MSGi Announces Cutbacks

Marketing Services Group Inc., an integrated marketing solutions vendor, yesterday announced a corporate reorganization designed to generate more than $5 million in annual cost savings.

The cost reductions will be attained through consolidating select MSGi offices, relocating back-office administrative functions to less expensive facilities and reducing staff. The reorganization is part of the company's ongoing program to integrate the multitude of direct marketing firms it has acquired over the past three years.

“MSGi has been focusing on streamlining our operations to attain maximum profitability and shareholder value,” said Jeremy Barbera, chairman/CEO. “This phase of the initiative is the largest step we've taken to realize the sizable cost-reduction synergies.”

The reorganization involves:

o Finalizing the consolidation of MSGi's three New York-based operations and aligning those operations with MSGi's facilities in Boston and Philadelphia. As part of this realignment, Thomas M. Smith has been appointed executive vice president, Northeast operations. He was formerly general manager of the MSGi Direct facility in Boston. Before joining MSGi he was senior vice president of sales and marketing with Harte-Hanks for 11 years.

o The elimination of several executive positions. The company is terminating the employment agreements of Stephen Killeen, president, and Bob Kielhorn, vice president of marketing planning. The employment agreement of Mark Clemente, chief strategy officer, is expiring without renewal. Barbera will become president.

o Relocating the operational and technology infrastructure for the firm's list management and brokerage lines of business from New York to MSGi's lower-cost Philadelphia-area facilities.

o Consolidating personnel, finance and administration as well as centralizing the procurement and administration of all products, services and procedures.

o Closing the operations of Pegasus Internet. The company will continue to provide online products and services through other MSGi Direct divisions.

Barbera said the reorganization does not affect the MSGi business units Grizzard Communications and TABS Direct. He emphasized, however, that MSGi is exploring additional cost-reduction and operational efficiencies in all lines of business.

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