Congressional Accountability Project
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December 18, 2000

The Honorable Hillary Rodham Clinton
Senator-elect
The White House
1600 Pennsylvania Ave. NW
Washington, DC 20500

RE: Submitting Your Book Contract with Simon & Schuster to the Senate Select Committee on Ethics
Dear Senator-elect Clinton:

This letter is a request that you submit your book contract with Simon & Schuster, and information surrounding the formation of the contract, to the Senate Select Committee on Ethics ("Ethics Committee") to determine whether it violates Senate Rules regarding conflicts of interest, the sale of intellectual property, or other applicable Senate standards of conduct. By promptly submitting your contract and surrounding materials to the Ethics Committee for review, you can show your commitment to adhering strictly to Senate Rules and other Senate standards of conduct.

On December 16th, The New York Times reported that you had agreed to accept an $8 million book advance in a book contract with Simon & Schuster, a subsidiary of Viacom Inc., the second largest media conglomerate in the world. According to news accounts, your $8 million book advance appears to be the largest one ever received by an elected official in the history of the world.

Senator-elect Hillary Rodham Clinton agreed last night to sell Simon & Schuster a memoir of her years as first lady, for the near-record advance of about $8 million.
* * * * *
Mrs. Clinton's $8 million advance is just below the advance of $8.5 million received by Pope John Paul II in 1994, believed to be the largest ever for worldwide rights.
* * * * *
Some publishers initially said that Mrs. Clinton sought almost all of her advance upfront, pushing to sign a contract by the end of the year. But people close to Mrs. Clinton said that she never requested the whole advance right away. Other publishers said only upfront payments up to half the total were discussed.
Such an arrangement would still be highly unusual. Multimillion-dollar advances are typically broken up into several smaller payments over the course of a book's publication. It was not clear last night what payment schedule was set.(1)
 
A: The Ethics Committee Should Determine Whether Your Book Deal Violates Senate Standards of Conduct
According to the Senate Ethics Manual, a Senator may enter into a book contract with a publisher, but the book contract's terms and execution are subject to Ethics Committee review because the Senator's income from the book may be controlled, to some extent, by the manipulations of publishers and bookstores. That leaves the Senator and the Senate vulnerable to efforts to purchase influence through the promotion of book sales.
Although the original copyrighted property was created by the individual's personal efforts, this type of income is made possible by the actions of others (such as the publisher, promoter, and bookstores), and calculated on the basis of income received by another person or entity (the publisher) as a result of the property's appeal to the purchasing public. In order to prevent abuses of this provision, the Committee has determined that such fees must be in accordance with usual and customary contractual terms governing the transfer of copyright...with established users or purchasers of those rights.(2)
At this time, you have not released your book contract to the public, so the only information available about it is from news reports. According to these articles, at a minimum, your book deal appears to fail the "usual and customary" test for book contract terms because it gives you the largest book advance ever for an elected official. In that respect, it is sui generis, not usual and customary.

The Ethics Committee should review other aspects of the book contract as well, such as the structure and rate of royalties, the timing of the advance payments, and the absence of a book proposal, to determine whether they, too, fall outside the bounds of usual and customary contractual terms.

According to news reports, your staff asserts that you held an auction to set the fair market value for your book. To date, none of these news reports provides conclusive evidence that your book auction either was or was not fair.

An auction does not guarantee that a book's price will meet -- and not exceed -- fair market value for the sale of book rights. For example, in 1994, then-House Speaker-presumptive Newt Gingrich agreed to accept a $4.5 million book advance from HarperCollins Publishers. After sustained public outrcy, he returned the advance, keeping only $1. Subsequently, news reports indicated that his auction process was not fair and open, with one publishing house calling the auction rules "murky."(3) The Ethics Committee should review your book auction process to determine whether or not it actually established the fair market value for your proposed book.
 

B: The Ethics Committee Should Determine Whether Your Book Deal Violates Senate Conflict of Interest Rules
According to news accounts, you have agreed to a book deal with Simon & Schuster, which is owned by Viacom, Inc., the second largest media company in the world. Viacom has major holdings in movies, television, radio, billboards, video stores, publishing and the Internet. According to Hoover's Company Profile Database, Viacom
produces movies through Paramount Pictures...and produces, distributes, and syndicates TV shows through Paramount Television...and CBS Enterprises...Viacom's extensive TV assets consist of the CBS and UPN (United Paramount Network) television networks and several cable TV networks, including MTV Networks (MTV, VH1, Nickelodeon, CMT, TNN: The National Network), Showtime Networks (Showtime, The Movie Channel, FLIX), and 50% of Comedy Central. The company also owns 16 CBS and 19 UPN TV stations. Viacom also has plans to acquire BET Holdings, the entertainment company which targets African Americans, for about $3 billion.
Viacom also owns movie theaters, theme parks, publisher Simon & Schuster, and 82% of Blockbuster (the #1 video rental chain). In addition, the company owns 64% of Infinity Broadcasting (more than 160 radio stations and the #1 outdoor advertising firm) and has agreed to buy the rest. It lords over stakes in a slew of Internet firms as well, through CBS Internet Group (MarketWatch.com, SportsLine.com) and The MTVi Group (MTV.com, VH1.com, SonicNet.com).
Viacom's merger with CBS in 2000 was a powerhouse media deal valued at about $45 billion. The acquisition vaulted Viacom to the second-largest media firm in the world.(4)
Viacom has a vital interest in many legislative and regulatory matters pending before the U.S. Congress, the Federal Communications Commission and other executive branch agencies, including antitrust and ownership restrictions on media holdings and market concentration, intellectual property and copyright protection, regulation of media violence, campaign finance reform, tobacco advertising, alcohol advertising, and the public interest duties of broadcasters, among many others.(5) Viacom spends lavishly on its efforts to influence Congress and the federal government on these issues. Between 1996-2000, Viacom spent $9,290,000 on in-house and outside lobbying expenses, according to the Center for Public Integrity.(6)

