank violated federal law and banking rules by allowing Memberworks to automatically withdraw payments from a checking account without written authorization from the consumer, the suit alleged. Since November 1996, U.S. Bank has received more than $4 million plus a 22% commission on all sales made by Memberworks, according to the complaint. The episode reflects increasing concern over release of personal data by financial institutions. On Monday, Comptroller of the Currency John D. Hawke Jr. called for banks to stop selling customer information to unaffiliated telemarketers. John F. Grundhofer, CEO of the bank’s parent company U.S. Bancorp, announced in full-page ads in the Minneapolis Star Tribune and the St. Paul Pioneer Press on Ju ne 11 that the bank was “ending [its] participation in this and all similar types of marketing programs for non-finthcial products.”

Rappaport Named DMA List Leader THE DIRECT MARKETING Association has named Donn Rappaport, CEO of American List Counsel Inc., list leader of the year for 1999. Rappaport, who has 20 years’ experience in the list business, is being cited by the DMA as a “leading proponent of innovation, spearheading the evolution from mailing lists to information marketing.” He will receive the award at a reception following the DMA’s List Vision ’99 on Aug. 10. The reception will be held at the 200 Fifth Club in New York. The conference will take place at the Hilton New York & Towers.

Domino’s Hires Relationship Director DOMINO’S PIZZA, Ann Arbor, MI, has named Jack Scheible to the newly created position of senior director of relationship marketing. Scheible had previously been a partner in J. Walter Thompson’s Detroit office, where he managed the planning and integration of national media for the Domino’s Pizza account. Scheible’s responsibilities will include coordinating direct and loyalty marketing efforts, price effectiveness studies and strategic marketing alliances.

AFP Hit by Judge A FEDERAL JUDGE has found American Family Publishers in contempt for violating a deal in which the company agreed to tone down its contest promotions mailed to North Carolina households. Chief U.S. District Judge Terrence Boyle found the sweepstakes company in civil contempt of a 1993 settlement that ended a lawsuit against the company’s practices. The settlement said American Family Publishers would stop using “language of congratulations or other prizewinning declarations which, when considered in context…represents that the recipient of the envelope has won a prize.” A hearing to address potential damages was scheduled for June 29.

Tiger Settles Charges TIGER DIRECT INC., the Miami-based computer direct marketer, has agreed to settle Federal Trade Commission charges that it misled consumers about its onsite warranty service. The FTC claimed the company failed to provide the service promised in ads and promotional materials-for example, it did not repair keyboards, speakers or mice, though these were depicted in the ads. The agency also alleged that Tiger did not complete repairs in a timely fashion, as advertised. The proposed settlement would prohibit Tiger Direct from misrepresenting the terms of its one-year, on-site warranty. It would also require the company to comply with the relevant provisions of the Magnuson-Moss Warranty Act and the FTC’s own rules.

Lifestyle Change Has a New Owner GEORGIA U.S. Data Services Inc. has acquired Lifestyle Change Communications, the Atlanta-based database and alternative media company. Terms of the sale were not disclosed. Bob Perlstein, president of Lifestyle Change Communications, plans to focus on a new firm, Sports & Entertainment Direct LCC. The new company distributes alternative media packs at sports and entertainment events such as the Super Bowl.

Digest Hires a New VP THE READER’S DIGEST Association Inc., Pleasantville, NY, has appointed Robert J. Raymond to the newly created position of vice president for strategic acquisitions and alliances. Since 1993, Raymond has been general manager for U.S. Music, Video and Special Channels.

USPS Launches System for Flats THE U.S. POSTAL SERVICE will begin a new labeling list and package reallocation system this month for mailers of Standard A mail flats (catalogs and other non-letter-size pieces) and irregular-shaped parcels. Postal officials hope the optional system will lead to an increase in the percentage of palletized and sacked Standard A mail that is pre-sorted by 5-digit ZIP code. Mailers who submit automatable palletized or sacked flats or packages at destination delivery units (DDUs) will be eligible for the basic DDU enhanced carrier route rate of 13.6 cents per piece, if the facility is one at which the carrier cases the mail, according to the USPS. The per-piece charge goes down to 12.5 cents a piece for high-density and 11.4 cents for saturation mailings that are either palletized or sacked entering the mail stream at a DDU. The basic per-piece charge for flats and other non-letter size Standard A mail entering the mail stream at a sectional center facility is 14.1 cents per piece; 13 cents for a high-density mailing and 11.9 cents for a saturation mailing.


