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Open House

Heat Wave Poses more Energy Questions; Martha Stewart Moves In; Pet-Proofing

Aired August 05, 2006 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BETTY NGUYEN, CNN ANCHOR: "Now in the News." Take a look at these pictures coming in from Kiryat Shmona, Israel. You can see the smoke billowing into the air. Two different areas there it appears. And when we had pictures of it a little bit earlier, it looked like it was in a residential area. Now we are still waiting on word on casualties as these missiles have hit in Kiryat Shmona, Israel. And as soon as we get that, we will bring it to you. But no doubt the shelling continues on both sides.
Across the border explosions in Israel. Earlier this morning we showed you live images of rockets slamming into an Israeli village in Metulla. Haifa has also been hit in recent hours. Now Israeli police say nine people were wounded there.

And as this crisis continues we have more word on Israel launching an aerial assault on the Lebanese city of Tyre. Look at the damage here. Israeli jets and gunships converge on the city as the offensive escalates. Israel says at least eight of its commandos were wounded while trying to disarm the Hezbollah stronghold.

In other news, results of a second doping test on Tour de France winner Floyd Landis just this morning was positive. He was immediately dismissed from his cycling team. It is still undecided though whether Landis will lose his championship. Landis is appealing. He says he is innocent.

And out with the old, check this out, and in with the new. Look at that come down right there to the right of the screen. This is video from Hartsfield-Jackson International Airport in Atlanta. Just a few minutes ago crews leveled an old air traffic control tower. They need room for continued work at the airport. But you see the new tower still standing after the implosion.

"OPEN HOUSE" with Gerri Willis begins right now.

GERRI WILLIS, CNN ANCHOR: The energy crisis gets worse and relief seems nowhere in sight. We'll talk to one senator about solutions.

Plus, Martha Stewart is back with a new project, Martha Homes. Can they breathe new life into her company? I sit down with the domestic diva.

Good morning, everyone. I'm Gerri Willis and this is OPEN HOUSE.

We'll get so Martha in just a few minutes. But first we need to talk about power problems. Temperatures soared above 100 degrees across the country this week. Electric companies and cities urged users to cut back as New York, Washington, and Boston set all-time records for electric demand. And in Chicago, part of the city's Southside was evacuated, up to 15,000 people, after the power went out. More than 180 deaths have been blamed on the heat in the last two weeks alone.

New York City Mayor Michael Bloomberg says the country lacks a clear energy policy. Can Washington fix the problem? Senator Craig Thomas, a Republican from Wyoming, is a member of the Senate's Energy and Natural Resources Committee.

Thanks for joining us today, Senator. I know you're busy. We appreciate your time.

SEN. CRAIG THOMAS (R), WYOMING: My pleasure.

WILLIS: All right. Well, let's get down to it. You know, we have got people dying in cities across the country. Chicago, large neighborhoods being evacuated. What is Congress doing?

THOMAS: Well, Congress has a policy and we're moving towards it. You can't implement it in a minute. Bloomberg is wrong. There is a federal policy. We're moving forward.

We've also -- you have to admit that we have had a real problem with energy recently. It didn't have near the impact it did a few years ago, partly because some of the things have been done but there's a great deal more to do. There's no question.

WILLIS: And let me interrupt you there. Because I want you to hear exactly what the mayor of New York City had to say and get you to react. Listen to this.

THOMAS: OK.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG, NEW YORK CITY: Everybody seems to lack the political courage to stand up and have a long-term policy that would require sacrifice and change. And unless we do that, unless we go to alternative sources of fuel and reduce the consumption, we are going to continue to denigrate the atmosphere and the quality of life that we are going to leave for our children.

(END VIDEO CLIP)

WILLIS: Senator, what do you have to say to that?

