The Polonium Diversion

At least a dozen people have been contaminated by the rare radioactive isotope Polonium 210. The list includes Alexander Litvinenko, the ex-Lieutenant Colonel in the KGB who died from a dose of Polonium 210 in London on November 23rd; Andrei Lugovoi, a former colleague of Litvinenko in the KGB, who met with Litvinenko at the Pine bar of the Millennium Hotel in London the day he became ill, November 1st; Dmitry Kovtun, Lugovoi’s business associate, who also attended that November 1st meetings; 7 employees of the Millennium Hotel; Mario Scaramella, an Italian security consultant, who dined with Litvinenko on November 1st at the Itsu Sushi Restaurant on November 1st (and whom, one week later, Litvinenko accused of poisoning him); and Litvinenko’s Russian wife Marina, who went with him to Barnet General Hospital on November 1st. In addition, tell-tale traces of the same Polonium 210 were detected at Litvinenko’s home and hospital, Lugovoi and Kovtun’s rooms at three luxury hotels they stayed at in London in October and November– the Parkes, Sheraton Park Lane, and Millennium Hotel; a security firm in London called Erinys, where Litvinenko, Lugovoi and Kotvun met on several occasions, a residence in Hamburg, Germany that Kotvun had visited en route to London, two British Airways planes on which Lugovoi flew from Moscow to London in October. and in the offices of billionaire Russian exile Boris Berezovsky. So the trail of the Polonium 210 followed in the steps of three men, Litvinenko, Lugovoi and Kovtun, who were involved in the fall of 2006 in some dealing that required Lugovoi and Kotvun flying back and forth from Moscow.
As Polonium 210 has not been manufactured in Britain for years, and it cannot be stockpiled for long– its half-life is 132 days– the Polonium 210 must have been smuggled into the country. If it is assumed that no one intended to leave a radioactive trail in airplanes, hotel rooms, or homes, or contaminate waiters and other innocent bystanders, there must have been some unintentional leakage of the smuggled Polonium 210 . Moreover, we know from the Hamburg trail of Polonium that the leakage was occuring October 28th, well before Litvinenko went into the hospital on November 1st. But where did the smuggled Polonium 210 come from?

Polonium 210 is made by bombarding bismuth with neutrons from U-235 (the fuel for atom bombs)in nuclear reactors . Not only is its distribution tightly controlled, but it is very rare. According to Wikepedia, " Only about 100 grams are produced each year.". Virtually all of known production– less than 4 ounces– comes from Russian nuclear reactors/ To keep it from leaking onto the black market, the United States made an arrangement with Russia to import almost all of its production to America. In the US, under tight controls, the Polonium 210 is embedded in plastic or ceramic so it can be safely used in static eliminators. To recapture the Polonium 210 in any toxic qantity would require acquiring over 15,000 static eliminators and using highly-sophisticated extraction technology. Such a large scale acquisition would instantly be noticed.

The reason that the US has gone to such lengths to control Polonium 210 is that if a rogue nation (or terrorist group) obtained access to any quantity of it– even a half-gram– it could use it as an initiator for setting off the chain reaction of a nuclear bomb. For that purpose, the bomb-makers would also have to have a fissile fuel, such as U-235, and Beryllium (which is mixed in layers with the Polonium 210). Even lacking these other ingredients, the Polonium 210, which aerosolizes at about 55 degrees Centigrade, could be used with conventional explosives to make a dirty bomb. So if pure Polonium 210 was smuggled into Britain– as British intelligence now believes– it is of considerable concern. At minimum, it means that there has been a diversion of Polonium 210 from the controlled supply. But where is the leak?
Only four facilities are licensed to handle Polonium 210 in Russia: Moscow State University; Techsnabexport, the state-controlled uranium export agency; the Federal Nuclear Center in Samara; and Nuclon, a private company. Although these licensees are monitored by the Russian government, it would not necessarily require an intelligence service to divert part of the supply into private hands. A single employee who was bribed, blackmailed or otherwise motivated conceivably could filch a pinhead quantity of Polonium 210 and smuggled it out in a glass vial (in which its alpha particles would be undetectable. Such corruption is not unknown in Russia. Or the diversion could have come from outside Russia. A number of other countries with nuclear reactors have been suspected of clandestinely producing (or buying) Polonium 210, including Iran (where it was detected by IAEA inspectors in 2000), North Korea (where it was detected by US airborne sampling), Israel (where several scientists died from accidental leaks of it in the 1950s and 1960s), Pakistan, and China. But whatever its source, the Polonium diversion has serious implications. For one thing, it could be sold to a country that wanted to set off a nuclear device, clean or dirty. So it might be worth a great deal of money on the black market.

Before the mystery of how Litvinenko came in fatal contact with a dose of Polonium 210 can be solved, the relationships he had with his contaminated associates may have to be unravelled. For example:

1. What was the relationship between Litvinenko and Mario Scaramella? According to Scaramella, Litvinenko told him at their November 1st sushi lunch that before he had defected from Russia, his activities had included the "smuggling of nuclear material out of Russia." If true, why did the ex-KGB officer broach the subject of nuclear smuggling?

2. What was the relationship between Litvinenko and Lugovoi. According to Lugovoi, the two former KGB officers, met "12 or 13 times" in London to discuss business, and, in between these meetings he returned to Moscow. In between their meetings in late October, Litvinenko made a quick trip to Israel while Lugovoi’s associate Kovtun flew to Germany. Was this international travel related to their business?

3. What was the relationship between Boris Berezovsky and Litvinenko and Lugovoi? Litvinenko had reportedly been on his payroll in London since his defection in 2000; Lugovoi had helped organize his security in Moscow in the 1990s. His London offices showed traces of Polonium 210. Did Lugovoi and Litvinenko meet with him?

The Polonium Puzzle: The Alternative Hypothesis

Alexander Litvinenko’s died from exposure to radioactive Polonium-210 in London on November 23, 2006. Even though there was too much Polonium 210 in Litvinenko’s body for the radioactive isotope to have occurred naturally, the British health authorities were unable to determine how the man-made substance "entered his body," and with typical British understatement classified it merely as a "suspicious death." The issue remains: how did Litvinenko come in such close proximity to a deadly radioactive isotope.

There are two hypotheses that could account for this fatal Polonium 210 contamination:
1) The murder hypothesis: Someone surreptitiously sprinkled particles of Polonium 210 on his food or in his drink. And Scotland Yard detectives are now proceeding on the allegation that it was murder,
2) The accident hypothesis: Polonium 210 particles escaped from a vial, envelope, or other container that he was carrying.

The media initially fastened on the murder hypothesis after it erroneously reported that Litvinenko had been given the rat poison Thallium and then speculated that the motive for the murder was to prevent him from disclosing information about criminal deeds of the Russian government. Even after it turned out (three weeks later) that the cause of death was not Thallium, but Polonium 210, the murder hypothesis continued to gain traction. Polonium 210, however, has very different attributes from Thallium as a murder weapon. For one thing, unlike Thallium which can kill over night, Polonium 210, takes weeks to kill. (Litvinenko, in fact, lived-- and talked to the media-- for three weeks.) So it is not efficient if the purpose is to silence a victim. Moreover, as the particles persists for months, it leave tell-tale trail of radioactivity, and it can even be traced back to the lab that produced it.