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DMA Picks Up Internet Group THE DIRECT MARKETING ASSOCIATION has acquired the Internet Alliance (IA), an Internet trade group. IA will be operated as an independent subsidiary of the DMA. The organizations first worked together two years ago to develop the original Online Privacy Principles. Under the DMA, IA will expand initiatives to promote consumer confidence, ensure consumer privacy, protect children, monitor content regulation, and support growth of the Internet in the United States and abroad. Last year, the DMA acquired the Association for Interactive Media, which also operates as a subsidiary.

Lansing Named Fingerhut CEO BIG CHANGES HAVE already occurred at Fingerhut Cos. Inc., acquired three months ago by Federated Department Stores Inc. President William J. Lansing has been named chief executive officer of the mail order giant, replacing 24-year Fingerhut veteran Theodore Deikel, who will retire in January. Deikel will continue to serve as chairman until his departure. In addition, Federated has formed Federated Direct, a new division that will include its Macy’s by Mail,, and newly acquired Fingerhut businesses. Lansing will also oversee Federated Direct operations. Fingerhut will handle operations, distribution and fulfillment for the Macy’s by Mail catalog and the e-commerce operations, as well as for existing Fingerhut businesses. Fingerhut will also be responsible for distribution and fulfillment for Bloomingdale’s by Mail.

Coughlin Resigns From Postal ServiceCoughlin Resigns MICHAEL S. COUGHLIN, deputy postmaster general for more than 12 years, submitted his resignation last month to the U.S. Postal Service’s Board of Governors, effective July 2. There was no immediate word on his plans. A native of Waterloo, IA, Coughlin joined the USPS as a letter carrier in 1967 after a stint in the U.S. Navy. Working his way up the chain of command, he served in a variety of positions within the USPS in New England, New York, California and at postal headquarters. Prior to his appointment to deputy postmaster general on Jan. 5, 1987, Coughlin, who was passed over for the PMG’s post four times by postal governors, had been assistant postmaster general for mail processing, regional postmaster general for the postal service’s Western region and executive assistant to the postmaster general.

TV Guide Forms Direct Division TV GUIDE INC., New York, has established TV Guide Direct, a new division for selling products and services through direct response and e-commerce. John Lappegaard, formerly president of Foster & Gallagher’s Spring Hill group, has been appointed executive vice president and general manager of the New York-based unit. “We see this as an opportunity to apply database software [technology] and use the information we can gather from that to understand our subscriber file, and use that knowledge to profitably enter certain merchandise lines,” Lappegaard said. The TV Guide media platforms, which reach more than 60 million people each week, include TV Guide Magazine, TVGuide Channel, TV Guide Interactive and TV Guide Online. A spokesman confirmed that marketing plans will not be limited to TV Guide-branded products or television entertainment, nor “will it be limited to targeting those 60 million.” Plans call for forming partnerships with manufacturers and licensees in various categories. TV Guide Inc. was recently formed through the combination of United Video Satellite Group and TV Guide.


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McCann-Erickson: Direct Mail Keeps Pace Direct mail expenditures were expected to increase by 7.5% during 1998, keeping pace with national advertising spending, according to the latest McCann-Erickson Insider’s Report on Advertising Expenditures. Total national advertising budgets were estimated at $118 billion for 1998, a 7.5% increase over 1997 levels. At just under $40 billion, direct mail is the largest single medium, surpassing the combined expenditures for the four TV networks, spot TV advertising, and cable and syndicated TV purchases. Direct mail’s growth rate exceeds that of all advertising, which was expected to grow at a 7.1% rate. Direct response television advertising showed the highest level of change among five categories surveyed for the first eight months of 1998. At a growth rate of 24% it outstripped several product categories, including liquor advertising, which fell by 2%; cigarette advertising, which rose by 21%; and brokers/ mutual funds and banks/S&Ls, which were each up 19%. According to the report, growth in direct mail spending during 1999 should again match a 6% increase in national advertising expenditures. Direct mail is projected to reach just over $42 billion, while the sum of all national advertising is seen as rising to $126 billion. The report was prepared by Robert J. Coen, McCann-Erickson’s senior vice president and director of forecasting.