Viacom is also major campaign donor. According to the Center for Responsive Politics, Viacom Inc. gave $533,595 in campaign contributions during the 2000 election cycle.(7)

Given Viacom's extensive efforts to affect the outcome of numerous matters pending before the Senate and federal government, if you accept the $8 million book advance from Simon & Schuster, you may violate Senate Rules regarding conflicts of interest.

No Member, officer, or employee shall engage in any outside business or professional activity or employment for compensation which is inconsistent or in conflict with the conscientious performance of official duties.(8)

A Member, officer, or employee of the Senate shall not receive any compensation, nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt or accrual of which would occur by virtue of influence improperly exerted from his position as a Member, officer, or employee.(9)

The Ethics Committee should determine whether your $8 million book advance is, in fact, a violation of these conflict of interest rules.

It is noteworthy, as well, that your book advance would be impermissible under the Rules of the U.S. House of Representatives, which prohibit House Members from accepting any book advance.

A Member, Delegate, Resident Commissioner, officer, or employee of the House may not receive an advance payment on copyright royalties.(10)
 
C: Conclusion
The sheer size of your $8 million book advance raises questions about whether you and Senate processes may be affected by large cash payments from a major media conglomerate. This book contract, with its uniquely lavish advance for an elected official, may be, in fact, a way for that corporation to place money into your pockets, perhaps to curry favor with you.(11)

We are not the only ones to express opposition to your $8 million book advance. Both Common Cause and the Center for Public Integrity have also questioned the propriety of it.(12) In addition, on December 15, Senator John McCain suggested that the Ethics Committee review your book contract.(13)

We urge you to submit your book contract and surrounding materials to the Ethics Committee for review of whether they violate Senate Rules regarding conflicts of interest, the sale of intellectual property, or other Senate standards of conduct.

During your campaign for the Senate, you often voiced support for campaign finance reform as a way to mitigate the corrupting influence of money in politics. As an advocate against public corruption, we urge you to walk your talk, by altering the terms of your book contract to accept only copyright royalties, under usual and customary contractual terms, for books actually sold. This would protect the Senate and the public from the possibility that a powerful corporation may be trying to obtain special favors from a Senator in exchange for a singularly lucrative book advance.

Sincerely,

Gary Ruskin
Director
 
 
 

cc: The Honorable Pat Roberts, Chairman, Senate Select Committee on Ethics
The Honorable Harry Reid, Ranking Member, Senate Select Committee on Ethics


ENDNOTES

1. David D. Kirkpatrick, "Hillary Clinton Book Advance, at $8 Million, Is Nearly a Record." The New York Times, December 16, 2000. Linton Weeks, "Hillary Clinton Seals $8 Million Book Deal." The Washington Post, December 16, 2000.

2. Senate Ethics Manual at 127.

3. David Streitfeld, "Bidders And Losers; Several Publishers Found Gingrich's Price Too High." The Washington Post, January 13, 1995.

4. Hoover's Company Profile Database, American Public Companies, Viacom Inc., 2001.

5. See especially "Off The Record: What Media Corporations Don't Tell You About Their Legislative Agendas." The Center for Public Integrity, 2000, <http://www.publicintegrity.org/reports/OffTheRecord/index.html>. See also Charles Lewis, "Media Money." Columbia Journalism Review, September-October 2000, <http://www.cjr.org/year/00/3/mediamoney.asp>. Robert McChesney, Rich Media, Poor Democracy: Communications Politics in Dubious Times. (Urbana and Chicago, IL: Illinois University Press, 1999).

6. "Off The Record: What Media Corporations Don't Tell You About Their Legislative Agendas." The Center for Public Integrity, 2000, at 63.

7. <http://www.opensecrets.org/industries/contrib.asp?Ind=B02>.

8. Senate Rule 37, cl. 2. <http://rules.senate.gov/senaterules/rule37.htm>

9. Senate Rule 37, cl. 1. <http://rules.senate.gov/senaterules/rule37.htm>.

10. House Rule 26, cl. 3(a).

11. Such questions have arisen in the past. See, for example, Lars-Erik Nelson, "Newt's Book Deal Fits A Disturbing Pattern." Denver Post, February 5, 1995.

12. David D. Kirkpatrick, "Questions on Mrs. Clinton's Book Bids." The New York Times, December 14, 2000. Kathy Kiely and Bob Minzesheimer, "Bids for 1st Lady's Memoir Top $7m; Deal Could Spell More Trouble." USA Today, December 15, 2000.

13. NBC News Transcripts, Interview with U.S. Senator John McCain, December 15, 2000. Richard Sisk and Paul D. Colford, "McCain: Read Fine Print on Hil's $8m Book Deal." New York Daily News, December 16, 2000.


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