Police investigators traced the Polonium 210 to at least six locations that Litvinenko reportedly visited on November 1st: 1) his own home, 2) the offices of billionaire Russian exile Boris Berezovsky (his sometime employer) 3) the headquarters of business intelligence company Erinys, 4)the Itsu sushi restaurant, where he had lunch with Italian "defense consultant" Mario Scaramella 5) the Millennium hotel, where he with the two Russian businessmen, and finally, 7) the Barnet General Hospital where he was admitted that evening. Two other people also got contaminated with Polonium 210-- Litvinenko's wife Marina and his lunch partner Scaramella. The common link in this contamination patter is Litvinenko. According to the murder theory, the assassin would have had to sprinkle the Polonium onto Litvinenko's food at the earliest contaminated location and Litvinenko himself would have contaminated the subsequent locations with low-level traces of Polonium 210 that oozed out of his body. The problem here is that Scaramella got contaminated at Itsu Sushi-- the only place he met with Litvinenko before he was hospitalized-- which, according to medical experts, could have only came from his exposure to a primary source (and not Litvinenko's secondary oozings), yet the strength of the Polonium 210 at the Millennium Hotel, which Litvinenko visited before going to the Itsu Sushi, reportedly was too strong to have come from Litvinenko's excretions (Daily UK Telegraph December 1,2006). If so, the Polonium 210 container--presumably a vial or envelope-- was present at two of the locations that Litvinenko visited. Since Litvinenko was at both locations, and Scaramella was not, he would be carrier of the container of Polonium 210. In addition, the date that the headquarters of Erinys may have been well before the contamination of the Sushi bar and the hotel. According to Andrei Lugovoi, the ex-KGB associate whom he met with at the Millennium Hotel, "Alexander Litvinenko, my business partner Dmitry Kovtun and I were in London on October 17 at a meeting in the office of (private security company) Erinys." Since traces of Polonium 210 cannot be precisely dated, the contamination of those offices could have occurred two weeks before Litvinenko was poisoned. If so, either Litvinenko or his associates in this unknown business had a container of Polonium 210 in mid-October.

The accident hypothesis , which also has problems, would explain the radiation from a primary source being found at two locations, as well as the radiation traces that predated Litvinenko's poisoning at the Eryns offices and the British Airlines plane. In this alternative theory, the radiation came from a vial of smuggled Polonium 210, which suffered undetectable damage or some spillage from transferring it from one vial to another. The leakage onto Litvinenko's clothing may have occurred as early as October (accounting for the undated traces in offices and planes). Then, according to the accident hypothesis, some particles would have been ingested by Litvinenko, his wife Marina, and Scaramella. Why would Litvinenko or his associates have a sample of Polonium 210?
The answer is thar Polonium 210 is a valuable commodity in any sizable quantity. Among its more nefarious uses, it can be used to control a chain-reaction in an early-stage clandestine nuclear weapons programs. Iraq, for example, in 1990 had investigated using polonium 210, as an initiator for a crude U-235 bomb. ( Polonium 210 traces were also found by IAEA inspectors on Iranian nuclear components in 2000. ). It may be relevant here that Mario Scaramella told authorities that Litvinenko’s past interests had included the "smuggling of nuclear material out of Russia." (In 1999, he was jailed for eight months in Lefortovo Prison in Moscow before the charges were dropped.) He might have a host of reasons for possessing a sample of Polonium 210, ranging from establishing the bona fides of someone claiming to have access to a Russian nuclear facility to investigating the traffic in components for nukes. He (or his associates) might also be acting as an intermediary in its sale.

At this stage, either hypothesis is possible. Why rush to judgment before the results of the inquest?

Puffing Up The 911 Commission

In July 2004, the National Commission on Terrorist Attacks Upon the United States, popularly known as the 9/11 Commission, published its final report. Coming in the midst of the presidential campaign, it won the quick endorsement of both candidates and wide acceptance in the media. In "Without Precedent," the commission's co-chairmen, Thomas Kean and Lee Hamilton, offer an inside account of their investigation of the 9/11 tragedy.
The book's title is somewhat of a misnomer. There were of course dozens of precedents for high-level bipartisan inquiries, such as the Warren Commission's investigation of the JFK assassination. More to the point, there was a precedent for the investigation of the 9/11 attack: the Joint Inquiry by the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence. Indeed, the 9/11 Commission was required to use the Joint Inquiry's report as its starting point and to limit itself to fill in what that report had not already covered.

The most notable difference between these two investigations was their public relations -- or, in Messrs. Kean and Hamilton's apt phrase, their "public face." The co-chairmen assumed that it was vital to be perceived "as having full access to the most secretive material in the government."
To build this impression, they recount in the book how they prevailed in their battle for information with a secretive Bush administration, an evasive military bureaucracy and recalcitrant New York City officials. They also had to cultivate the media. So both chairmen appeared on the TV talk shows, gave joint press interviews and did everything possible to build an aura of openness around the investigation -- hoping to avoid, as they explained, "the kinds of conspiracy theorizing that have followed in the wake of other inquiries."

For the commission to succeed, Messrs. Kean and Hamilton had to nurture the impression that the commissioners had seen all the evidence regarding 9/11 and had independently assessed it

In reality, however, the 9/11 Commission was neither exhaustive nor independent. If the investigation had truly been as exhaustive as advertised, it would have made a genuine effort to weigh evidence that ran counter to its thesis. But it did not. Consider how the 9/11 Commission dealt with Capt. Scott Phillpott, a high-ranking naval intelligence officer who asserted that through data mining his military intelligence unit, code-named Able Danger, had identified Mohamed Atta as a potential terrorist in 2000 and even had his photograph on a chart.

Since the staff could not find any such chart in the documents that it had obtained from the Pentagon, and because Capt. Phillpott's account "failed to match up" with the staff's conclusion that Atta was unknown to U.S. intelligence prior to 9/11, this putative identification of Atta was omitted from the commission's report (and a number of commissioners were not informed about it).
Later, the Pentagon said that at least four other intelligence officers in the unit had confirmed that they had seen the photograph of Atta or recalled hearing Atta's name prior to 9/11. The Pentagon also explained one possible reason the chart with Atta's photo was missing: The military had destroyed many Able Danger records in 2001. To be sure, there were reasons to be skeptical about eye-witness accounts, but an exhaustive investigation would have at least heard them.

Nor was the 9/11 Commission able to independently evaluate or verify crucial information it received from intelligence agencies. Although the CIA had imprisoned seven al Qaeda conspirators who had planned, directed and coordinated the 9/11 attack, the agency refused to give the commission access to the prisoners. In the case of the Warren Commission, Chief Justice Earl Warren went to Jack Ruby's prison cell to personally question Oswald's killer. In the case of the 9/11 Commission, the commissioners were not allowed to speak to, see or know the whereabouts of conspirators. The commission could not even question the prisoners' CIA interrogators about the way information had been obtained from them.

The co-chairmen admit in "Without Precedent" that they "had no way of evaluating the credibility of detainee information." But apparently that did not discourage them from accepting, essentially at face value, information from the prisoners, delivered via a CIA "project manager," if it would fill in gaps in the commission's investigation.