Consumers Edgy About Privacy: Survey More than two in five U.S. consumers say they have had their privacy wrongly invaded by a business, according to the latest privacy survey by Privacy and American Business and Louis Harris. Only 25% expressed the same sentiment in a survey done by the firms a few years ago. The national poll of 1,008 adults also found that 88% of the respondents are concerned about threats to their personal privacy, with 55% saying they are “very” concerned. More consumers than ever (82%) say they have lost control over how their personal information is used. Nearly eight in 10 (78%) believe businesses ask for too much personal information. Sixty-one percent believe that their data are not adequately protected by law or business. Still, 69% said they would prefer voluntary measures over government intervention. Almost eight in 10 (79%) consider telemarketing calls to be “intrusions” and 68% say they would exercise an option to block calls if their local telephone company gave them that choice.

Iomega to Pay Record FTC Fine Iomega Corp., a manufacturer and direct marketer of portable data storage products, has agreed to pay the largest civil penalty ever levied by the Federal Trade Commission for non-fraudulent violations of FTC mail order rules. Without admitting any wrongdoing, the Roy, UT firm, which makes a variety of computer data storage products and sells them by mail and phone, said it will pay the FTC a record $900,000 to settle charges that it failed to pay customer refunds or deliver merchandise, including free gifts, as promised in a timely manner. The FTC also alleged that the company failed to provide customers with notices of shipping delays, optional refunds, or providing a cost-free way of canceling orders.

Mattel to Acquire The Learning Co. Toy maker Mattel Inc. will acquire The Learning Co., Cambridge, MA, a direct marketer of educational software, in a transaction valued at roughly $3.8 billion. The Learning Co., the second-largest consumer software company after Microsoft, offers titles like Carmen Sandiego, National Geographic and American Greetings. The deal is expected to close in March or April. Earlier this year, Mattel purchased The Pleasant Co., maker of the popular line of American Girl dolls, books and clothes, sold primarily through direct mail.

Kestnbaum Now Part Knowledge Base Marketing Inc., Chapel Hill, NC, has acquired Kestnbaum & Co., Chicago, a management consulting firm specializing in direct and database marketing. Terms were not disclosed. James Wheaton, senior vice president of strategic consulting at KnowledgeBase Marketing, has been named a vice president of the new company, to be known as Kestnbaum, a KnowledgeBase Marketing Co. Kestnbaum & Co. was founded by direct marketing veterans Bob and Kate Kestnbaum.

Four Chicago Agencies Merge Four Chicago-area direct response firms will merge into a single company called United Marketing Group LLC. The component agencies are The Hi-Tech Group; Roy Thomas; United Promotions; and Mail Services. Alan Portelli is president/CEO of United Marketing, based in Schaumburg, IL. Combined annual revenue is expected to exceed $120 million.

3Q Boom in DM Service Deals Total mergers and acquisitions volume for all marketing service companies in the third quarter of 1998 came to more than $2 billion, up 196% from the same period in 1997, according to Winterberry Group Inc., Manorville, NY. Direct marketing service firms accounted for close to 30% of the deals closed. The study revealed that of the 77 total transactions (up 32.8% from 58 deals in 1997’s third quarter), direct response agencies accounted for 11 deals, or 14.3%; database companies for nine deals, or 11.7%; and teleservice bureaus for seven deals, or 9.1%. Most notable among the companies making two or more deals were Snyder Communications, with two deals totaling $166 million in value, and Interpublic, with four deals between its Lowe Healthcare and DraftWorldwide divisions. “With database marketing technology being core to the future of marketing, the marketing services industry will continue to consolidate, resulting in creative and robust strategies for advertisers and marketing companies,” said Michael Petsky, president of Winterberry. In addition, Petsky predicted that “back-end order processing for electronic commerce companies will give rise to a new wave of mergers and acquisitions among fulfillment, teleservice and customer care providers.”


