The Rittenhouse Review

A Philadelphia Journal of Politics, Finance, Ethics, and Culture

Sunday, August 25, 2002  

The All-Too-Clueless Rep. Greenwood

Rep. James C. “Jim” Greenwood (R-Pa.) has been out making quite a name for himself lately, appearing on more news programs and talk shows on television and radio since Johnnie Cochran reached his peak defending two-time killer and habitual woman-beater O.J. Simpson.

Rep. Greenwood is the chairman of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, the only congressional panel that has concerned itself with allegations of insider trading by Martha Stewart, chairman and chief executive officer of Martha Stewart Living Omnimedia Ltd. He is quickly proving himself capable of operating on roughly the same plane as the aforementioned Cochran.

The investigation of possible violations of federal insider trading laws, of course, lies in the hands of the Securities and Exchange Commission and the Department of Justice. It is not properly the province of congressional committees. According to the Energy and Commerce Committee itself, Rep. Greenwood’s subcommittee’s jurisdiction is as follows: “Responsibility for oversight of agencies, departments, and programs within the jurisdiction of the full committee, and for conducting investigations within such jurisdiction.”

Working backward, we find that House Rule 10, Clause 1 states the Energy and Commerce Committee’s jurisdiction encompasses: “Biomedical research and development. Consumer affairs and consumer protection. Health and health facilities (except health care supported by payroll deductions). Interstate energy compacts. Interstate and foreign commerce generally. Exploration, production, storage, supply, marketing, pricing, and regulation of energy resources, including all fossil fuels, solar energy, and other unconventional or renewable energy resources. Conservation of energy resources. Energy information generally. The generation and marketing of power (except by federally chartered or Federal regional power marketing authorities); reliability and interstate transmission of, and ratemaking for, all power; and siting of generation facilities (except the installation of interconnections between Government waterpower projects). General management of the Department of Energy and management and all functions of the Federal Energy Regulatory Commission. National energy policy generally. Public health and quarantine. Regulation of the domestic nuclear energy industry, including regulation of research and development reactors and nuclear regulatory research. Regulation of interstate and foreign communications. Travel and tourism. The committee shall have the same jurisdiction with respect to regulation of nuclear facilities and of use of nuclear energy as it has with respect to regulation of nonnuclear facilities and of use of nonnuclear energy.”

That’s quite a range of responsibilities, but insider trading is not specifically mentioned nor are securities transactions generally, except perhaps under the catch-all phrases “interstate and foreign commerce generally” and “regulation of interstate and foreign communications.” Perhaps Rep. Greenwood is relying on the fact that Stewart was in Texas, her broker Peter Bacanovic was in Florida, and her broker’s assistant Douglas Faneuil was in New York. It’s a stretch nonetheless.

But it doesn’t matter, really. Committee and subcommittee chairmen typically have been given great latitude to determine what is and is not within their panels’ boundaries. Taking advantage of that tradition, Rep. Greenwood has for months been on a one-man mission/publicity tour intended to determine once and for all what happened when Stewart instigated one of the greatest threats to our entire financial system by selling fewer than 4,000 shares of ImClone Systems Inc.

“Greenwood is skeptical of Stewart’s defense,” reports Peter Nicholas in today’s Philadelphia Inquirer. “He is also impatient with her refusal to come in voluntarily for what he calls a ‘chat’ with committee investigators.”

The real kicker is this: Rep. Greenwood cannot even issue a subpoena compelling Stewart to appear before his subcommittee. That directive can come only from House Energy and Commerce Committee Chairman Rep. Billy Tauzin (R-La.), reports Nicholas.

In the Inquirer article, Rep. Greenwood chimes in with this howler: “Advertisers from the magazine are falling off . . . . She’s going to hell in a handbasket [sic].”

Now, Rep. Greenwood is, as they say, entitled to his own opinions, but he’s not entitled to his own facts.

Page counts count

The latest issue of Martha Stewart Living, dated September 2002, just happens to be on the desk right here.

Let’s see how quickly Stewart is headed to hell in said certain-to-be-tasteful hand basket.

Total page count: 316, including cover pages.

Advertising page count: 181 ½ pages, the vast majority of which are either spreads or full-page ads. The count includes partials and house ads, but excludes inserts.

Advertising inserts: 5, one of which runs 6 pages and one 4 pages.

Editorial page count: 134 ½.

Ad/Edit Ratio: 57/43.

[Rep. Greenwood is free to contact us if he doesn’t understand the publishing industry terminology used here.]

Anyone in the magazine business will tell you these are impressive, even enviable figures, particularly given the persistent softness in the advertising market that accompanied and outlived last year’s recession and the impact of the terrorist attacks of Sept. 11, 2001.

Now, how about a comparison?

In our library we happen to have a copy of the September 2001 issue of Martha Stewart Living, published exactly one year earlier.

Let’s look at the numbers again.

Total page count: 284, including cover pages.

Advertising page count: 174 pages, again the vast majority are either spreads or full-page ads. The count includes partials and house ads, but not inserts.

Advertising inserts: 3, two of which are 2-page inserts and one is an 8-page insert.

Editorial page count: 110.

Ad/Edit Ratio: 61/39

Well, by golly, Rep. Greenwood is correct: Martha Stewart Living lost 7 ½ pages of advertising between September 2001 and September 2002, a decline of 4 percent.

But let’s put that number in perspective. If the advertising page count at Martha Stewart Living were to continue to decline at a 4 percent annual rate, the September issue of the magazine will be virtually advertisement free in 2202, exactly 200 years from now.

“Going to hell in a hand basket!”

Who would have thought the journey would take two centuries?

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