For example, the CIA reported that one key prisoner, Ramzi Binalshibh, had said co-conspirator Atta "did not meet with anyone" when he went to Prague in June 2000 -- even though Binalshibh himself was not in Prague and had no first-hand knowledge. He further alleged that on another two journeys, Atta went to Spain solely to talk with him and met no other conspirator -- but Binalshibh was not in Spain during all of Atta's visits. And, again through the medium of the CIA project manager, Binalshibh informed commissioners that Osama bin Laden would not have allowed Atta to meet with an Iraqi intelligence officer because the al Qaeda leader was upset with Saddam Hussein's treatment of Muslims.
Even though such contributions were indeed unverifiable -- particularly the one that required Binalshibh to read bin Laden's mind -- the 9/11 Commission came to rely on this information, giving it the benefit of the doubt when conflicting information surfaced. For instance, the commission uncovered CIA documents that threatened to complicate matters by dragging Iran into the 9/11 conspiracy: The documents revealed that Iran had "apparently facilitated" the travel of most of the 9/11 "muscle hijackers" in flights from Afghanistan by not stamping their passports, and that Imad Mugniyar, the Hezbollah terrorist group's infamous chief of terrorist operations, had flown with the hijackers. But the commissioners merely referred the "troubling" matter to the CIA project manager.
At that point, the report was only one week away from publication. The project manager quickly ran the information past the agency's prisoners and sent a reply back "just in time for inclusion in the Report," Messrs. Kean and Hamilton write. Result: "We found no evidence that Iran or Hezbollah was aware of the planning for what later became the 9/11 attack." Such CIA feeds permitted the commission to hew to its theory that al Qaeda carried out 9/11 with no help from any outside party or government.
With this book, Messrs. Kean and Hamilton have shown how a government-appointed commission managed to create the appearance, if not the reality, of an exhaustive independent investigation and artfully transformed itself into a lobby for the reorganization of the intelligence establishment. Now that is without precedent.

The Mystery of Prague

Was the putative Prague Connection an invention of the Bush Administration– or was it the product of an incomplete intelligence operation?
To sort out the confusion , I met earlier this November 11 in Prague with Jiri Ruzek, the chief at the time of Czech counterintelligence service(BIS), Ruzek, a professional intelligence officer, is in a position to know what happened, He personally oversaw the investigation of Iraq’s alleged covert activities that began, with full American collaboration, nearly two years before Bush became President and resulted, some five months before the 9-11 attack, in the expulsion the Iraqi intelligence officer to have met with Atta, Ahmad al-Ani. I also spoke with ex-Foreign Minister Jan Kavan, who headed the Intelligence Committee to whom Ruzek reported, and to Ambassador Hynek Kmonicek, who, as deputy foreign minister at the time, handled the al-Ani expulsion for the foreign ministry. According to them, here is how the the Prague connection developed.

The proximite cause for the BIS’ interest in al-Ani was a sensational revelation made by Jabir Salim, the Iraqi consul who defected in Prague in December 1998. He said in his dbriefings that the Mukharabit, Iraq intelligence service, had given him $150,000 and tasked him with job of carrying out a covert action against an American target in the Czech Republic, using a free-lance terrorist to blow up the headquarters of Radio Free Europe in Weneclas Square in the heart of Prague. This intelligence about state-sponsored terrorism was taken very seiously by both America and the Czech Republic. The US, for its part, doubled security at the Radio Free Europe facility, and began its own counter-survellience, including photographing suspicious individuals in Weneclas Square. The BIS did what counterintelligence service do in such circumstances: they sought to penerate the Iraq Embassy by recruiting Arabic-speaking employees familiar with its operations.

Al-Ani was Salim’s replacement at the Iraq Embassy. Soon after he arrived in March 1999 , he was picked up by US countersurvellence cameras. The interest in him intesified after the BIS’ learned from its penetration of the Iraq Embassy that he was attempting to acquire explosives and contact foreign-based Arabs. Then, on April 9th 2001, the BIS’ source in the Embassy reported that al-Ani had gotten into a car with an unknown foreign Arab. After al-Ani’s car managed to elude BIS survellience, concern mounted that he was in the process of recruiting his bomber, and, since the BIS could not find the ystery Arab, Ruzek decided to act pre-emptovely. He recommended to Foreign Minister Kavan that al-Ani be immediately expelled from the Czech Republic, and, accepting it. al-Ani was given only 48 hours to get out of Prague on April 19t.h– and he returned to Baghdad.

On September 11th, Atta’s picture was shown on Czech TV, and the next day, the BIS’s source in the Iraq embassy dropped a bomb shell. He told his BIS case officer that he recognized Atta as the Arab who got in the car with Al-Ani on April 9th. Ruzek immediately relayed the secret information to Washington through the CIA liaison. The FBI sent to Prague an interrogation team, which after questioning and testing the source, concluded that there was a 70 percent liklihood that he was not intentionally lying and sincerely believed that he saw Atta with al-Ani. The issue remained whether he had mistaken someone who resembled Atta. Meanwhile, records were found showing that Atta had applied for a Czech visa in Germany in 2000, and made at least one previous trip to Prague.
Less than a week after Ruzek shared the BIS’ secret information with American intelligence, it was leaked. The Associated Press reported "A U.S. official, speaking on condition of anonymity, said the United States has received information from a foreign intelligence service that Mohamed Atta, a hijacker aboard one of the planes that slammed into the World Trade Center, met earlier this year in Europe with an Iraqi intelligence agent," and CBS named with al-Ani as the person meeting with Atta in Prague. Ruzek was furious. He consider what he had passed on to the FBI to be unevaluated raw intelligence, and the disclosure of it not only riskedt compromising the BIS’s penetration in the Iraq embassy but it greatly reduced the chances of confirming it. In Baghdad, al-Ani, through an Iraqi spokesman, denied he ever met Atta. In Prague, Czech government officials, who had not been fully briefed, added to the confusion. The Prime Minister,. Milos Zeeman , wrongly assuming that the meeting had been confirmed, stated on CNN, for example, that Atta and al-Ani had met to discuss Radio free Europe, not 9-11 attack.

Meanwhile, the pressures on Ruzek mounted. Richard Armitage, Powell’s deputy at the State Department, complained to Prime Minister Zeeman that Ruzek was not cooperating in resolving the case, eben though Ruzek had extended unprecedented access to the FBI and CIA, including allowing their representatives to sit on the task force reviewing the case. He was also warned by a colleague in German intelligence that could be entangled in a heated Hawk-Dove struggke over Iraq. He decided that if this was an American game, he did not want part of it. So he threw the ball back in the CIA’s court, by taking the position that if al-Ani did meet Atta for a nefarious purpose, it would have been not on his own initiaive but as a representative of the Iraqi Mukharabit. The answer was not it Prague, but in Iraq’sa ntelligence files, and the the CIA and FBI would have to use their own intelligence capabilities to obtain further informatuion about al-Ani’s assignment, and brief. That more oe less cocluded the Czech role in the investigation.

. The FBI had by this time established that Atta checked out of the Diplomat Inn in Virginia Beach and cashed a check for $8,000 from a SunTrust account on April 4, 2001 and was seen again in Florida on April 11, 2001. But it could not account for his movements during this period (or how he used that money), though there wa no record of Atta using his passport to travel outside the United States. The CIA also drew a blank. CIA director George Tenet testified on June 18, 2002 before a Joint Committee of Congress : "Atta allegedly traveled outside the US in early April 2001 to meet with an Iraqi intelligence officer in Prague, we are still working to confirm or deny this allegation. It is possible that Atta traveled under an unknown alias since we have been unable to establish that Atta left the US or entered Europe in April 2001 under his true name or any known aliases." When Al-Ani was captured in Baghdad in 2003, he told the CIA that he was not even Prague at the time of the meeting. Although Ruzek termed Al-Ani’s claim of being elsewhere "pure nonsense," the CIA had evidently found it could go no further with the vexing case. Tenet, on March 9,2004, told a closed session of the Senate Armed Service Committee, "Although we cannot rule it out, we are increasingly skeptical such a meeting occurred."

