BUSINESSWEEK ONLINE: DECEMBER 18, 2000 ISSUE

Readers Report

Taking the Guesswork Out of Presidential Elections

''Is there any help for the 'hanging chad'?'' (Cover Story, Nov. 27) on voting fraud and technology got me thinking. Many states actually hold a type of election every week, with good voter turnout. Here in Ohio, it's called ''Super Lotto,'' in which ''voters'' choose six numerical ''candidates'' out of 49 ''nominees'' by marking the numbers on a lottery card with a pencil. To my knowledge, the tabulation is 100% accurate, speedy, and every ''voter'' even gets a slip of paper verifying what numbers they picked. If you accidentally pick too many numbers or too few, a lottery machine returns the card to you for correction.

When it comes to making money, state officials have no problem keeping track of things. Yet when it comes to the democratic process, getting your vote counted may be a matter of sheer luck. Perhaps elections should be handled by state lottery commissions. Maybe with a few adjustments, the same type of lottery machines found in gas stations and convenience stores could be converted into voting booths. I may never win that $20 million, but it would be nice to know that at least one day every four years, win or lose, my input actually counts for something.

Paul Volker
Columbus, Ohio


John Carey's article on the problems with electronic polling stations focused on the inability to perform manual vote recounts after the fact. But the solution seems rather obvious: After voting using a touch-screen system, the voter could then receive a printed ''receipt'' detailing their votes, which could then be deposited into a ballot box for later verification use, if necessary. This would provide an excellent paper trail, with no muss, no fuss, and (most important) no chad.

It would, however, significantly add to the cost of electronic polling stations. Here in Cuyahoga County, I have heard estimates running upwards of $20 million to convert to electronic voting. But to prevent the Florida nightmare from ever happening again, I'm ready to bet that taxpayers might be willing to ''kick in'' a little extra to help subsidize such a system. How about an additional line on the 2001 federal tax forms allowing a voluntary $1 contribution to the ''Accuracy in Our Presidential Elections Fund,'' with the proceeds going to the county elections board, to be dedicated to the purchase of such systems? I'd be one of the first to check that box.

Donald E. Bernardo
Cleveland Heights, Ohio


More consistent national standards and voting systems might reduce, but not get rid of, rampant cheating and errors. Both sides will still suffer/profit from the irregularities, with one side or the other ending up a net loser, but we'll never really know for sure.

One interesting, and entirely feasible, check of the voting outcome could be based on scientific sampling. Any professional survey mathematician/statistician could devise a random sample that will give results that are unbiased and, for all practical purposes, correct.

Take this a step further: Given the irregularities of the actual voting process, a proper sample could be a far less expensive, less cumbersome, less divisive, yet more reliable substitute for the present voting system. Whether the substitution of sampling for actual voting would be legal, or politically acceptable, is another question.

Wolf Illing
Ottawa



The Electoral College Is an Anachronism

While there are some legitimate concerns with abolishing the Electoral College, it need not yield the electoral chaos envisioned by the authors of ''The pitfalls of one person, one vote'' (Cover Story, Nov. 27). They paint a bleak picture of delayed inaugurations and ''Presidentus interruptus'' because no one candidate receives over 50% of the vote.

There are, however, at least two well-known solutions to this problem. Countries such as France have a second round of voting restricted to the top two candidates if no one candidate receives more than 50% of the popular vote. This guarantees that one candidate always receives more than 50% of the vote. It also eliminates one of the most serious problems in our current system: the millions of voters who don't vote for their candidate of choice because they don't want to ''throw away their vote'' on a third-party candidate.

The second solution involves voting for first-, second-, and third-choice candidates on the same ballot. In this system, there is an ''instant runoff'' between the top two voter-getters if no candidate receives more than 50% of the first-choice ballots. The second- and third-choice ballots are counted to determine the winner. Either system guarantees the winner more than 50% of the popular vote--adding legitimacy to any new President--and would make an excellent replacement for the anachronistic Electoral College.

Daniel Gonneau
New York



Protecting the Heartland

The disparity between the popular vote and the Electoral College points out the increasingly sharp division occurring in this country (''Why the electoral college lives on,'' Cover Story, Nov. 20). Even more revealing is a map showing the counties that voted Republican vs. those that voted Democrat. When shown in red for Republican and blue for Democrat, the vast majority of the land mass of the U.S. is red. The blue areas are the heavily populated areas.