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Survey: Service Bureaus Hardly Perfect Database marketers are less than satisfied with their service bureaus, according to a recent survey by KnowledgeBase Marketing Inc., Houston. Fewer than one-third of respondents reported having no problems with their service. One out of five reported problems with accuracy or quality of work, while another 13% said that timeliness and failure to meet deadlines were concerns. One in 10 said that they’d had difficulties with customer service. Other concerns mentioned included technical-support problems, communication issues between the bureau and the marketer, and staffing changes. Just over three-fourths of the respondents said that their service providers performed mailing support functions such as merge/purge functions or name and address cleaning. Fifty-four percent indicated that they contracted for database development services, while exactly half said that they used service bureaus for enhancement purposes or modeling. While nearly all of those contacted used their databases to store information on customers, almost 60% indicated that they also kept information on prospects. The survey found no difference in the needs of higher-quantity vs. lower-quantity mailers. The survey was conducted by the Perdue Research Group on behalf of KnowledgeBase Marketing. Three hundred DMers were contacted by telephone during late April and early May.

Two E-Commerce Groups Formed Last month, e-commerce companies announced the formation of two new industry groups dedicated to Internet marketing: The Internet Direct Marketing Bureau (, and (www.merch. net). Both organizations will address best practices for emerging e-commerce disciplines. The founding members of the IDMB include Stephen Schultz, Compaq; Dave Lalande, Dave’s World; J. Balmer, I.D.E.A. Inc.; Tony Winders, InterActive Agency Inc.; Rod Griffith, MarketReach Inc.; Ken Wruk, WebPromote; Steven Krein, Webstakes; and Paul Grand, Word of Net Promotions. Charter members of include BizRateR (of Binary Compass Enterprises), Impulse! Buy Network, Inktomi, LinkShare Corp. and Netcentives Inc. To facilitate its mission, plans to host merchant forums and workshops and to publish periodic research studies.

Snyder Acquires Response Marketing Snyder Communications Inc. bought Response Marketing Group for $52 million in stock. The purchase is expected to increase the company’s international growth. RMG’s clients include Intel Corp., Microsoft Corp., BancAmerica Corp., Fleet Financial Services Group Inc., and Prudential Securities. Sues Emaginet Over Patent Inc., Chicago, which provides Internet promotion services, has sued competitor Emaginet Inc., charging that the Bethesda, MD company has offered consumer and advertiser services that infringe on a CoolSavings patent for distributing printed and electronic coupons through the Internet. CoolSavings, which has a database of 1.6 million registered shoppers, says its system is the first to provide target marketing capabilities to advertisers and still protect the privacy of consumers. Dadi Akhavan, Emaginet executive vice president, said the company’s attorneys have looked at the lawsuit, which was filed in federal court in Chicago, and determined that “we do not infringe. We’re the technology leaders, and this [lawsuit] is one of the tactics to try to catch up.”

DMA Buys Interactive Trade Association The Direct Marketing Association has acquired the Association for Interactive Media (AIM), a Washington, DC nonprofit group with 250 corporate members. The group is the largest association of companies doing business on the Internet, according to the DMA. The deal will provide the DMA with “intellectual capital” in the e-commerce area, while making it the largest single online trade group. AIM will operate as an independent subsidiary of the DMA, while making use of the DMA’s accounting, legal, conference and public relations services. Andy Sernovitz, who founded AIM in 1993, will continue as president. Though he declined to give an exact figure, DMA president H. Robert Wientzen said the purchase price was “under $10 million and over $1 million.”

Transmedia Hires Dimac CEO Henderson Transmedia Network Inc., Miami, which develops and markets transaction-based dining and other consumer savings programs, has appointed Gene M. Henderson as president/CEO. Henderson was most recently president/CEO of Dimac Marketing, a full-service direct marketing company in St. Louis. Prior to Dimac, Henderson spent 19 years at Epsilon Data Management Inc., Burlington, MA, a database marketing firm. James Callaghan, who has been serving as Transmedia’s acting CEO, resumes his duties as president of Transmedia Restaurant Co.