Prior to 911, when the investigation al-Ani’s activities was iniatated, both the CIA and the BIS took deadly serious the allegation of state-sponsored terrorism directed against Radio Free Europe, Both agencies cooperated in attempting to thwart it, and accepted the information furnished by the BIS’ penetration agent as reliable enough to expel al-Ani. After 9-11, with Iraq now on the Bush administration’s agenda, the subject of state-sponsored terrorism became a political hot potato, as Ruzek learned, that could easily burn who touched it. So hot that if the CIA even questioned al-Ani about the instruction he had concerning blowing up Radio Free Europe, it never disclosed the answers to the BIS. So, like many other intelligence cases that become politicized, the Prague Connection, and all that led up to it, was consigned to a murky limbo.

The Non-Judy Miller Story

Judy Miller, despite the media’s obsessively fixation on her, is not the subject of Patrick Fitzgerald’s investigation. She is a witness, along with a half dozen other journalists, to a possible crime. The crime involves the abuse of power by government officials and the misuse of classified information. The evidence is not merely journalists’ recollections. It includes White House logs, emails traffic,and a classified memo marked "secret" that had been s circulated on Air Force One. The targets are government officials who misused this information for political ends or attempted to cover-up the illicit acts.
Here is basically what happened :
1) Nick Kristof wrote a column in the New York Times on May 6, 2003 wrongly suggesting that Vice President Cheney had sent Joseph Wilson to Niger to investigate WMDs (It was the CIA, not Cheney, that choose and dispatched Wilson.)
2) Cheney sent a request for information about Wilson to CIA Director George Tenet right after the New York Times story appeared. Tenet informed him that Wilson's wife was a CIA officer.
3) On June 12, 2003, according to Libby's notes, he learned from Cheney that Wilson's wife, Valerie Plame, was a CIA officer.
4)Libby subsequenly leake that information to journalists. He discussed it with Judy Miller on June 23, 2003. Meanwhile, Rove and possibly other officials in the administration also "leaked" Wilson's wife's CIA status to other journalists. This "leaking" activity may have involved a conspiracy to misuse classified information.
5) Wilson's op-ed piece was published July 6, 2003.
6) A week later Novak published the information, followed by Cooper. .

Judy Miller did not disclose the name of Wilson's wife, Valerie Plame– which she mispelled "Flame" in her notes– to a single person before Novak’s story. She did not write about it or discuss it on talk shows. If the White House had tried to use her to publish a damaging story on Wison, they clearly failed. Either she saw that Wilson's wife’s identity was a non-story or she believed it was impolitical to undermine a prior New York Times op-ed position.

It is a pure misunderstanding of the media– and of the self-serving blogs-- that this is, as the New York Times calls it, The "Judy Miller Case" or "Miller Mess."

Able Danger

Mohamed Atta
Two US military intelligence officer, Navy Captain Scott Phillpott and Army Lt. Col. Anthony Shaffer, and a civilian technician, J.D. Smith now say that a secret military intelligence unit codenamed Able Danger had identified Mohammed Atta and three of his 9-11 hijacking associates in early 2000. Phillpott and Smith also said that the unit had a photograph of Atta.

According to these witnesses, Able Danger had found Atta via "data mining." Smith says "I am absolutely positive that he [Atta] was on our chart among other pictures and ties that we were doing mainly based upon [terror] cells in New York City," Smith said.
Smith, although himself only worked on open source material, said "the data was gathered from a variety of sources, including about 30 or 40 individuals. He said they all had strong Middle Eastern connections and were paid for their information. Smith said Able Danger's photo of Atta was obtained from overseas." It is possible Atta could have been located by only the cross-referencing of non-classified data. Here is how.

First, Able Danger could come up with a list of Arabs who might have secretly visited al-Qaeda camps across the Afganistan border of Pakistan. To do this, it would obtained from airline manifests the names of Arab males who flew to Pakistan in 1999 and the names of Arab males who applied for a U.S. visa with a newly issued passport. It could then cross-reference both lists against the passport issuance dates. Presumably, the Arabs on that list seeking to hide trips to al-Qaeda facilities in Pakistan and Afghanistan from US authorities would have gotten new passports after the trip to Pakistan to hide the Pakistan stamps on their old passports. On the short list of Arabs who had been to Pakisatan then obtained new passports would be the names of Atta and al-Shehhi.

Next, since it emerged out of the 1998 investigation of al-Qaeda attacks in Africa that Osama Bin Laden planned to train pilots for crop dusting and other agriculture tasks, Able Danger would cross-reference its short list with applicants to US flight schools. Here Atta's name would come up 31 times, as he applied to 31 flight schools.

Then, Able Danger could check the address both men used on their visa application, 54 Marienstrasse in Hamburg, and this could match the address given by other al-Qaeda suspects. (The 911 Commission had no opportunity to examine Atta and al-Shehhi’s visa applications-- or even determine when they applied-- because in 2001 the files were destroyed "according to routine document handling practices" by the Department of State.)

If just this level of data mining could yield the name and photograph of Atta, the question arises: Did other US intelligence services, such as CIA, with similar data mining techniques (as well as links with informants and foreign intelligence services) have similar results?
Stay tuned. The answer to the mystery of Able Danger will have to await the scheduled hearing of the Senate Judiciary Committee.

Iran's Russian Connection

At the time in June 2002, little attention was paid to General Yuri Baluyevsky's incredible assertion that Iran already had nuclear weapons. The Russian Deputy Chief of Staff stated at a press conference in Moscow, "Iran does have nuclear weapons. These are non-strategic nuclear weapons." Russia had an interest in Iran's nuclear progress. It was then building 6 six nuclear reactors for Iran-- four at Bushehr and two at Akhvaz-- as well as a uranium-conversion plant, and providing assistance for its ballistic missile program. This provided General Baluyevsky a vantage point to assess 6 pieces of the Iran jigsaw not available to the United States.

1) Whether or not the Russian-engineered uranium-conversion plant could be used for uranium enrichment.

2) Since Iranian centrifuges made indigenously in Iran — not imported gear — showed traces of on enriched uranium with a purity level of 36 percent U-235 that matched the atomic signatures of the 36% uranium used in Russian submarines, was Russia the source of this 36% enriched uranium for Iran.

3) If so, could the Russian 36% U-235 could be raised by Iranians to weapon-grade U-235 with either centrifuges or the laser isotope separating system and had Iran acquired such technology from Russia .
4) Since Polonium 210-- an isotope used by Russian scientists (in combination with beryllium) to ensure the chain reaction leading to a nuclear explosion begins at the right time-- was detected in Iran, was Russia the source of Iran's Polonium 210.

5) A defecting Iranian nuclear scientist had claimed in 1998 that Iran had attempted to use Russian criminal intermediaries to buy four tactical nuclear weapons and enriched uranium from Kazakhstan. Was there any basis to this claim.
6) Has Iran managed to weaponize the Shahab-3 medium-range ballistic missile with a warhead?

Of course, General Baluyevsky may have conjured up the picture of Iran's tactical nukes out of thin air. If not, did he based his assessment on the answer to some or all of these questions.

The Mind of Deep Throat

W. Mark Felt

Bob Woodward interviewed Mark Felt on Tuesday February 27, 2000 to test the memory of his legendary source on Watergate. In his own book, Woodward had Deep Throat meeting him in an underground garage, inserting coded signals in Woodward's New York Times, drinking with him in a bar, etc. Here is precisely how Felt remembered these events.

