Gov. Arnold Schwarzenegger to be
Paid $8 Million by Fitness Magazines
The publications rely heavily on advertising for dietary
supplements.
Schwarzenegger vetoed a bill that would have regulated
their use.
PETER NICHOLAS & ROBERT SALLADAY / Los Angeles Times 14jul2005
[More articles below]
SACRAMENTO — Two days before he was sworn into office, Gov. Arnold Schwarzenegger accepted a consulting job paying an estimated $8 million over five years to "further the business objectives" of a national publisher of health and bodybuilding magazines.
The contract pays Schwarzenegger 1% of the magazines' advertising revenue, much of which comes from makers of nutritional supplements. Last year, the governor vetoed legislation that would have imposed government regulations on the supplement industry.
According to records filed Wednesday with the Securities and Exchange Commission, Schwarzenegger entered into the agreement with a subsidiary of American Media Inc. on Nov. 15, 2003. The Boca Raton, Fla.-based company publishes Muscle & Fitness and Flex magazines, among others.
Watchdog groups and state lawmakers called the contract — which refers to Schwarzenegger as "Mr. S" — a conflict of interest.
Larry Noble, executive director of the Center for Responsive Politics in Washington, D.C., said: "This is one of the most egregious apparent conflicts of interest that I have seen. This calls into question his judgment as to who he is working for, and it calls into question what he thinks he owes the public."
He added: "For a governor to have … contracted his decision-making and judgment to a company is a real conflict of interest."
The law allows governors and other elected officials to keep outside jobs. Assembly Speaker Fabian Nuñez (D-Los Angeles) has been paid $35,000 a year by the Voter Improvement Program in Los Angeles, a nonprofit organization created by the former president of the Los Angeles County Federation of Labor.
A Schwarzenegger spokeswoman, Margita Thompson, said that his financial holdings were "probably the most complicated of any governor" and that he had complied with all laws for disclosing his income. She said the consulting contract presented "no conflict of interest" because Schwarzenegger did not solicit any advertising.
"The governor did not direct sales or marketing activities of American Media and did not have personal contact with any advertisers to generate the advertising revenue," Thompson said.
The contract calls for the governor to help the company through his own suggestions and by "being responsive to the reasonable requests" of Weider Publications, a subsidiary of American Media.
In a concession to Schwarzenegger's job as California governor, the agreement says that he is not compelled to work for the company during "normal business hours on business days."
"Mr. S shall seek in good faith to make himself available from time to time to Weider" — after the workday or on weekends, the filing says.
As recently as a few days ago, American Media refused to say anything about Schwarzenegger's pay. The company filed an 83-page annual financial statement with the SEC last month that, in one paragraph, mentioned a consulting agreement with an unnamed "third party." Stuart Zakim, an American Media spokesman, refused to say whether the third party was Schwarzenegger.
American Media, which also owns the National Enquirer, the Globe and the Star tabloids, made public the terms of Schwarzenegger's contract in a separate SEC filing Wednesday.
The governor announced last year that he had agreed to become executive editor of Muscle & Fitness and Flex. He writes monthly columns for both, dictating them to the editorial staff of the magazines. The governor's office had declined to reveal his salary.
The SEC filing by American Media, which followed repeated inquiries by The Times, is the first public indication of the size of the contract. Schwarzenegger's financial disclosure statement covering 2004 shows that he received an undisclosed amount of income from American Media. But the state form calls for little specificity, requiring only that public officials report income in excess of $10,000. The statement offered no more detail. And unlike past governors, he has declined to make his tax returns public.
The contract shows that Schwarzenegger's firm, Oak Productions, gets 1% of the subsidiary's annual advertising revenue. It holds that "in no event" will payment be less than $1 million a year.
The agreement estimates that the governor's company will receive $2.15 million in fiscal year 2006; the same amounts in '07 and '08; and $1.7 million in '09. Those sums exceed the salary of the chairman and CEO of American Media, David J. Pecker, whose base pay this year is listed at $1.5 million.
American Media has also agreed to contribute $1.5 million over six years to one of the governor's tax-exempt groups: a physical fitness council launched this summer at Disney's California Adventure theme park. The chairman of the council is Austin M. Beutner, a director of American Media.