Gift Cataloger/Medical-Equipment Co. to Merge Pragrance Express Inc., Pompano Beach, FL, is merging with National Boston Medical, which sells anti-viral and bacterial lotions and medical equipment. Fragrance Express sells gift items through catalog and telemarketing channels. The addition of Fragrance Express will push the projected revenue for National Boston well over $60 million.

Genesis and AA Create Catalog Genesis Direct has teamed up with American Airlines to produce a new catalog for American’s passengers. Appearing quarterly, the American Voyager’s Collection will offer double bonus flyer miles with purchases of $100 or more. The first issue is now on board American flights. Genesis Direct will perform merchandising, fulfillment and customer service. The catalog will be produced by AA Publishing.


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USPS Unveils Holiday Mail Plans THE U.S. POSTAL SERVICE, with the aid of major mailers, has developed fall and holiday mailing plans that it hopes will resolve the delivery problems that plagued direct marketers last year. The plan calls for the application of “sufficient resources of space and equipment” and the early hiring of temporary workers, according to comments by COO Clarence E. Lewis Jr. in “Memo to Mailers.” Last year, mailers faced long delivery delays due to increased mail volumes, a shortage of equipment at various postal facilities, a lack of communication between mailers and postal officials, and a sudden influx of packages stemming from a 16-day strike at United Parcel Service. DM observers are skeptical about the plan. “Those are nice assuring words we’ve all heard before,” said Advertising Mail Marketing Association president Gene A. Del Polito. Last year, Del Polito added, mailers faced a “USPS inquisition” when they complained of problems.

Mendoca said that the USPS has built-in contingency plans that cover a wide range of problems, including unexpected increases in mail volume, equipment breakdowns and shortages, and adverse weather conditions.

GeoCities Settles TRC Privacy Case IN THE FIRST CASE involving Internet privacy rights before the Federal Trade Commission,

GeoCities settled an FTC complaint that it failed to live up to its stated privacy policies. GeoCities agreed to rewrite the privacy statement on its Web site, explaining what information it collects and how it is distributed. According to the FTC, GeoCities had informed customers that it wouldn’t release information about their education, income, marital status, occupation and personal interests without their permission, but failed to live up to that pledge. The company has 2 million customers and its collection of Web pages ranks it among the 10 most frequently visited consumer sites on the Internet.

Fleet Splits Accounts Between Devon, Blau FLEET FINANCIAL GROUP, Boston, has consolidated its direct business under two agencies-Berwyn, PA’s Devon Direct and Wilton, CT’s Barry Blau & Associates. Fleet’s senior vice president and director of corporate marketing Betsy Richardson said Fleet’s DM budget is “over $100 million.” The two were chosen after a three-month review that included 20 firms, according to Richardson. At one point the contest was down to the two winners and Bozell Direct, New York, and Cohn & Wells, San Francisco. Blau is owned by Snyder Communications. Devon was the DM agency for Advanta Corp.’s credit card business, which Fleet bought this year.

USPS to Discontinue Retail Product Sales CITING “SERIOUS CONCERNS” of “businesses that may object to these sales,” the U.S. Postal Service will discontinue sales of postal-related merchandise, such as ties, T-shirts, earrings and mugs, in post offices but will carry on sales by direct response. The discontinuation will take effect gradually, with current inventories allowed to dwindle without being replaced. Postmaster General William J. Henderson said in a letter that the post office wanted to be “as responsive as we can to the sentiments of the communities we serve, including businesses that may object to these sales.”

DM Deals Soar in First Half THE COMBINED VALUE of all direct marketing strategic transactions reached $23 billion during the first six months of 1998, a 59% increase over $14.4 billion in the first half of 1997, according to DM investment firm Gruppo, Levey & Capell Inc. The number of deals rose to 991, up 52% from 651 in the January-to-June period in 1997. On a percentage basis, public offerings, which were up 171% (17 transactions in first-half 1997; 46 in 1998), showed the greatest change in level of activity. Joint ventures and strategic alliances jumped 93%, from 146 in 1997 to 282 in 1998, closely followed by an 87% increase in acquisitions, buyouts and mergers (238 in 1997, 44 in 1998). New ventures were off by 11%, dropping from 228 to 204, and bankruptcies and closings declined by 32%, with 22 companies subjected to them during the first six months of 1997 and only 15 during the first six months of 1998.