This division is getting wider every day. There is a sort of ''reverse discrimination'' among our urban elite. In today's urban centers, someone who lives in a rural area, has been married to the same person since high school, has children, likes to hunt and fish, attends church, has kids in scouting, etc., is looked upon as some kind of dinosaur. If not for the Electoral College, the entire nation would be governed by New York and Los Angeles. Thank God it hasn't come to that yet.

Out here on the West Coast, Seattle controls the politics of the entire state of Washington; Portland governs Oregon; L.A. rules rural California. The cities have no right to make the rules for all of us. But that's exactly what happens when a handful of large cities elects the vast majority of our politicians. We not only need to keep the Electoral College, we need to expand on the ideas it represents.

Jon Robson
Battle Ground, Wash.



The SEC's Victory Is a Hollow One

Regarding ''How Levitt won the accounting wars,'' (News: Analysis & Commentary, Nov. 27): With all due respect, Arthur Levitt has won nothing. Those of us in the accounting profession doubt seriously whether the status quo will be changed at all. In the end, the Big Five will be able to maintain their monopoly on public companies. With some exceptions, local and regional firms are shut out from auditing public companies--other than so-called Bulletin Board companies [very small companies trading on the NASDAQ]. The real issue, which Mr. Levitt failed to address, is whether it is wise to have the entire reporting system of our public financial market controlled by those firms. The Securities & Exchange Commission should propose a plan to break the stranglehold these accounting giants have on their public clients by opening up the competition to other qualified firms.

Any plan the SEC might propose in this regard should address the reasons why the Big Five have a monopoly. Neither the exchanges nor the SEC prohibit a local or regional firm from providing an audit of a public company. Instead, the underwriters in an initial public offering or secondary offering usually insist that a Big Five firm (or at least a large national firm) audit the company's statements so as to avoid a negative reaction by the financial analysts. Above all else, what an analyst should be concerned with is the depth of the accountant's pocket if the statements are wrong. Most local firms carry errors and omissions insurance of less than $10 million, which is far less than any Big Five firm. If the SEC saw fit to empower more qualified accountants with oversight responsibilities of public companies, it should work with the American Institute of Certified Public Accountants to create an insurance pool for non-Big Five firms to audit public companies.

Stephen P. Milner
Managing Partner
Squar, Milner, Reehl Williamson
Newport Beach, Calif.



This Bunny Is Hardly Winding Down

I was disappointed at how little you seemed to understand the story of Playboy Enterprises Inc. (''Playboy's not-so energized bunny,'' News: Analysis & Commentary, Dec. 4). The article seemed to revolve around four points: 1) The company keeps changing its strategy. 2) The magazine is in trouble. 3) The brand is aging and hasn't connected to younger consumers. 4) Our expansion into television and online has failed. Every one of those conclusions is wrong.

Since I became CEO at the end of the 1980s, we have consistently proclaimed our strategy as being one of leveraging the magazine brand into the higher-growth, higher-margin electronic entertainment businesses. And Playboy remains the best-selling monthly magazine for men in the U.S. and the world. It's closing a third year of advertising revenue growth at a rate base of 3.15 million, at which it has been for five years, and has projected profit growth for the year. And it has been a strong year in terms of editorial coups, from Jesse Ventura to Darva Conger.

As to No. 3, the magazine remains among the most favorite magazines by men in their 20s, according to the Cassandra Report. Between spring, 2000, and fall, 2000, Market Research Inc. reports, Playboy experienced a 22.8% increase in readers currently attending college. Our online business, which attracts more than 4 million unique visitors each month, is built on its appeal to the 18-to-34-year-old audience. We have had a 100% increase in apparel sales through such hip stores as Fred Segal, Patricia Field, and Urban Outfitters.

Regarding No. 4, we are the only magazine company to have successfully transitioned into the lucrative world of cable TV. Through the first nine months of this year, Playboy TV Networks made $18.5 million in operating income, and its results didn't ''slide'' from last year. Last year included the first payment of a $100 million deal for international TV rights. But your writer seems to be penalizing us for the fact that the payment stream was front-loaded and doesn't even mention the remaining $70 million, paid this year through 2004.

As to online, we never projected a profit this year. We are on plan investing $25 million this year. Now that we're out of registration, we've been able to share our plans for cutting the loss in half in 2001 and being profitable in 2002. We doubled revenues again for the first nine months, and in a world full of all kinds of sites, including all those pornographic sites mentioned in the piece, Playboy.com is the No. 1 lifestyle and entertainment destination on the Web for men.

