Up Front
Edited by Sheridan Prasso
Talk Show
"The FCC's model is a form of competition that only French farmers could love." -- Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee's telecommunications subcommittee
WAR COSTS
The Messenger Has Already Been Shot
Larry Lindsey frequently seemed to be the odd man out in the Bush Administration. In a team prone to congenital optimism, starting with Cheerleader-in-Chief George Bush, the dour economic forecasts of the former White House economic adviser stood out. But more often than not, they proved right.
And it looks like Lindsey may be right once again--this time about the cost of war in Iraq. When he suggested last September that the conflict could cost the U.S. Treasury as much as $100 billion to $200 billion, it set off a political firestorm on Capitol Hill. Administration insiders say the ruckus was one reason Bush gave Lindsey the heave-ho in a December shake-up of his economic team.
Now Administration officials are admitting the war could cost nearly $100 billion, pretty much in line with Lindsey's back-of-the-envelope estimate. So does Lindsey feel vindicated? He couldn't be reached for comment, but who could blame him if he does?
By Rich Miller
THE MASTERS
Where Have All the Companies Gone?
With just five weeks to go before Tiger Woods tees off at the Masters Golf Tournament, normally booked hotels around Augusta, Ga., are still wide open.
Companies battered by the economy and spooked by a looming war, are scaling back or eliminating junkets. And at least as ominous: the specter of protests over the Augusta National Golf Club's male-only membership policy. "We're hearing that this year the Masters is less about golf than about the controversy," says Jeff Bliss, president of Javelin Group, a sports marketing and hospitality firm. Companies "are thinking it's better to take a breather for a year and hope this clears up."
The list of no-show companies is long: former sponsors Citigroup (C
) and Coca-Cola (KO
), plus Cadillac, IBM (IBM
), J.P. Morgan Chase (JPM
), and Southern Co. (SO
) Georgia-Pacific (GP
), meanwhile, is paring its Masters entertainment budget by two-thirds.
One factor surely is Martha Burk, the chair of the National Council of Women's Organizations, who has been campaigning to force the club to admit women. She's promising picket lines near the course and perhaps protests at hospitality venues. Notes Bliss: "Consumer-oriented companies have to be very wary.... In many cases, the primary purchasers of their products are women."
By Mark Hyman
LABOR NOTES
Nice Place for a Speech, Anyway
The locale of the AFL-CIO annual meeting on Feb. 26 certainly put Labor Secretary Elaine Chao on the spot. She addressed the group at the Westin Diplomat Resort & Spa in Hollywood, Fla. Sound innocuous enough? Well, here's the rub: Last fall, Chao's office sued AFL-CIO executive council member and plumbers' union President Martin Maddaloni for misusing union pension funds to buy that very hotel.
The Labor Dept. wants Maddaloni and other union pension trustees held personally liable for losses. The cost of buying and renovating the 998-room luxury beachfront property ballooned from $400 million in 1997 to $800 million before it reopened last year. The Labor Dept. accuses them of making an imprudent investment with no feasibility study, no budget, and no architectural plans. Maddaloni has had to pay back the cost of a trip he and his wife took to Italy--paid for in part by a contractor with close union ties--to pick out marble for the hotel. A statement by Maddaloni when the suit was filed said Labor's "allegations will prove to be baseless." Chao, who showed no sign of discomfort over the lawsuit issue, nonetheless had no comment.
By Aaron Bernstein
THE LIST
ON B'WAY
Everything's Coming Up Roses
After September 11, ticket sales on Broadway were looking a lot like Les Misérables' Jean Valjean: poor and desperate. But 17 months later, they're as bubbly and irrepressible as the cast of Mamma Mia. Sales ended 2002 up 10% from 2001 levels and even beat 2000's record take.
So far, the new year is off to a strong start. Sales total nearly $100 million, 34% higher than the same period last year.
Why? "People need to live their lives," says Richard Frankel, producer of Hairspray and The Producers. "They need to go out." A marketing blitz and a slew of new shows has helped: Broadway now offers opera (La Bohème), and a dialogue-free rock musical (Movin' Out).
Some clouds remain. Sales to tourists, who once accounted for half the audience, have yet to rebound fully. Advance sales are weak, possibly because more folks from the New York area are filling seats and don't need to plan outings far in advance. That has forced promoters into selling cut-rate tickets--but at least the seats are filled. Says Patricia Armetta-Haubner, spokeswoman for the League of American Theatres & Producers: "We're optimistic, but we're cautiously optimistic." Compared with the outlook a year ago, that's a rave.
By Kimberly Weisul
Dept. of Humor
From a Letter to the Editor in the Feb. 22 Atlanta Journal-Constitution:
In the spirit of capitalism, I propose that Corporate America sponsor the various levels in the color-coded terrorism alert system. Besides raising money that could be directed toward anti-terrorism activities, it would instill a sense of pride and patriotism among employees when they hear the words: "This security alert brought to you by the caring folks at (your company name here)." And don't forget the favorable publicity and increased sales. I suggest the following sponsorships:
-- Green alert: Eli Lilly (LLY
), makers of Prozac (Sure, everything's fine--for now)
-- Blue alert: American Express (AXP
) (Don't leave home without it. In fact, don't leave home at all)
-- Yellow alert: Hertz (F
) car rentals (Get out while the going's good) and Kodak (EK
) (Because you just don't know how many Kodak moments you have left)
-- Orange alert: Home Depot (HD
) (For all your duct tape and plastic sheeting needs)
-- Red alert: Coke (KO
) (It's the real thing!), Orkin (Hello Orkin man, good-bye world), and Target (TGT
) (self-explanatory).
STEVE FRANDZEL, Atlanta
ALL THAT GLITTERS
A Golden Opportunity for India's Jewelers
In a suburb of Bombay, home to the city's diamond and jewelry free-trade zone, 80 manufacturers of earrings, wedding bands, necklaces, and bracelets are pouring new investment into factories and retraining workers. The reason? After years of lobbying by New Delhi, the U.S. has lifted its 5.7% tariff on finished jewelry from India. The result could be a doubling of India's jewelry exports to the U.S. by 2005, to $1.2 billion, says Sanjay Kothari, president of India's Gem & Jewelry Export Promotion Council.
India's 2,500 diamond exporters are making plans for an export boom, too. India has long been a major processor of cut diamonds--it exported nearly $8 billion worth in 2002. Without the tariff, diamond cutter Suraj Diamonds & Jewellery has upped sales projections for this year by 50%, to $40 million. "This is a great opportunity for India to grow its wallet," says Biju Patnaik of Dutch bank ABN Amro (ABN
).
But China is looming: Its jewelry exports to the U.S. doubled, to $712 million, from 1997 to 2001, and could skyrocket if U.S. tariffs of up to 6.6% ultimately fall away due to China's entry into the World Trade Organization. For now, though, India's prospects are glittering as never before.
By Manjeet Kripalani
THE BIG PICTURE
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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