(Audiotape, February 27, 2000)

MR. WOODWARD: You remembered the Nixon period a little bit.
MR. MARK FELT: Vaguely but I still don't have any specific recollections
from it.
MR. WOODWARD: Remember back in those years when we met and chatted? And
any...
MR. FELT: Well, I think I remembered the area and a time, but I don't
remember specifically anything.
(End audiotape)
Here was the perfect candidate for Deep Throat

The Set Up

Bob WoodWard and Carl Bernstein

Bob Woodward had some concern that he and his partner Carl Bernstein were being set up by two government officials who had provided them with false information. Both officials worked for the FBI, one had arranged an elaborate series of meetings with Woodward; the other called Bernstein out of the blue with an offer to volunteer secret information. Then, in late October 1972, both of these sources confirmed to Woodward and Bernstein that Hugh W. Sloan Jr., the treasurer of Nixon’s reelection campaign, had testified to the Grand Jury that President Nixon’s top deputy, Bob Halderman, had been involved in dispersing secret funds used for illegal activities. To publish the story, the Washington Post required two independent sources, which the FBI had conveniently provided. The Washington Post ran the story on October 24, 1972 under the sensational headline. "Testimony Ties Top Nixon Aide To Secret Fund."

The story fell apart the next day. Sloan and his lawyer denied that Sloan’s Grand Jury testimony contained any such information about Halderman. The Washington Post had been caught flagrante delicto in a false story based on anonymous sources at a critical time. Since both FBI officials should have known from their access to FBI files that Sloan had not named Halderman, Woodward asked in All the President’s Men,"Had the entire thing been a set-up"?

Woodward had a point. Could it be a mere coincidence that two FBI officials sought out the Washington Post reporters during the same time period and provided them with the same misleading information? Woodward also knew-- although his editor did not-- that the source he described as working in the executive branch was actually W. Mark Felt, the associate director of the FBI.

Felt was certainly capable of setting up a reporter. He had earned his spurs at the FBI in the 1940s orchestrating disinformation operations. He also was in charge of controlling the "leaks"on Watergate appearing in the Washington Post. In working against the Washington Post, Felt had an entire team of FBI agents at his disposal. According to Paul V. Daly, a former FBI bureau chief, whose account was recently published in the Albany Times Union, this team included Richard Long, who was chief of the FBI's white-collar crimes section during Watergate; Robert G. Kunkel, agent-in-charge of the Washington field office, which led the Watergate burglary investigation; and Charles Bates, who was assistant director of the FBI's criminal investigative division. They were all involved in the operation of "leaking" (the euphemism for planting) stories to the Washington Post. The FBI agent who approached Bernstein with information from secret FBI 302 reports and who confirmed the canard that Sloan had named Halderman presumably was a subordinate of Felt's. If so, the disinformation funneled to Woodward and Bernstein about the White House connection was part and parcel of Felt’s operation. Felt then continued to steer, if not control, Woodward and Bernstein by misdirecting them to search for no fewer than 50 non-existing political operatives who he claimed were the real heart of the Watergate conspiracy. One of the areas Felt may have been steering Woodward and Bernstein away from was the FBI's extensive program of illegal break-ins, which Felt had himself authorized.
Woodward did not find it profitable to pursue his suspicion of a set up. By submerging Felt into the mystery he brilliantly created about the identity of Deep Throat, Woodward managed to avoid that issue.

Clearing Deep Throat

This summary is not available. Please click here to view the post.

Deep Throat Resurrected

This summary is not available. Please click here to view the post.

The Blur Between Fact And Fiction

Michael Douglass
Can the New York Times distinguish fact from fiction any longer?

Consider a front page story today (May 20,2005) stating "Just as corporate raiders represented the Wall Street of the 1980's (think of Gordon Gekko) and mutual fund managers were the icons of the 90's (Jeffrey N. Vinik, who ran the Fidelity Magellan fund, was a minor celebrity), the lawyers who keep companies in compliance with increasingly tough regulatory laws have become a new prototype of the financial district." Unlike Jeffrey Vinik, however, Gekko is not a real person. Played by Michael Douglas in the 1987 movie Wall Street, he is a fictional creation of writer-director Oliver Stone. Stone, himself a master of the art of blending fact and fiction in movies, say he modeled the character after Ivan Boesky. That may be true, but Boesky was not a corporate raider. He was a crooked money manager, who bought inside information for cash, traded illegally on these secrets, and went to prison for it.

The New York Times reporter, Jennifer Steinhauer, may have been innocently misled into thinking Gordon Gekko was a real corporate raider by CNN’s program Moneyline which repeatedly used a film clip in the 1990s from the movie in which an immaculately dressed Gordon Gekko (Michael Douglas) intones "Greed is good" to illustrate news reports of corporate corruption. Moneyline's decision to use such fictional clip for its news coverage was, appropriately, part of an even bigger greed-is-good corporate deal in which Warner Brothers (which produced Wall Street) paid CNN (which was acquired by its corporate parent from Turner Entertainment ) to hype the licensing values of its movies. The result, as is demonstrated by the New York Times, is that fictional images such as Gekko come to stand for real events.

Paranoia For Fun and Profit

Michael Moore
Michael Moore proved yet again that funnctional paranoia could be both fun and lucrative. By the end of April 2004, he'd finished making Fahrenheit 9/11 but had no American distributor. Mel Gibson's Icon Productions rejected the project back in April 2003. (Moore claims he had a signed contract before Gibson acquiesced to White House pressure. Icon executives deny any such contract existed.) Moore then went to Harvey Weinstein at Miramax. Weinstein agreed to back the movie and signed a contract with Moore to acquire the rights. But in order to distribute the movie, Weinstein still needed the approval of his superiors at Disney. Although he does not discuss this publicly, Weinstein's contract explicitly prohibits Miramax, a wholly owned subsidiary of Disney, from distributing any film that's vetoed by the Disney CEO. When CEO Michael Eisner exercised his veto in May 2003, Miramax, though it still held the rights to the film, could not distribute Fahrenheit 9/11.

By the time Eisner told Weinstein of his decision, the Miramax head had already given Moore $6 million from Miramax's loan account. Weinstein agreed that this advance was to be "bridge financing" that he would recover when he sold off the film's distribution rights. To make sure there was no misunderstanding, Disney's Senior Executive Vice President Peter Murphy, who was also at the meeting, wrote Weinstein a letter on May 12, 2003, affirming that this money was "bridge financing" and that Weinstein had agreed to dispose of Miramax's interest in the film.

For Moore, this $6 million in "bridge financing" was more than enough to make Fahrenheit 9/11. He acquired most of the footage from television film libraries at little, if any, cost and did not pay any of the on-camera talent (except for himself). On April 13, 2004, after Weinstein saw a rough cut, he went back to Eisner and asked him to reconsider his year-old decision not to distribute Fahrenheit 9/11. After getting a report on the content, which included footage from such sources as Al Jazeera and Al-Arabiya television, Eisner saw no reason to change his position. He again declared that Disney wouldn't have anything to do with the movie.

With the presidential election heating up, Moore needed to get his movie into theaters. Although Weinstein had told Eisner and Murphy that he planned to sell the film's distribution rights after it was screened at the Cannes Film Festival, Moore had a more expedient strategem. On the Fahrenheit 9/11 DVD, Moore says he resolved to get the film seen in America "by hook or by crook." His hook was censorship.
On May 5, 2004, the New York Times ran a front-page article headlined "Disney Is Blocking Distribution of Film That Criticizes Bush." The story included the sensational charge that Eisner "expressed particular concern that [choosing to distribute Fahrenheit 9/11] would endanger tax breaks Disney receives for its theme park, hotels and other ventures in Florida, where Mr. Bush's brother, Jeb, is governor." The source for this allegation was Moore's agent, Ari Emanuel. Two days later, Moore claimed on his Web site that Disney's board of directors rejected Fahrenheit 9/11 "last week." In fact, the Disney board had not made such a decision in 2004—the project had been vetoed in 2003.

