Money Player

Los Angeles
January, 2004

Midway through his first term, so many key players had left Jim Hahn's staff that the departure of Matt Middlebrook, the deputy mayor for communications, failed to shock. His destination—now that was news. Middlebrook, manager of Hahn's last two election triumphs, signed on as a senior vice president of the global public relations giant Fleishman-Hillard. A few weeks later, a young Fleishman vice president, Shannon Murphy, became the mayor's chief spokeswoman, trading the agency's glass suite in a Flower Street tower for a coop of paneled offices on the third floor of City Hall.

Such a swap might have escaped attention when Richard Riordan was mayor. These days, however, the Los Angeles branch of Fleishman-Hillard operates under the gaze of journalists, competitors, and an ever-larger body of alumni and defectors, all impressed by the firm's growing reputation as a local power player. The L.A. Times and others are keeping an eye on Fleishman as if it were another wing of City Hall, one inhabited by executives in sleek suits who take lunch at Pinot, bring clients to private sit-downs with the mayor, and accompany him on trips overseas.

Murphy was still at Fleishman when she joined Hahn's entourage during its swing through Asia in 2002. Also on the plane was her boss, Doug Dowie, the architect of Fleishman's image as a shop of connected insiders. The 55-year-old former journalist would not fit many people's picture of a prototypical $425-an-hour communications adviser. Dowie is more ruddy than slick. He lives not in elite Brentwood or Palos Verdes but in suburban West Hills. His wardrobe has been upgraded since the days when wire reporters could get by with khaki trousers and one blue blazer, but he remains loyal to his Marine Corps cuff links—he spent four years in fatigues, including all of 1968 as a sergeant in Vietnam.

Don't be fooled. Dowie is at home in inner sanctums and doesn't object to anyone believing he has special access to the mayor. His office has provided free public relations for Hahn's homeland security summit, the foundation that operates Getty House (the official mayoral residence in Windsor Square), the mayor's Workforce Literacy Program, and his One Book, One City L.A. program. When Hahn launched his counteroffensive against secession two years ago, Fleishman-Hillard kicked in the first cash contribution, and Dowie took the lead in trying to persuade the influential Valley Industry and Commerce Association to stay neutral. (He failed.) Dowie is an officer of the chamber of commerce and belongs to the exclusive California Club. This month he will receive the first Civic Leadership Award given by the American Jewish Committee.

It's a long way from covering Governor Jerry Brown for California Public Radio and pounding out stories for United Press International as a political reporter, manager of the Los Angeles bureau, and California state editor. In 1985, Dowie jumped to the Los Angeles Daily News as business editor, then became metro editor, and finally managing editor. For three years he oversaw the transformation of the old Valley News and Green Sheet from a shopper into a daily that respectably covered city and county government, with a focus on the Valley.

In 1990, Dowie became the chief of staff for Valley assemblyman Richard Katz. Times columnist Bill Boyarsky wrote a piece about the potential for fireworks, noting that both Katz and Dowie tended to be hotheads. If anyone lost his cool, the scars healed quickly. After a year Dowie joined Fleishman-Hillard but continued to advise Katz. He retained Katz as a Fleishman consultant after the assemblyman left office.

Dowie spent the '90s raising the agency's profile, first as head of the Los Angeles public affairs practice and for the last five years as general manager and senior partner. Until he arrived, St. Louis-based Fleishman-Hillard—the world's second largest PR outfit—was better known locally for its corporate clients. Dowie wants Fleishman to be more aggressive and visible than the other agencies in town, to be "ubiquitous." Staffers are assigned to aid politicians with pet projects, work the crowd at parties, and—at least in Hahn's case—raise money for campaign bank accounts. Ex-officials with connections are brought on as "senior consultants." The most recent addition is former assembly speaker Robert Hertzberg, which could prove awkward should he decide to challenge Hahn's reelection bid next year.

Another Dowie tactic is to use high salaries to entice senior journalists to make the leap into public relations. So many former Times and Daily News staffers have switched over that New Times Los Angeles, employing the adolescent tone the now-defunct weekly favored, dubbed Dowie's operation the best escape hatch for newsroom pricks. "You're a newspaper editor," New Times said. "You're a total asshole. And you're about to get shoved overboard, or maybe just looking for a more lucrative way to be a dick. What to do? Get a job as a high-paid flak at Fleishman-Hillard, a corporate PR firm with a rep for pure nastiness and a willingness to do just about anything for clients with fat wallets."