DraftWorldwide Adds Munich Agency DRAFTWORLDWIDE, CHICAGO, will buy M&V, Munich. The acquisition will make DraftWorldwide the third-largest below-the-line agency in Germany. Terms were not disclosed, but M&V billings are given as $78 million. Its clients include Volvo, Peugeot, and Marriott Vacation Club. Its principals, Herbert Schneider and Bernhard Voigtlander, will remain as managing directors and will report to Jean-Paul Dupuy, president, DraftWorldwide, Europe.

DraftWorldwide itself is a unit of The Interpublic Group of Cos. Inc.

Fingerhut to Acquire Arizona Mail Order FINGERHUT COS. INC., Minneapolis, will acquire Arizona Mail Order, a cataloger of women’s apparel with annual revenue of some $140 million. The purchase price is $120 million, subject to adjustment. The deal will provide Fingerhut with about 1.6 million new customer names.

Jillies Honors Creatives THE WOMEN IN Direct Marketing International/NY direct response creative Jillies Awards will be presented Thursday, Oct. 1 at the Cellini Restaurant in New York.

Emily Soell, vice chair and chief creative officer of Draft Worldwide and a WDMI Woman of the Year, will present the awards, which are sponsored by The Horah Group. Judges will include last year’s winners and creatives from the National Geographic Society, BMG and Ogilvy & Mather.

The deadline for entries was Sept. 14. For information on the entry process, call Marcie Guest at 212-229-1275. For details about the awards presentation and networking party, fax Vilma Freeburg at 516-294-8141.


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Reader’s Digest Plans Global Change THE READER’S DIGEST Association, Pleasantville, NY, is planning a global reorganization aimed at revitalizing the troubled company. Reader’s Digest will organize into four business groups, restructure its editorial organization, establish new reporting relationships and change responsibilities for some people while hiring others. Chairman and CEO Thomas O. Ryder outlined the objectives of the changes as broadening the customer base to include younger customers and more products for older customers, overhauling the company’s work processes and cost structure, and freeing up dollars from underperforming assets to invest in growth opportunities. The four groups are Global Books and Home Entertainment, U.S. Magazine Publishing, International Magazine Publishing and QSP, the company’s school and youth fundraising business. The Books and Home Entertainment unit, Reader’s Digest’s largest business, will be broken down into four strategic business units in the United States and three geographic units internationally, each organized around similarities in their customers and business issues. Ryder said in a letter to employees that plans for restructuring costs and raising capital will be announced this month. The 76-year-old company has experienced financial woes over the past few years. Revenues fell 8% to $2.8 billion in fiscal 1997. Operating profits have fallen for the past four years, from $393.7 million to $227.8 million.

Abercrombie & Fitch Pulls Alcohol Story ABERCROMBIE & FITCH CO., Reynoldsburg, OH, will remove a controversial two-page story called “Drinking 101” from the back-to-school issue of its quarterly magalog in response to criticism the article promoted underage drinking. In addition to removing the story, the cataloger and retailer will send a postcard to recipients of mailed copies. The postcard will explain A&F does not support underage or binge drinking. Advocacy groups protesting the article-such as Mothers Against Drunk Driving (MADD)-claimed that its description of drinking games and mixed-drink recipes promoted excessive, if not irresponsible, drinking to a college-age audience that is largely under 21. The magalog has a circulation of 1 million, most of which is distributed as a direct mail piece. However, there is a paid subscription base of 70,000.

ABI: New Name and New CFO AMERICAN BUSINESS INFORMATION Inc., Omaha, NE, has changed its name to infoUSA Inc. Its Nasdaq symbols are now IUSAA and IUSAB for the company’s class A and class B common stock, respectively. In a separate development, infoUSA’s chief financial officer, Steven Purcell, resigned effective Sept. 1.Rick Puckett, vice president and corporate controller, succeeds him.