Christie Hefner
Chairman & Chief Executive
Playboy Enterprises Inc.
Chicago



Starwood's Star Isn't Rising That Fast

''At Starwood, the CEO is in the details'' (People, Nov. 20) reports that Starwood Hotels & Resorts Worldwide Inc. is ''pushing ahead of its rivals in market share.'' Nothing can be further from the truth, and this claim does a disservice to the two industry leaders, Hilton and Marriott.

According to the latest data from Smith Travel Research, the facts are these. When looking at the half of the U.S. hotel industry that includes the upscale and midscale segments (where the big companies like Hilton, Marriott, and Starwood compete), Hilton and Marriott and the brands owned and operated by these companies, each claim about 15% market share. Starwood and its brands bring up the rear at approximately 5%.

Just as important is each company's share of new construction in the upscale and midscale segments. Hilton and Marriott each command approximately 22%, while Starwood is under 3%. In other words, Hilton Hotels Corp. and Marriott International Inc. are each gaining market share, while Starwood is, in reality, losing market share.

Marc A. Grossman
Senior Vice-President
for Corporate Affairs
Hilton Hotels Corp.
Beverly Hills, Calif.

Editor's note: We should have stated that Starwood is gaining on its rivals in terms of occupancy rates not market share. In the third quarter, Starwood reported that its occupancy rate for North American owned hotels grew 3.3 percentage points, to 77.7%. Hilton reported that its occupancy rate for U.S. owned or operated hotels increased 2.4 percentage points to 76.9% during that time. Marriott International reported that its occupancy rate for U.S. operated hotels increased more than one percentage point to 79.7% in the third quarter.



What Gun Magazines Don't Reveal About Gun Ownership

Regarding ''New ammo in the gun debate'' (Economic Trends, Nov. 27), I see a serious problem with Mark Duggan's use of circulation data of one of the nation's largest gun magazines as a proxy for gun ownership levels and shifts.

The focus of Duggan's study is the criminal uses of guns. It would seem self-evident that when crime is low, most people buy guns to hunt, target shoot, and the like. Personal defense may be an issue, but it is most often a minor one. In this situation, the circulation of a large gun magazine should be an excellent proxy for gun ownership, because it is hunting, target shooting, and gun collecting that are the topics of most of the articles.

As crime rises, however, more and more people buy (or steal) guns to commit crimes or buy guns to defend themselves. These new gun owners typically have little or no interest in the sporting uses of firearms. As a result, they also have little or no interest in or motivation to buy a large-circulation gun magazine.

Thus Duggan's measurement of gun ownership seems fatally flawed by this disconnect between the various uses for guns. He might just as well have tried to prove a connection between crime and gun ownership by studying the circulation of BUSINESS WEEK.

Bruce Dart
Calabasas Hills, Calif.


Mark Duggan assumes that most readers of gun magazines must necessarily own guns; indeed, I've found the opposite to be true. Most people who read gun magazines are people who, for various reasons, do not or cannot own guns. Minors, for one, make up a significant segment, perhaps a majority, of this group. Many boys find guns fascinating, but federal law prohibits anyone under 18 from purchasing and possessing a firearm. Equally important, many people simply cannot afford the generally high cost of the firearms showcased in such magazines.

By Duggan's logic, most readers of the many racing magazines on the market must own race cars, or most readers of aviation magazines own airplanes.

William and Melissa Jordan
San Jose, Calif.



''Can Liberty Media get its groove back?'' (Media, Nov. 27, 2000)

Failing to take into account Emmis Communications Inc.'s 2-for-1 stock split on Feb. 25, the table in ''Can Liberty Media get its groove back?'' (Media, Nov. 27) incorrectly calculated Liberty Media's loss on its investment in Emmis. Liberty's stake in the company was valued at $131 million, a loss of $19 million from its initial investment.





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LETTERS:
Taking the Guesswork Out of Presidential Elections

The Electoral College Is an Anachronism

Protecting the Heartland

The SEC's Victory Is a Hollow One

This Bunny Is Hardly Winding Down

Starwood's Star Isn't Rising That Fast

What Gun Magazines Don't Reveal About Gun Ownership

CORRECTIONS & CLARIFICATIONS:
''Can Liberty Media get its groove back?'' (Media, Nov. 27, 2000)

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