[MavKikiNYC]

Two Central Figures on the Kerry Media Team Go Toe to Toe
By JIM RUTENBERG

Published: April 9, 2004

WASHINGTON, April 8 — When Democratic strategists list the leading factors behind Senator John Kerry's primary-season victories, they put his campaign advertisements near the top, particularly those that featured former Vietnam crew mates vouching for his leadership. So the campaign's announcement last week that Jim Margolis, a chief consultant behind those commercials, would significantly reduce his role because of a contract dispute puzzled party officials. Details of the dispute offer a glimpse into the machinery and growing pains of a presidential campaign as it switches from a primary to a general-election footing. It is then that the risks and rewards grow exponentially, along with the potential financial return to consultants. But the details also underscore the growing influence of Mr. Kerry's senior strategist Bob Shrum.

People close to the situation would speak only on condition that they not be identified, saying campaign decorum did not provide for publicly speaking about private contractual negotiations. But people on both sides agree that the lessening of Mr. Margolis's role was precipitated by a financial decision of Mr. Kerry's campaign manager, Mary Beth Cahill. She was determined to reduce the rate of commissions being paid to Mr. Margolis's firm, GMMB, and to Mr. Shrum's: Shrum, Devine & Donilon.

Media strategists customarily collect a percentage of the cost of advertising time that campaigns buy, a factor that helps make them among the best-paid people in politics. Yet people familiar with the arrangements at the Kerry campaign said commissions it had paid to its two main advertising firms were not only equal but also relatively modest, with rates in the low-to-mid single digits. These people said each of the two firms had earned a profit of less than $1 million in commissions so far.

But, campaign officials said, Ms. Cahill wanted to lower the commission rate further, in light of the prospect that the the Kerry organization would be spending tens of millions of dollars more on advertising between now and midsummer than it had initially expected. That would have netted the two firms far more than Ms. Cahill wanted to pay them. Rather than set the new commission structure herself, Ms. Cahill left it to the firms to work it out between themselves, people close to both firms said.

Mr. Margolis, these people said, was unhappy with the terms that Mr. Shrum proposed. That proposal gave Mr. Shrum's firm a far larger share of the smaller commission rate, the notion being that his two partners, Mike Donilon and Tad Devine, were also senior advisers to Mr. Kerry, whereas Mr. Margolis was the only senior partner in his firm who was so closely involved.

Mr. Shrum and his partners also argued that Mr. Margolis's proposal — that the two firms continue to split the commission evenly — would not adequately compensate their firm because, they believed, it was playing a greater role in shaping Mr. Kerry's message, an assessment that Mr. Margolis disputed. Frustrated by the impasse, Mr. Margolis decided to walk away from the creative work, although he will continue buying advertising time for the campaign. Mr. Margolis's allies say they believe the deliberations were devised by the campaign leadership to leave him no choice, giving Mr. Shrum still more power over the message machine.

The Margolis supporters noted that Ms. Cahill had not involved herself in the negotiations at the beginning and had not done much to intervene at the end. Mr. Shrum, who like Mr. Margolis would not comment for this article, is close to Ms. Cahill, while Mr. Margolis was hired by Jim Jordan, the Kerry campaign manager who was fired last fall.

"The truth is he was pushed out," a Democratic strategist familiar with the deliberations said of Mr. Margolis. "They came back with a deal they knew he'd say no to." Officials of the Kerry campaign called that account "imagined."

"No one forced anyone to leave — it just didn't happen," one said. "He chose to leave." Ms. Cahill declined to make any new comment, and Stephanie Cutter, a campaign spokeswoman, pointed back to Ms. Cahill's statement of last Friday, when the dispute became public. "Jim Margolis and his colleagues at the firm," the statement said, "have made an extraordinary contribution to John Kerry's success. We're disappointed that they won't continue in that role."

The two Vietnam spots that Mr. Margolis helped create featured shots of Mr. Kerry as a young Navy officer in the Vietnamese jungle, and war comrades who extolled his leadership retrospectively.

"I think he won Iowa because of those ads and he won in Georgia in part because of those ads," said David Axelrod, a senior strategist for Senator John Edwards of North Carolina, formerly a campaign rival.

Some Democratic strategists, including those who remain close to the campaign, said they were concerned that Mr. Kerry was losing so instrumental a player at so crucial a time. "They've taken a step away from putting the best team on the field," one said.

Others were not as concerned, noting that the Vietnam spots had been developed in a team effort and that most of that team remained. "I've worked with all of them, and they're both great firms," said Joe Trippi, who managed the campaign of Howard Dean. Still, he said, as the Kerry campaign moves deeper into the general-election season, it should be adding consultants, not losing them. Officials with the campaign said they expected to expand their media team as time passed.