Kleid Collects $6.2 Million So Far KLEID CO. Inc., New York, has reported collecting over $6.2 million in outstanding debt since filing for Chapter 11 bankruptcy protection in March. The list owner/manager portion of the collected funds is $5.2 million and of that, over $4.1 million has been paid, Kleid CFO John Hughes said. An additional $666,000 is being prepared for disbursement this week. Another $260,000 has been placed in escrow under the control of the Creditor Committee’s counsel. Outstanding debt remains approximately $2.7 million, Hughes said. A plea to debtors in a recent letter from Hughes stated, “If you still owe us money, please pay it now.”

Congress Checking USPS Overhead Costs THE TWO CONGRESSMEN who oversee the U.S. Postal Service’s activities are probing the differences between the way the postal service and the Postal Rate Commission attribute overhead costs to each class of mail. Specifically, they have asked that the PRC by mid-September recast the results in the USPS’s 1997 cost-analysis report, using the same attribution methods the PRC used to develop the rate increase it recommended to the Board of Governors on May 11. In a July 17 letter to PRC chairman Edward J. Gleiman, Reps. Dan Burton (R-IN), chairman of the House Government Reform and Oversight Committee, and John McHugh (R-NY), chairman of its postal subcommittee, noted the USPS “does not apply the same definitions of attributable costs that have been used by the PRC to develop rates in any of the recent rate or reclassification cases.” In the most recent rate case, the PRC recommended a 3% increase in postage rates instead of the 4.5% sought by the USPS. On June 30, postal governors ordered the new rates to begin Jan. 10, 1999. In asking for the redetermination, Burton and McHugh said that “from the standpoint of fairness and equity, mailers understandably have a strong interest in knowing the contribution that each subclass [of mail] is making toward the institutional costs of the postal service.”

Moore Cuts Jobs, Takes Loss PRINTING AND DM conglomerate Moore Corp., Toronto, will cut a quarter of its work force, about 4,800 jobs, and take a $630 million pretax charge, after posting a $21 million loss in the last quarter. Most of the jobs will be cut in North America, particularly in the U.S., where 10 of Moore’s 100 factories will be closed. The savings are expected to total $120 million by 2001. In addition, the company will sell its Asian division, which accounted for less than 6% of its 1997 revenue of $2.63 billion. Moore is also getting out of the forms and label business in Europe, maintaining only its DM group there.

Fulcrum Files Chapter 11 SOME 700 EMPLOYEES were told not to return to work when mail order clothing company Fulcrum Direct, Rio Rancho, NM, filed for Chapter 11 bankruptcy protection and closed its doors in late July, according to published reports. The cataloger had been hit recently by a flurry of lawsuits alleging it had not paid its bills. The company’s brands, After The Stork, Storybook Heirlooms, Playclothes and Zoe, are being pursued by buyers interested in those products. Fulcrum Direct, lured to the state in 1995 by millions of dollars in tax breaks, was Rio Rancho’s second-largest employer, behind Intel Corp. The company filed for bankruptcy protection in the U.S. Bankruptcy Court in Delaware.


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DM Deals Hit $38 Billion in ’97 The combined value of strategic direct marketing transactions-including mergers, acquisitions and buyouts-reached $38 billion in 1997, according to a study by New York-based investment firm Gruppo, Levey & Capell.

This 52% increase (from $25 billion in 1996) marks the seventh consecutive increase. The sheer number of transactions also rose-from 1,303 in 1996 to 1,416 in 1997. “Industry segments such as cataloging, telemarketing and lettershop services underwent and continue to go through significant consolidation,” said Harry Chevan, a senior vice president with Gruppo, Levey & Capell. “In addition, computer service providers’ growing sophistication in list segmentation and analysis opened marketers’ eyes to the significant synergies that could be gained in strategic alliances.” According to the report, mergers, acquisitions and buyouts increased to 554 in 1997, a 19% increase over the 465 deals reported in 1996. The number of strategic alliances and joint ventures increased by 27%, from 252 such transactions in 1996 to 319 in 1997. New ventures, however, were stagnant, with the 472 recorded in 1997 virtually identical with the 475 launched in 1996. Initial and secondary public offerings showed significant decline, with the 30 reported in 1997 a far cry from the 70 noted in 1996. On the plus side, the number of bankruptcies and closings decreased from 41 in 1996 to 39 in 1997. Gruppo, Levey & Capell foresees 1998 to be a robust year in deal-making and predicts an overall increase of 10%.