The squib touches on something that often comes up when former colleagues are asked about Dowie. They call him talented but gruff, the kind of boss whose biting comments can reduce people to tears. Former Fleishman executives, and there are many, trade stories about hearing shouting in Dowie's corner office and his with-me-or-against-me style. "It's like an armed camp," says one former executive. Another, Eric Rose, was recruited from the staff of then-councilwoman (now city controller) Laura Chick. After nine acrimonious months, he left for Weber Shandwick, the largest PR firm in Los Angeles. Rose's exit was famously testy, say colleagues, but all he will concede is that "the courtship was wonderful, the marriage was a disaster, and the divorce has been amicable." Ex-colleagues say Carol Stogsdill, a former Times senior editor, bristled at Dowie's brusque manner and became something of a legend for simply quitting as a senior vice president when she'd had enough.

Significant departures have cut into Fleishman's roster of accounts, which already was hit hard—as were those of most area communications agencies—by the tech collapse and the flight of corporate home offices from Los Angeles. Two days after the party celebrating his promotion to senior partner, former Riordan press secretary Steve Sugerman left Fleishman to start his own firm in Westwood. He now represents the Pacific Maritime Association and the Playa Vista development, both ex-Fleishman clients. Last October, Fred Muir, a former Times reporter and editor who joined the agency in 2002, told Dowie during a heated meeting that he was leaving┬»and taking the Hearst Corporation and Ambassador College accounts with him. He hadn't hit the street before e-mail was flying. Muir is conciliatory. "Doug made the transition from newsman to PR man better than just about anybody in Los Angeles," he says. "That's why I sought out Fleishman-Hillard when I decided to leave the news business."

Around the office, it often fell to Mark Barnhill to smooth hurt feelings. "Doug certainly has a reputation that precedes him," says Barnhill, a former senior vice president and a friend of Dowie's. He describes Dowie as blunt but professional. "That can be painful for some people," says Barnhill, who recently left to handle corporate communications for one of Fleishman's clients.

Dowie the reporter is remembered as a charming companion on campaign buses and as a jovial schmoozer. So has he changed? He says no. "There aren't a lot of former marine sergeants who do what I do," he says over a salad at a downtown lunch spot. Dowie says he manages the same way he always has, telling people what he expects and giving them the tools they need but demanding that they succeed. "A lot of people don't like confrontation." He claims to be surprised at being called a difficult boss and offers to name 100 people who would walk through fire for him. "My management is far from mild, but in this town I consider myself a wuss."

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It's obvious how Dowie benefits from the perception that he is close to the mayor. Every story (such as this one) that describes him as an insider boosts Fleishman's profile. Although Dowie won't reveal how much the office bills each year, Fleishman is the envy of its local rivals for nabbing a $3 million-a-year contract to provide services to the city's giant quasi-independent Department of Water and Power. Fleishman also does work for the Port of Los Angeles and the airports department, but the DWP job is one of the firm's core assets. "Doug bet the house on the DWP contract, and it has paid off," says a former associate. "If he lost it, he would probably have to let go of a third of the staff." That may explain why Matt Middlebrook—after leaving City Hall in October to work in Fleishman's San Francisco office—sent out a letter announcing that he would have an active hand in helping service the DWP contract.

Fleishman's contract dates to the Riordan administration. At the time, deregulation loomed, and the nation's largest municipal utility sought advice on how to compete. "We function as a corporate communications department would to a company of that size," Dowie says. Deregulation didn't happen, but the contract has been extended and will run at least until 2005—although not without controversy. In the secession campaign, when Assemblyman Keith Richman ran for mayor of the Valley, he called the DWP-Fleishman contract a political payoff. The Daily News editorialized against the deal. Chick has released an audit concluding the utility spends too much on public relations.

Last May the Times latched onto the DWP deal in a story headlined Outside PR Consultant Reaps Millions From City. It noted how, in one week in 2002, the political stars aligned for Fleishman. First, the agency paid $10,000 to seed Hahn's antisecession effort (eventually contributing $55,000) and its executives dined with the mayor at the City Club. The next day the Harbor Commission approved a two-year PR contract with Fleishman. Six days later, the airport department signed off on another Fleishman contract. Then the Board of Water and Power Commissioners extended the DWP deal. The paper counted up more than $20 million in business between the city and the firm in recent years (and $137,000 in campaign contributions from Fleishman personnel to city candidates) and got hold of e-mails and internal memos that showed how Dowie counsels the mayor and his top aides on everything from political strategy to crisis management to getting World Series tickets.