As a consultant, Schwarzenegger's role includes "advising on the direction of the" magazines and "otherwise helping in various ways to further the business objectives of the Weider business," the contract shows.
Weider Publications was started by longtime bodybuilding promoter and Schwarzenegger patron Joe Weider, who brought Schwarzenegger to the U.S. in 1968. Weider sold his magazines to AMI in 2003.
Schwarzenegger's two muscle magazines are crammed with ads for performance-enhancing dietary supplements promising chiseled bodies and surges of energy. The 257-page August issue of Muscle & Fitness contains 110 pages of ads for supplements, from creatine ethyl ester to anabolic/androgenic "absorption technology."
The governor used his regular column in the June issue of Muscle & Fitness to defend the supplement industry. He vowed to oppose any effort to restrict sales of the products in California, writing that he is "so energized to fight any attempt to limit the availability of nutritional supplements."
An article in the August issue of Muscle & Fitness said Schwarzenegger had "lent his support" to a new lobbying group that would work to promote nutritional supplements. "The governor also made it clear that he will remain a phone call away as the coalition progresses," the magazine said.
Schwarzenegger's office characterized the article as "hyperbole."
Last year, the governor vetoed a bill by state Sen. Jackie Speier (D-Hillsborough) that would have required coaches to take a course in performance-enhancing supplements, created a list of banned substances for interscholastic sports and barred supplement manufacturers from sponsoring school events. In his veto message, the governor said that most dietary supplements were safe and that Speier's bill would have been difficult to implement. He also said the bill unfairly focused on "performance-enhancing dietary supplements (PEDS) instead of focusing on ensuring that students participating in high school sports are not engaged in steroids use."
Speier said in an interview Wednesday: "I have got to believe the electorate will be incensed that he has this relationship, that he has not been upfront in disclosing it, that he has taken action on legislation that has an impact on the very industry from which he is indirectly receiving financial support."
Thompson said Schwarzenegger is committed full time to his job as governor: "We just signed a budget, and the governor has a reform agenda. I don't think anyone could dispute that he has been absolutely focused on his agenda and the state, from the media perspective, from the institutional perspective and from a civic perspective."
American Media's publications have been Schwarzenegger boosters since he formed a partnership with the company.
That wasn't always the case. The National Enquirer published an article in 2001 alleging that Schwarzenegger had had an extramarital affair. Two years later, just before Schwarzenegger signed the contract, American Media produced a 120-page glossy magazine called "Arnold, the American Dream."
In a new book about Schwarzenegger, author Laurence Leamer said the governor was aware that his contract with AMI would prompt the publisher to end any negative coverage of him. In the book, Schwarzenegger is quoted as saying: "Do you want to work with someone who you are attacking?"
For his pay, the governor's most public role is his monthly columns. A seven-time Mr. Olympia winner, he speaks with the magazine editors by phone every few weeks. They take notes, draft a column and send it to him for review, said Vincent Scalisi, editor-in-chief of Muscle & Fitness.
"Obviously, we know that he has a busy, full-time job," Scalisi said in an interview in recent months. "And we don't want to be a drain. But the reality is … what a wonderful resource we have access to."
source: http://www.latimes.com/news/local/la-me-governor14jul14,0,6217025,print.story?coll=la-home-headlines 14jul2005
Schwarzenegger Gets $1M As Fitness
Guru:
Deal Raises Questions About Potential Conflicts
AP 14jul2005
SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger is being paid $1 million a year as a consultant to a company that publishes fitness magazines, a deal critics say is a serious conflict of interest for the former bodybuilding champion.
The payments, revealed Wednesday in filings with the U.S. Securities and Exchange Commission, are from American Media Operations, a subsidiary of American Media Inc., the company that publishes magazines including Flex and Muscle & Fitness and gossip titles National Enquirer and Star. (See the agreement.)
Critics say the contract is a conflict of interest because Mr. Schwarzenegger's pay comes from advertising revenue and the magazines often feature ads about dietary supplements. The governor last year vetoed a bill that would have imposed government regulations on the dietary supplement industry.
Bill sponsor Sen. Jackie Speier, a Democrat, called on Mr. Schwarzenegger to cut off all ties with the magazines. "Whether it is an actual conflict or not, it certainly gives the appearance of being a conflict," Sen. Speier said.
Independent political observers agreed, saying the contract showed a lapse in judgment by the Republican governor.
