In the public relations business, sprucing up a client's image is no longer enough. At a time in which the prestige value of connections in Washington is growing, it is becoming a must to offer everything from appointments with key policy-makers to inside tips on legislation pending before Congress.
It is this attempt to fulfill the growing demand for access to the Washington power structure that is driving the world's leading public relations firms to purchase successful lobby groups here, according to several Washington lobbyists. In the past four years all of the major international public relations firms, from Ogilvy & Mather to Hill & Knowlton, have bought at least part of a well-established lobbying organization.
"What they are trying to do is provide one-stop shopping for corporate clients," said Tom Korologos, a lobbyist with Timmons & Co., a small government relations firm that was bought two years ago by the London-based WPP company. "Now they should be able to get everything they want at one place. They can come to us and need not go further."
Thomas Bell, head of the Washington office of the international public relations company, Burson-Marsteller, concurs. His firm's purchase of the lobbying group Black, Manafort, Stone & Kelly, announced a week ago, is the latest example of the trend. "More and more, we get clients who have a wide range of needs," Bell said. "And we want to be able to provide them with everything they want."
Bethlehem Steel illustrates how shopping at one stop can work in a company's favor. In the past, the Pennsylvania firm has retained the New York office of Burson-Marsteller for its public relations needs and used Black, Manafort as its Washington lobbyist. "Now that the two are merged," a representative of Bethlehem said, "communications between them should be easy and that would definitely serve our interests."
But by far the biggest advantage of having several firms under one umbrella handling an account would go to "those in really big trouble who need help fast," said Korologos. Examples: Chrysler during its bailout in the 1980s and the savings and loans involved in the ongoing scandal.
Joining public relations firms, with their broad network of clients, provides advantages to the lobbies too. At Wexler, Reynolds & Associates, a small lobby group that was bought last year by Hill & Knowlton, being owned by the bigger company is regarded as a way to get "get access to a broader market," according to Wexler spokesman Dale Snape.
In Korologos's view, the biggest boon in the mergers for the lobby groups is financial. "Let's face it," he said, "all these deals are really all about money." In 1986, the lobbying firm of Gray & Co. received $21 million from Hill & Knowlton in the purchase that touched off the current wave of mergers.
At a period in which the business of government relations is one of the most profitable in the United States, the financial advantage in merging with lobby firms with good Washington connections is substantial for the public relations giants.
Black, Manafort, which had $1 million in revenues in 1980, multiplied its intake tenfold over the last decade. Next year, under the new ownership of Burson-Marsteller, the firm is expected to take in $11 million. That is only slightly less than the projected revenues over the same period for the Washington office of Burson-Marsteller, which has a staff twice as large. Taken together, the combined revenues of the two operations are projected to total $33 million this year.
Still, when they merge with international groups, the smaller lobbies risk losing the personal character that helped make them successful, some critics have warned. Black, Manafort, which in the past has maintained strong Republican ties, may have greater difficulties doing so as part of a large structure, critics say.
However, the firm is adamant about maintaining its independence and image separate from the larger Burson-Marsteller organization, said Charles Black, one of the founders. "One of the agreements in the deal is that we could maintain our independence," Black said, "and continue doing exactly what we have been doing. If we do lose a little bit of independence, we gain a lot of security."
The concept of one-stop shopping for public relations and lobbying also reflects the needs of a changing clientele for these services. A flood of new customers is coming from abroad, said Bell of Burson-Marsteller. In 1989, for instance, the company's West European business grew by 33 percent, he added. Other strong bases for foreign customers include Japan and Eastern Europe.
Another expanding clientele base for Washington work is mid-level companies that do not have their own lobbyists in Washington.
For foreign companies and mid-sized American ones, the lure of one large company that provides a variety of services has proven attractive. "For us, these conglomerates offer no particular advantage as we have our own lobbyists in Washington," said Ken Jacobsen, a spokesman for DuPont, the Delaware chemical company. "But for a smaller company from out west which has some problems on the Hill and needs some help, they are surely a major convenience."
Ogilvy & Mather, a New York-based public relations firm with a growing foreign clientele, also is finding that its customers want a strong link to American policy-makers, John Margaritis, a company spokesman, said in a telephone interview. "It is becoming more and more important for our clients to have key access with certain audiences," Margaritis said. "Clearly one of the most important of those audiences is in Washington."
Ogivly & Mather owns interest in the Washington lobby group of Charls Walker Associates. It also owns Washington-based Powell, Adams & Rinehart, which does public relations and counseling for corporate clients and is run by former White House press secretary Jody Powell.
The mergers are also part of a shift in Washington lobbying away from putting representatives of interest groups in contact with members of Congress. Gradually, according to several key lobbyists, the lobbying business is being expanded to include advertsising, news media contacts and general image making. "All of these activities are linked closer and closer together now," one lobbyist said. "The line between them is becoming grayer."