Fleishman-Hillard's St. Louis headquarters announced today that the PR giant will withdraw from its three controversial Los Angeles city contracts. The agency has gotten a ton of bad publicity lately about its lucrative deals to provide public relations services to the Department of Water and Power, Port of L.A. and the airports department. The brouhaha already claimed Doug Dowie, the head of Fleishman's Los Angeles office, who was given a new job after receiving what his competitors in the PR biz and City Hall observers called too much public attention about his influence with the Hahn administration. Fleishman email has also been subpoenaed as part of the City Hall ethics investigations. Story today at the St. Louis Post-Dispatch website; here's my January Los Angeles magazine piece on Dowie.

* And: Anita Chabria, Los Angeles-based writer for PR Week, quotes Dowie's replacement, Richard Kline. Also: Word is around that KNBC may air a new report about Dowie's methods on this evening's news. Reporter Ana Gracia has been covering Fleishman-Hillard aggressively for Channel 4. (Update: The story on the 6 p.m. news reported on a downtown deli owner who claimed Fleishman hit him up for Hahn campaign contributions, then took away business when he refused. Dowie was not mentioned.)

** 1:45 p.m. update (edited): This is not an insubstantial hit to Fleishman. Sources say the $3 million-a-year DWP contract is the foundation of the agency's Los Angeles public affairs practice. In addition to about $400,000 in annual billings from the port contract, PR industry sources speculate that Fleishman may be in jeopardy of losing another lucrative contract doing work for the L.A. community colleges. That contract expires Aug. 1.

*** Wednesday stories: Times, Daily News, Breeze

Fleishman's statement follows:

Statement by Richard Kline
Regional President, Fleishman-Hillard,
and General Manager, Los Angeles

Los Angeles, April 20, 2004 -

Fleishman-Hillard announced today that it will not seek extensions or renewals of its contracts with the Los Angeles Departments of Water and Power and the Port of Los Angeles when those contracts expire during the next 90 days. The city agencies and Fleishman-Hillard agreed on the decision after discussions this week.

The agency's contract with LADWP expires June 30 and with POLA July 10.

The company also announced it has notified Los Angeles World Airports that it will end its contract with that department in 30 days, on May 20. Fleishman-Hillard has not worked for LAWA in more than two years. The contract was to expire on Nov. 27.

"We are in the business of client service. Unfortunately, our representation of the Department of Water and Power has become part of a larger public debate that has diverted attention from the department's important work to the provider of its communication services. That does not serve our client's best interests," said Richard Kline, regional president of Fleishman-Hillard and general manager of the Los Angeles office. "Ideally, public attention would be on the department's work, rather than on the provider of its communications services. As a result, we believe the best course for DWP and our firm is to end the relationship.

"Although our representation of the Port and the Airport is not being debated today, we want to take this voluntary step so it does not become an issue for our clients.

"We believe we have accomplished much and performed properly in our work for these agencies," Kline added.

"Our work for the LADWP began by helping it prepare for energy deregulation. Today, the challenges are more numerous, including encouraging the wise use of scarce water supplies, environmental threats, state and federal legislation that could have detrimental impacts on the LADWP and the city, as well as the issues of diversity and economic development.

"For the Port, our work has included helping promote initiatives to clean the air, including the AMP program to allow ships to use cleaner shore-side power. Although we have a contract with the airport, we have not done any work there for some time.

"We value the opportunities we had with these agencies to help them achieve their communications goals. We will work with each of them, as needed, to ensure an orderly transition."

Previously on L.A. Observed: Subpoenas for Fleishman, Dowie kicked upstairs?