"This is one of the most egregious apparent conflicts of interest that I have seen. This calls into question his judgment as to who he is working for, and it calls into question what he thinks he owes the public," said Larry Noble, executive director for the Center for Responsive Politics in Washington, D.C.
State law allows elected officials to keep outside jobs.
Margita Thompson, the governor's spokeswoman, said Mr. Schwarzenegger had disclosed all his financial holdings and added that the deal with the fitness magazines doesn't represent a conflict of interest.
"The governor did not direct sales or marketing activities of American Media and did not have personal contact with any advertisers to generate the advertising revenue," she said.
Mr. Schwarzenegger's consulting contract calls for him to receive 1% of the magazines' ad revenue each year for five years, a sum that could total $8 million.
Mr. Schwarzenegger announced last year that he had agreed to serve as executive editor for Muscle & Fitness and Flex. He writes monthly columns for both, but his salary for those jobs hasn't been revealed.
source: http://www.washingtonpost.com/wp-dyn/content/article/2005/07/14/AR2005071400240.html 14jul2005
Arnold Schwarzenegger's Nutrition Supplement Conflict of Interest via American Media
DAVID HAUSLAIB / Jossip 14jul2005
Since Arnold Schwarzenegger is clearly unfit to actually govern an entire state, perhaps he's more suited to dish out advice to fitness magazines. Even he's smart enough to figure that one out, so he inked a consulting deal with David Pecker's American Media Inc., where he'll pick up one percent of advertising revenue, which is expected to work out to $8 million over five years.
Smart move, sure, but then what happens when those very magazines, who make most of their cash from nutritional supplements, become a conflict of interest in the State of California?
No need to wait on that one, since it was last year Mr. S. vetoed legislation that would've imposed regulations on the supplement industry.
Larry Noble, executive director of the Center for Responsive Politics in Washington, D.C., said:
"This is one of the most egregious apparent conflicts of interest that I have seen. This calls into question his judgment as to who he is working for, and it calls into question what he thinks he owes the public." One word comes to mind: "Nothing."
But with all the free Vitamin E bottles, can't he afford to give wife Maria Shriver some? Now if anyone's in need of nutrition consulting ..
source: http://www.jossip.com/gossip/american-media-inc/arnold-schwarzeneggers-nutrition-supplement-conflict-of-interest-via-american-media-20050714.php 14jul2005
Filings Show Schwarzenegger Gets Millions as Fitness Consultant
AP 14jul2005
SACRAMENTO — Gov. Arnold Schwarzenegger is being paid $1 million a year for his role as a consultant to a company that publishes several fitness magazines, a deal critics say represents a serious conflict of interest for the former bodybuilding champion.
The payments, revealed Wednesday in filings with the U.S. Securities and Exchange Commission, are from Schwarzenegger's consulting job with American Media Operations, a subsidiary of the company that publishes Flex and Muscle & Fitness magazines, among others.
Critics say the contract is a conflict of interest because Schwarzenegger's pay comes from the magazines' advertising revenue and the magazines often feature ads about dietary supplements. The governor last year vetoed a bill that would have imposed government regulations on the dietary supplement industry.
Bill sponsor Sen. Jackie Speier, D-Hillsborough, called on Schwarzenegger to cut off all ties with the magazines.
"Whether it is an actual conflict or not, it certainly gives the appearance of being a conflict," Speier said.
Independent political observers agreed, saying the contract showed a lapse in judgment.
"This is one of the most egregious apparent conflicts of interest that I have seen. This calls into question his judgment as to who he is working for, and it calls into question what he thinks he owes the public," said Larry Noble, executive director for the Center for Responsive Politics in Washington, D.C.
State law allows elected officials to keep outside jobs.
Margita Thompson, the governor's spokeswoman, said Schwarzenegger had disclosed all his financial holdings and added that the deal with the fitness magazines does not represent a conflict of interest.
"The governor did not direct sales or marketing activities of American Media and did not have personal contact with any advertisers to generate the advertising revenue," she said.
Schwarzenegger's consulting contract calls for him to receive 1 percent of the magazines' ad revenue each year for five years, a sum that could total $8 million.