Moore's excursion from reality proved a boon at Cannes. On May 22, 2004, the Cannes jury defied putative efforts to censor Moore by awarding Fahrenheit 9/11 the prestigious Palme d'Or. Moore now had a golden palm in his hand and the media at his feet—with more free publicity than any Hollywood studio could afford to buy, Fahrenheit 9/11 now stood to rake in a fortune. And Disney, which still controlled the movie's rights through its subsidiary Miramax, now got to decide who was going to profit from it.
Disney had some experience dealing with Miramax's hot potatoes. Rather than distributing the controversial Kids and Dogma, Disney allowed Miramax founders Harvey and Bob Weinstein to buy the films back and set up short-lived companies to distribute them. But those potatoes were as small as they were hot. In the case of Fahrenheit 9/11, Eisner wasn't about to let the windfall escape into the Weinstein brothers' pockets. Nor could Disney take the PR hit that would result from backtracking and distributing the movie itself.

Eisner's solution: Generate the illusion of outside distribution while orchestrating a deal that allowed Disney to reap most of the profits. Here's how the dazzling deal worked. On paper, the Weinstein brothers bought the rights to Fahrenheit 9/11 from Miramax. The Weinsteins then transferred the rights to a corporate front called Fellowship Adventure Group. In turn, that company outsourced the documentary's theatrical distribution rights (principally to Lions Gate Films, IFC Films, and Alliance Atlantis Vivafilms) and video distribution rights (to Columbia Tristar Home Entertainment).

Because of the buzz and prestige attached to Fahrenheit 9/11, Harvey Weinstein extracted extremely favorable terms from these distributors, about one-third of what distributors typically charge. Their cut amounted to slightly more than 12 percent of the total they collected from the theaters. As a result, Fahrenheit 9/11's net receipts—what remains after the distributors deduct their percentage and their out-of-pocket expenses (mounting an ad campaign, making prints, dubbing the film)—would be much higher than those of a typical Hollywood film.

Fahrenheit 9/11, now an event, took in more than $228 million in ticket sales worldwide, a record for a documentary, and sold 3 million DVDs, which brought in another $30 million in royalties. After the theaters took their share of the movie's gross (roughly 50 percent) and distributors deducted the marketing expenses (including prints, advertising, dubbing, and custom clearance) and took their own cut, the net receipts returned to Disney were $78 million.

Disney now had to pay Michael Moore's profit participation. Under normal circumstances, documentaries rarely, if ever, make profits (especially if distributors charge the usual 33 percent fee). So, when Miramax made the deal for Fahrenheit 9/11, it allowed Moore a generous profit participation—which turned out to be 27 percent of the film's net receipts. Disney, in honoring this deal, paid Moore a stunning $21 million. Moore never disclosed the amount of his profit participation. When asked about it, the proletarian Moore joked to reporters on a conference call, "I don't read the contracts."

What of Disney? After repaying itself $11 million for acquisition costs, it booked a $46 million net profit, which Eisner split between two subsidiaries, the Disney Foundation and Miramax. While it was far less than Disney made on children's fare such as Finding Nemo, it was not a bad outcome. The Weinstein brothers also made a multimillion-dollar profit. They had a deal with Disney that contractually entitled them to a bonus of between 30 percent and 40 percent of the net profits on any film that they produced—in this case, that came out to about $8 million per brother. But Michael Moore had perhaps the happiest ending of all. Not only had he made $21 million, he already had a sequel in preproduction—Fahrenheit 9/11 ½.

Dowdy Intelligence

Maureen Dowd

In a scathing ad hominem attack on the Commission on Intelligence Capabilities in the New York Times today, Maureen Dowd protests: "It is absurd to have yet another investigation into the chuckleheaded assessments on Saddam's phantom W.M.D. that intentionally skirts how the $40 billion-a-year intelligence was molded and manufactured to fit the ideological schemes of those running the White House and Pentagon." She then implores, "Please, no more pantomime investigations."

Despite such ridicule from Dowd, the nine-person bipartisan Commission is not without credentials and the capability of intelligent speech. Co-chaired by Governor Charles S. Robb, the former Democratic Senator from Virginia, and Judge Laurence Silberman, who serves on both the U.S. Court of Appeals and U.S. Foreign Intelligence Surveillance Court of Review, its members include Walter Slocombe, President Clinton’s former Undersecretary of Defense, Judge Patricia Wald of the International Criminal Tribunal at the Hague, Senator John McCain, Republican from Arizona, and Charles Vest, the President of M.I.T. It had unprecedented access to all the documents used by the Intelligence Community in reaching its judgments about Iraq’s WMD programs, including what no journalist has ever seen: the chain of documents ranging from raw operational traffic produced by intelligence operators to finished intelligence products culminating in the President’s Daily Brief. Its 60-man staff interviewed hundreds of officials involved in producing and analyzing these documents. Aside from US intelligence reports, the Commission also reviewed the highly-classified assessments of British, Australian, and Israeli Commissions.

Doth Dowd protest too much? As it turns out, she has a a most compelling reason for scorning the Commission: its findings expose her own repeated misrepresentations of the event.

Consider Dowd’s amazingly smug assertion: "We all know what happened... Ahmad Chalabi conned his neocon pals, thinking he could run Iraq if he gave the Bush administration the smoking gun it needed to sell the war. Suddenly Curveball appeared, the relative of an aide to Mr. Chalabi, to become the lone C.I.A. source with the news that Iraq was cooking up biological agents in mobile facilities hidden from arms inspectors and Western spies."
Dowd here is partly correct: "Curveball"– an Iraqi engineer who defected to Germany– was a fabricator. According to the Commission, he provided false information that seriously misled the CIA to conclude Iraq had biological weapons. But she is wrong that Curveball was a product of the Bush administration. He defected during the Clinton Administration. He defected to Germany in 1999, and his (mis)information was passed by the Germans first to the DIA and then to the CIA a year or so before Bush was President. His false data on Iraq biological warfare went to Clinton's policy makers in 2000 and was included in the CIA’s revised 1999 National Intelligence Estimate (NIE). As he refused to (ever) meet with CIA or other US intelligence officers, the CIA could not squeeze more out of him than he gave to his German debriefers. Dowd’s assertion that "Suddenly Curveball appeared...." during the Bush administration is therefore demonstrably false. That Dowd repeated it in two columns-- March 31st and April 3rd-- after the facts were revealed in the Report gives her serial status.

The Commission also found that there was not a shred of evidence showing Curveball was influenced by Chalabi (as Dowd claimed in her March 31st column) or his INC organization. On page 107, the Commission says: "the CIA’s post-war investigations were unable to uncover any evidence that the INC or any other organization was directing Curveball to feed misleading information to the Intelligence Community. Instead, the post-war investigations concluded that Curveball’s reporting was not influenced by, controlled by, or connected to, the INC."

Moreover, whereas Dowd describes Chalabi as providing "the smoking gun" to the Bush Administration, the Commission concludes " In fact, over all, CIA’s post-war investigations revealed that INC-related sources had a minimal impact on pre-war assessments."