Before the story was published, associates say Dowie fretted about the piece and pressured the staff to find out what it would say. Six weeks after the article hit, he was more sanguine and sent out a letter that began, "Thanks to the Los Angeles Times' intrepid reporting, the secret is out: I am a fan of Mayor James Hahn." The letter called on minority-owned businesses that receive a cut of the DWP contract and other city jobs to join Dowie at yet another City Club fund-raiser for Hahn. "Tickets are $1,000 per person and your check should be made out to 'Hahn for Mayor 2005.' Please bring it with you to the reception. Cheers, Doug."

Dowie defends his fund-raising for the mayor and his larger strategy to extend the Fleishman brand. "Service firms need to find ways to market themselves," he says. "There's a reason our visibility is off the charts." He notes that Fleishman won the DWP contract before Hahn ever ran. "If we couldn't do the work, it wouldn't matter how much I give." Still, he agrees that his pro bono efforts for the mayor are good business, if sometimes messy. In December the Daily News ran a story critical of Fleishman's spending $5,000 to host the mayor's media Christmas party. The piece quoted a Dowie e-mail to Middlebrook suggesting a way to save on party costs: "Cripes, it's the media. Chips and plain-wrap booze."

What's less clear is how much value Hahn gets from his relationship with Dowie and Fleishman-Hillard. Though the mayor is pleased to receive donated advice from one of the world's premier public relations firms, Hahn's tenure has not been distinguished by an abundance of good press. Last fall the Times editorial page ran a midterm report card complaining that Hahn was ineffective during the MTA strike, has soured relations with the city council, and put forth a widely panned $9 billion plan for modernizing LAX. The paper also said he has become known—like recalled governor Gray Davis—more for his campaign fund-raising profligacy than for his leadership. "Hahn approaches his job as though he were the city manager of a South Bay burg," the Times said. "Los Angeles needs him—or key members of his staff—to think BIG." The Daily News likes him even less than the Times and attacked him with gusto during the secession fight. Hahn, thanks in part to Dowie and major rainmakers like Airport Commissioner Ted Stein, has the war chest to survive a reelection battle. The mayor, however, isn't seen as strong enough to scare off potential challenges, possibly from Hertzberg or former police chief (now councilman) Bernard Parks.

If Dowie has so much pull, skeptics ask, why does he have to give away his advice rather than be paid dearly for it? Whatever the answer, his modus operandi has spawned an imitator. Last fall Fleishman competitor Burson-Marsteller named Alan Arkatov as president and CEO of its Los Angeles office. Arkatov is a Hahn confidant who has worked in politics (he was a senior adviser to Bill Clinton campaign chairman Mickey Kantor) and in the media business but never at a PR agency. The message was clear. Arkatov has long-standing ties to Hahn, having directed his first campaign, in 1985. Arkatov's wife, Mary Leslie, was until recently a water and power commissioner for Hahn. No one would be surprised if Burson tries to win the DWP contract from Fleishman when it comes up for renewal in about 18 months.

Arkatov acknowledges that knowing the mayor well won't hurt his hopes of making his firm the top public affairs agency in town. "Do I know and appreciate the mayor? Yes. Do I know and appreciate all the wanna-be mayors? Yes. Does it get me the business? No. Does it help? Yes." He says Los Angeles is big enough for both his firm and Dowie's to flourish.

Making the rivalry especially intriguing is the fact that Dowie and Arkatov are friends. When Arkatov accepted the Burson offer, he was leasing space in the Fleishman offices. He had to walk down the hall and tell Dowie not only that he was going into PR but that they would be going mano a mano.

Dowie admits he was floored. Since Arkatov was a friend, not an employee, he didn't get hauled off the premises. Just to be sure, Dowie sent an e-mail—one that promptly was circulated outside the office as evidence of his take-no-prisoners attitude: "Alan is a friend and an honorable person, but he and his assistant will be in over the weekend packing. Please don't leave anything sensitive on your desk. Thanks."


©Kevin Roderick 2004
Not for publication without permission