APAC to Acquire ITI Marketing Services Teleservices provider APAC TeleServices Inc., Deerfield, IL, has signed an agreement to acquire ITI Marketing Services Inc., reportedly making the company the nation’s largest teleservices firm with over 14,000 workstations and combined annual revenue of more than $492 million. In exchange for 100% of the outstanding equity of ITI, APAC will pay $155.2 million in cash subject to certain adjustments. The acquisition was expected to close in May. APAC chairman/ CEO Theodore G. Schwartz will continue his role in the expanded company, and Marc S. Simon will remain as president/COO. Reporting to Simon will be ITI’s president and CEO, Raymond R. Hipp, who will have added responsibility for the integration and consolidation of the two companies. Hippwill also be nominated to join APAC’s board of directors. Joining Hipp will be ITI’s entire executive team. In the near term, APAC and ITI will continue to serve clients through their respective organizations. As operating efficiencies are identified and new opportunities emerge, the company will consolidate redundant functions.

NEBS to Purchase McBee Systems New England Business Service Inc., Groton, MA, will acquire McBee Systems Inc. and McBee Systems of Canada Inc., both wholly owned subsidiaries of ROMO Corp. of Lakewood, CO. McBee manufactures and markets a line of checks and related products to small businesses.

Under the terms of the agreements, NEBS will acquire 100% of the stock of the U.S.-based company and all of the assets of the Canadian company for total consideration of $63 million, of which up to 20% may be in the form of NEBS stock.

McBee sells checks and check-writing systems to over 300,000 small business customers through a 350-member sales force in North America. NEBS designs and produces business forms and distributes packaging, warehouse supplies, retail merchandising supplies and other products through mail order, direct sales and dealers.

Tom Brady Retires Tom Brady, co-founder of Kobs & Brady Advertising, now DraftWorldwide, has retired. He is also a former member of the Chicago Association of Direct Marketing’s board of directors as well as a former member of the Direct Marketing Association’s Echo Award Committee.

MGM Enters Catalog Business Hollywood studio Metro-Goldwyn-Mayer Inc. will start a consumer-products division, called MGM Brand Portfolio, for items not necessarily connected with its movies. It also plans to launch a catalog with Neiman Marcus Direct this fall to sell some of the products. MGM will offer everything from chocolates in the shapes of top hats to home furnishings.

Cendant to Acquire British Auto Club Cendant Corp., Stamford, CT, has entered into a letter of intent and exclusive negotiations with the Royal Automobile Club Ltd. to acquire its RAC Motoring Services business. The price is approximately $750 million. RAC provides parts, roadside assistance and driving lessons for British motorists. Cendant has just completed the purchase of National Parking Corp. Ltd., also based in the United Kingdom.

Discover Offers Internet Access The Discover Card is going into the Internet-access business. The Discover Connection Internet Service, created through an alliance with EarthLink Network Inc., Pasadena, CA, and Planet Direct, Andover, MA, allows card holders to receive unlimited Internet access, personalized content, merchandise discounts and customer service support for a flat monthly fee of $19.95. In addition, it will offer personalized content.

Ogilvy Wins Royal Mail Account Royal Mail U.S. Inc. has selected OgilvyOne Worldwide to develop and launch a direct mail campaign for the incorporated subsidiary of Royal Mail in the United States. OgilvyOne will also develop telemarketing and print ad efforts as well as consult on a series of joint seminars. In London, OgilvyOne and Royal Mail have worked together for about seven years. OgilvyOne is a $1.4 billion subsidiary of Ogilvy & Mather, a unit of WPP Group plc. Royal Mail is a subsidiary of the British Post Office that provides international bulk mailing services to companies in North America.


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This campaign, Netflix at AsiaPOP Comicon from Jack Morton Worldwide, landed a 2019 Gold PRO Award.


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