Schwarzenegger, who is referred to as "Mr. S." in the SEC filing, announced last year that he had agreed to serve as executive editor for Muscle & Fitness and Flex. He writes monthly columns for both. His salary for those functions has not been revealed.
The SEC filing also shows that American Media is paying $100,000 a year for five years to the Arnold Classic, an annual bodybuilding competition in Ohio.
The Sacramento Bee reported Wednesday that Schwarzenegger attended a March meeting to help dietary supplement companies launch a lobbying group aimed at avoiding government regulation of their products. That meeting took place as a new measure to restrict supplement use was pending at the state Capitol.
source: http://www.sfgate.com/cgi-bin/article.cgi?file=/n/a/2005/07/14/state/n021912D79.DTL&type=printable 14jul2005
Schwarzenegger Making Millions as Muscle Mag Editor
ADAM TANNER / Reuters 14jul2005
SAN FRANCISCO, July 13 — Arnold Schwarzenegger may be forgoing a state salary as California governor but he is still pulling in millions of dollars a year as an editor of two bodybuilding magazines.
American Media Operations, which publishes "Muscle & Fitness" and "Flex" magazines, said on Wednesday it was paying the former Mr. Olympia $8.15 million over five years to serve as executive editor of those magazines.
Schwarzenegger announced his role with the magazine last year but declined to detail payments. American Media disclosed their "consulting agreement" with the governor in Security and Exchange Commission filings.
"Having Arnold as executive editor of both magazines has enormous value and brings credibility to the publications," said American Media spokesman Stuart Zakim.
The firm, which bought Weider Publications formerly owned by Schwarzenegger's mentor Joe Weider in 2003, may be happy about the arrangement, but some analysts say earning millions on the side while serving as governor is troubling.
"I would say that if someone is getting $8.1 million from the fitness industry, even if it is a magazine, it potentially creates a conflict of interest," said Bruce Cain, a professor of political science at the University of California, Berkeley. "If is is not in violation of California law, it certainly violates the spirit of our conflict of interest laws."
Schwarzenegger's office confirmed that $8.1 million figure, but said it did not constitute a conflict of interest. "My reply is so what, what's the harm?" communications director Rob Stutzman said in an interview.
"We've been clear ever since he's become governor that he still would have outside income," he said. "He reports that income under state law in a form filed on an annual basis."
A spokesman for California's political watchdog, the Fair Political Practices Commission, said income such as in the American Media deal was legal provided it was disclosed.
In the SEC filing, American Media said it would pay Schwarzenegger's firm Oak Productions one percent of its net print advertising revenues, with a minimum payment of $1 million a year. This is in addition to the $8.15 million over five years. Zakim, a senior vice president, said American Media is also contributing $250,000 a year over five years to the Governor's Council on Physical Fitness.
An American Media filing on Wednesday said Schwarzenegger was helping "the overall editorial direction of the specific Weider magazines and otherwise helping in various ways to further the business objectives of the Weider business."
The filing added: "For the avoidance of doubt, Mr. S shall not provide any consulting services to Weider pursuant to this agreement during normal business hours on business days." The "M. S" reference, the filing said, referred to Schwarzenegger.
Weider's magazines helped transform Schwarzenegger from an obscure Austrian into the world's best-known bodybuilder, and he has appeared on their covers dozens of times.
American Media also publishes tabloids such as the National Enquirer.
source: http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-07-14T004802Z_01_N13666895_RTRIDST_0_LIFE-SCHWARZENEGGER.XML 14jul2005
Schwarzenegger Magazine Connections Questioned
AP 14jul2005
A recent S.E.C. filing reveals that California Gov. Arnold Schwarzenegger makes a million dollars a year as consultant to a fitness magazine publisher.
Critics say it's a serious conflict of interest and are calling on Schwarzenegger to cut ties with American Media Operations.
Schwarzenegger writes columns for the company's magazines and is paid to appear at its annual Arnold Classic bodybuilding and fitness weekend in Columbus.
Critics say the deal is questionable because Schwarzenegger gets one percent of the magazines' advertising revenue, some of which comes from dietary supplement companies.
He last year vetoed a bill that would have imposed government regulations on dietary supplements.
The governor's spokeswoman says there's no conflict of interest because he has no personal contract with any advertiser.
source: http://www.onnnews.com/Global/story.asp?S=3594140&nav=LQlCc8Ul 14jul2005
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