The Commission also undercuts an idea that has run amok among Dowd, as well as journalists at Newsweek and the New Yorker, that the CIA's faulty analysis of intelligence was the result of political pressure. On the contrary, the Commission found "Analysts universally asserted that in no instance did political pressure cause them to skew or alter any of their analytical judgments. We conclude that it was the paucity of intelligence and poor analytical tradecraft, rather than political pressure, that produced the inaccurate pre-war intelligence assessments."

The Commissions’ report is well worth reading (especially for journalists reporting on the issue). It shows that the enormous intelligence failure went beyond fabricating defectors. Technical intelligence, which CIA officials in the 1980s promised would provide an electronic Maginot Line against deception, proved to be just as vulnerable to error as human intelligence. Indeed, according to the report, it was the satellite imagery from Iraq that led to the staggering mistakes about Iraq’s chemical weapons. The problem lies in the elusive nature of "intelligence" itself. Whether obtained from humans , communication interceptors, or satellite cameras, the data requires interpretation. Unlike marbles, which can be lined up by size or color, each fragment of intelligence must be selected and placed in a scheme that exists in the mind of the beholder. In this case, the mind of the beholder, the CIA, was at least temporarily deranged between 1998 and 2003.

Rise Of The Tube Moguls

Brad Grey Toasts Jeff Bewkes

A common thread runs through the appointments of Robert Iger as CEO at Disney, Sir Howard Stringer as Chairman of Sony, Tom Freston as Co-President of Viacom, Brad Grey as CEO od Paramount, Gail Berman as President of Paramount, Jeffrey Bewkes as President of the Time Warner Entertainment & Networks Group , and Peter Chernin as President of the Fox Entertainment Group. They are all former top TV executives.

The ascendency of the tube moguls should not come as a surprise– at least not to readers of The Big Picture. What used to be the movie business, centered in "movie houses," has been transformed into the home-entertainment business, centered around TV sets. Old Hollywood studios–prior to 1948– owned or controlled movie houses; New Hollywood studios– or their corporate parents– own or control television outlets. In fact, they own all six broadcast networks in America, almost all the principal cable networks in America, and most of the Pay-TV channels in America.

Underlying this transformation is a singular reality: most of the adult population no longer goes to the movies on a regular basis. As late as 1948, over two-thirds of Americans went to the movies weekly. Now barely 10 percent of Americans go in an average week (and, even in this sliver of the population, most of the frequent movie-goers are teenagers.) Where did the audience go? On any given night, over 90 percent of the American population is at home watching something on a television set. Naturally, Hollywood followed that mass audience home.

The numbers, which I reveal in Table 1 of The Big Picture, tell the story: ticket sales from theaters, which had provided all the studio revenues in 1948, provided less than 20 percent of the studios’ revenues in 2003 . Instead, home entertainment– including television, Pay-TV, DVD, and videos– provided more than 82 percent of the studios' revenues . Further, whereas as the high costs of print and advertising eat away most, if not all, of theatrical revenues, the studios retain the lion's share of the home entertainment revenues.
These lucrative home entertainment earnings have transformed the way Hollywood operates. Theatrical releases, despite the blinding allure they hold for the media, now serve essentially as launching platforms for its products for the home market, much like the runways at money-losing fashion shows establish brands for downstream consumer markets.

With New Hollywood's takeover of the television now all but complete-- see my X-Ray of the 6 major studios' media holdings-- the line of succession now runs to the gatekeepers of its El Dorado: the tube executives

Send In The Aliens

Milla Jovovich

Furthering the Midas formula for New Hollywood, Twentieth Century Fox arranged in 1996 for the then governor of Nevada, Bob Miller, to dedicate Nevada’s Highway 375 as an "Extraterrestrial Highway" on which aliens would be granted safe haven when they landed their UFOs. The studio then unveiled a beacon on it near the town of Rachel, Nevada. This monument, according to the Fox news release, pointed to "Area 51"–where the U.S. military operates "a top secret alien study project." In fact, there is no such military base or "Area 51", but Fox assumed it had license to stretch the boundaries of reality for the opening of Independence Day– a Fox movie that, not unlike the news release, depicted "Area 51" as the U.S. government base for alien spacecraft. So while its beacon had only problematic navigational utility to any visitors from alien heavens searching for "Area 51," it had great value in luring entertainment journalists by the busload along the now official Extraterrestrial Highway to the putative periphery of the non-existing "Area 51." These investigative junkets (helped along with the usual studio-provided terrestrial gift bags) resulted in hundreds of news stories about the alien sanctuary.

The reason that Fox went to such lengths to establish Area 51 is that the mining of the paranoid fantasy about government machination to conceal space invaders from the public produces gold in the form of licensing rights for the New Hollywood. Steven Spielberg deserves much credit for developing the mother lode of this El Dorado. In his enormously-successful Close Encounters of the Third Kind (1977), the US government is so deeply involved in concealing the alien abductions that it stages a fake nerve-gas attack to hide its transactions with extraterrestrials. The deception pays off when, in an inspired ending, the aliens exchange the humans they have been abducting for experimental purposes for a busload of American astronauts. Spielberg expanded on the theme with E.T.: The Extra-Terrestrial (1982), which not only broke box-office records around the world, but opened up the universe of merchandise licensing which heretofore largely been the preserve of Disney. He also produced the franchise, Men in Black (in which the government not only shelters ETs but systematically erases the memories of civilians exposed to alien visitors) and the miniseries Taken about alien abductions (its tag line: "Some secrets we keep. Some are kept from us.")

These Spielbergesque fantasies neatly fit the requisite in New Hollywood for movies that could serve as launching pads for the raft of other products– including videos, games, toys, TV spinoffs and rides– that now kept it afloat. So others followed suit. Fox, for example, used The X-Files television series to help establish the Fox network.

Ironically, in promoting a view of governments as paternalistic institutions that create elaborate illusions to shield citizens from developments with which they cannot cope, studios may be extrapolating from the strategies they themselves use to dupe the public. What else is the Extraterrestrial Highway but a brilliant con job? The political logic of Hollywood may seem other-worldly, but, as The Big Picture explains, there is a decided method in its madness .

The Money Shot

William Safire

The lucidity prize for summing up my entire 396-page book in a succinct sentence goes to master wordsmith William Safire. In his column in today’s New York Times Magazine, he writes: "In The Big Picture: The New Logic of Money and Power in Hollywood, the investigative author Edward Jay Epstein holds that what used to be the movie business, centered in "movie houses," has been transformed into the home-entertainment business." That transformation, in a nutshell, is the key to understanding the New Hollywood.

Even though today's Hollywood studios may have the same names, logos and back lots as their Old Hollywood counterparts, they are radically different creatures. The Old Hollywood studios owned movie houses; the New Hollywood studios– or their corporate parents– own television conduits, including all six broadcast networks, all the principal cable networks (including ESPN), and most of the pay-TV channels. The Old Hollywood studios made virtually all their money from the sale of tickets at box-office; the new Hollywood studios make most of their money from licensing products, including movies, TV shows, and videos, for home entertainment. For the extent of the TV windfall alone, see the answer to my Question of the Day.

Underlying this transformation is the reality that most of the adult population no longer goes to the movies weekly. Consider: as late as 1948, over two-thirds of Americans went to the movies weekly. Nowadays barely 10 percent of Americans go in an average week (and most of today's frequent-goers are teens). Today's mass audience-- over 90 percent of the population-- is at home watching something on a television set.

The ineluctable metamorphosis of Hollywood into a provider of home entertainment brought with it a new global logic. For one thing, unlike the movie business, the television business is licensed, franchised, and regulated by government authorities.

If this sea change has remained elusive to the outside world, that is not accidental. The owners of the new Hollywood go to considerable lengths to conceal the breakdown of their cash flows they garner from home entertainment. Once the numbers are known– and I provide the breakdowns in The Big Picture– it becomes clear that all that remains of the Old Hollywood is institutionalized nostalgia, self-generated myths, and an outdated vocabulary.

Willful Blindness

"Willful blindness involves the conscious avoidance of the truth"
-- Merriam-Webster Dictionary of Law

In Hollywood reporting willful blindness can be found in the media’s avoidance of any performance measures for moguls that might get undercut "gotcha" personality stories. This eyes-wide-shut practice serves a truly gawkeresque purpose: it allows entertainment journalists to focus on juicy tidbits about the bad manners of moguls while ignoring, or at least holding in abeyance, readily-available facts that might distract their audience from them.

Consider, for example, the field day. or, more precisely, field decade, that the media has enjoyed in its disparagement of Disney’s Michael Eisner. The stories about Eisner’s bad behavior began soon after Jeffrey Katzenberg, Disney’s talented studio chief, left in 1994, intensified after Eisner’s clumsy firing of Michael Ovitz in 1996, and became a veritable feeding frenzy after Eisner got rid of Roy Disney, Walt Disney’s nephew, in 2003. The rehash of items about Eisner's insensitive language (eg. describing Katzenberg as a "midget"), nepotistic decisions (eg. hiring his friend Ovitz), back-stabbing (eg. firing Ovitz) and rich payoffs (eg., honoring the compensation committee’s negotiated $140 million settlement with Ovitz) gradually coalesced into a media morality play: how Eisner's "dark side" led to Disney’s near downfall. To keep the story plausible, entertainment journalists kept their eyes wide shut to the numbers that showed that Eisner, even with the "dark side" that their moral compasses located, had transformed Disney into a huge financial success.


Willful blindness conveniently allowed these journalists to miss the most obvious measure of performance: the valuation of Disney by the stock market. Here are the actual figures: in 1984, when Eisner took over Disney, the (split corrected) Disney share price $1.20, giving Disney a market value of only $1.7 billion; in 1994, when Katzenberg left, the share price was $12.90, Disney had a market value of $18.6 billion; today the share price is $28.5, giving the company a market value of $55.8 billion. So under Eisner, his bad manners and questionable pay offs not withstanding, Disney’s market value has increased $54 billion. Even taking inflation into account between 1984 and 2005, the company increased 18 times in value under Eisner. In view of this enormous business success, it is not surprising that Fortune’s 2005 poll of 10,000 business executives rated Disney as the most admired company in the entertainment industry. These executives evidently valued good performance over bad manners.

Eisner achieved the $54 billion increase in the company’s value not because of his "dark side" but because he recognized that Disney’s future would be in home entertainment– not movie theaters– and, to move Disney in this direction, boldly bought Capital Cities/ABC in 1996 for $19 billion. Disney acquired not only 10 ABC television stations in the biggest advertising markets and the ABC network, but 80 percent of ESPN which turned out to be a huge money-machine. With this coup, Disney moved to the forefront of home entertainment, which is now the heart (if not the soul) of the new Hollywood. As I demonstrate in my book The Big Picture, the logic of money and power behind the new Hollywood is not always transparent. For a closer look at why Disney makes record profits even when its movies bombed at the box-office, see the answer to my Question of the Day on my web site.

Lighting Hollywood's Camera Obscura

Hedy Lamarr

The screenwriter William Goldman famously explained Hollywood this way: nobody knows anything. He is right– up to this point. The decisions of Hollywood studios seem inexplicable to anyone who is not privy to what is perhaps their most carefully guarded secret: the breakdown of the money made from sources other than movie houses. Despite the tsunamis of back-stabbing and self-idolizing anecdotes about mini-moguls that all but drown the entertainment media, there is a Saharan dearth of information about actual cash flows from such after-markets as television networks, cable television, Pay-TV, and DVD sales.

If these numbers are obscure that is not accidental. Studios have no interest in providing a road map to their El Dorado to those who might want to claim a share of the gold, including talent agents, stars, producers, directors, writers, and equity partners. And, as of now, no regulatory agency requires divulging this information. So just as the studios keep their patrons in the dark in movie theaters, they keep their other audiences in the industry– and media– in the dark about the magnitude of these cash flows.


Once the lights go on– and I provide the numbers and breakdowns in The Big Picture– the studios’ decisions not only are explicable but the business model is more relentlessly logical than those of many non-creative industries. They demonstrate that those who ask how the movie industry can possibly make sense are asking the wrong question. There is (no longer) a movie industry, there is an entertainment industry. Consider, for example, Table I, in my book. The ticket sales from theaters, which had provided all the revenues in 1948, provided less than 20 percent of the studios’ revenues in 2003 . Instead, home entertainment in the form of television, Pay-TV, DVD, and videos provided more than 80 percent of the studios' revenues in 2003. This tidal shift reflects this underlying reality: on any given night, less than 2 percent of Americans go to movie theaters while over 95 percent stay home to watch something on TV. Since the advertising and other marketing costs associated with DVD sales and television licensing are minimal, the six big studios earn a veritable ocean of bottom-line profits from this home market. These rich streams, which studios understandably prefer to keep private in their camera obscurae, have transformed the way Hollywood operates. Theatrical releases, despite the blinding allure they hold for the media, now serve essentially as launching platforms for licensing rights, much like the runways at haute couture fashion shows.

Even in the face of this forced march towards home entertainment, there are notable disconnects between the economic and social logic of the Hollywood community. See, for example, the answer to today's Question Of The Day– "Is movie sex an asset or a liability in Hollywood's economy today?"

Logic of Hollywood

My book has finally made it to the book stores. What is it about? The Big Picture is neither pro nor anti Hollywood: it is a demystification of it. The thesis, as perverse as it may sound, is that there is an underlying logic to today’s multibillion-dollar entertainment economy--and that those who run the industry understand it

The gross misunderstanding most people have about Hollywood proceeds from the assumption that the business is about making movies. Once upon a time, it was: as late as 1948, two-thirds of Americans went to the movies every week and the tickets they bought accounted for virtually all of Hollywood's profits. But the lights blinked out in that universe more than half a century ago, obliterated by the bright blue glow of television.


Today, the big picture is very different. On an average night about 4 million Americans go to the movies, while more than 260 million Americans stay home to watch something-- a program, video, DVD-- on television. Hollywood may continue to pay lip service to its ever-diminishing audience of moviegoers, but it now makes its real money from the home audience. To tighten their grip on it, the studios gradually extended their domain over the entire television industry. All six broadcast networks and most of the commercial cable channels are now owned by the corporate parents of the six big studios-- new Hollywood's sexopoly -- and the studios make most, if not all their money, from that captive home audience. As far as the studios are concerned, the main function of the remaining moviegoing audience-- barely ten percent of the population-- is to help establish a movie in the public’s mind for the all-important home market. To get it, they go after that part of it they can most efficiently find. Happily for the studios, the audience that has proved easiest to find (because they’re home watching TV), lasso (with a barrage of 30-seconds ads) and herd to the multiplexes for big opening weekends is also the primary audience for videos, merchandising tie-ins, and character-driven video games: teenagers. As a result, people under 21 now make up over 62 percent of habitual moviegoers.

Not surprisingly, the creative decisions of the sexopoly are largely driven by the economic necessity of capturing the home audience. But that is not the whole story. There is also a social logic involving awards, prestige, star worship, publicity-mongering, power, and even the impulse to make a work of art, which, though less tangible, also informs the Big Picture.

Book reviews