THOMAS: Well, I don't disagree with it. The only thing I disagree with is that's what we're doing now. We're looking at new corridors for transmission. We're looking for ways and the policy includes giving some incentives to increasing the capacity of lines. We're looking at the opportunity to produce fuel in the different way, to turn -- convert coal, for example, to electricity and to gas and all these things are happening. WILLIS: And in fact, your state is a big producer of coal, we should mention. Let's talk about the bill. Because you mention those incentives to encourage these companies to make the kinds of improvements they should. Why give these companies incentives? Wouldn't it be smarter to slap them with fines for not upgrading the transmission lines? For not fixing the generators?

THOMAS: Well, it's not a matter of fixing the generator, it's a matter of the capacity and demand. And quite frankly, part of the problem and part of the issue, the resolution is going to be more efficient use, more conservation, not only in gas and oil but also in electricity. So that is part of it. And that's part of the plan.

The incentives are -- there is a good deal of investment going on and there should be because there's a good deal of profit being made in energy now. It ought to be reinvested and that is happening.

WILLIS: All right. Well, you know, your bill would suggest even more profit out there opening up the Arctic National Wildlife Refuge for development for producing oil. You know, it begs the question here, can we find solutions to this energy crisis, green solutions or is it impossible to do that, Senator?

THOMAS: No. It's very possible. I think you have to understand, though, that there's at least two elements to this thing. One is the long term where we find alternative sources, where we're looking for wind and energy and sun and all those things.

The other one is what are we going to do next year and five years from now by doing the things we already know how to do and that's what we're providing incentives to move towards the short term, plus research for the long term. It's not easy, you know, the mayor is just saying, well, the government ought to say you have to do this. Saying you have to do it is not enough.

WILLIS: Well, and I know a lot of people out there, it's not just Mayor Bloomberg who is losing his patience, it's a lot of consumers out there who have been struggling with a lack of power and are seeking answers. Senator, we're happy to come back to you in a month or two and see how progress is getting along on this very topic. Thanks for joining us.

THOMAS: Thank you, very much.

WILLIS: And we'll continue on this program to follow the energy problems in this country. Just as we continue to follow the soft landing of the housing market. Slumping sales have some home builders slowing down. But one CEO is pushing forward with an ambition plan involving a controversial celebrity.

(BEGIN VIDEOTAPE)

BRUCE KARATZ, CHMN. & CEO, KB HOME: Well, there is no one like Martha Stewart. If you think of who else you would select when you think of somebody who knows homes and living, I think you'd be tough time trying to find a number two. WILLIS: Do you worry, are you concerned that she has been through a lot in the last year? That your effort could be hurt? Could it hurt sales and earnings at KB if Martha Stewart's star were to fall or become tarnished in any way?

KARATZ: I don't think there was any risk of that today. Back when we were thinking about this over a year ago and she had just come through her problems, I would not be totally candid if I didn't say that thought crossed our mind.

Very quickly, I realized that, one, people -- Martha, you know, whatever she did, I'm not sure many people understand what she did wrong, but whatever she did she paid the price. She's gone on. From the time I met her until today, I have never heard her complain. I think it's quite secure, her future and people's desire to be somehow connected to her.

WILLIS: Who is the target market? Is it Martha wannabes? Is it people who followed her career for a long time? Or is it anybody at all?

KARATZ: What I found is, one, women as a general rule have a huge amount of respect for Martha. They believe in her. They believe her ideas have merit. And they like her. And so I would say, while you can't pigeonhole who that market is, I think it's very broad. I think it goes through an enormous breadth of incomes.

And finally what it comes down to is, what we know being in the home building business for 50 years. Women make the decision about who buy -- if it's a couple, the woman is the one that makes a decision.

WILLIS: Which is as it should be, Bruce.

(LAUGHTER)

KARATZ: Well, of course, of course. I'm not going to argue with that.

(LAUGHTER)

(END VIDEOTAPE)

WILLIS: We have so much more for you today OPEN HOUSE. Coming up, what it's like to be surrounded by Martha? We take you on a personal tour of the new development from the domestic diva herself. But what about the Martha brand? The magazine, the products, the TV show? Can she and her company finally overcome what she calls her personal problems? We'll ask her next.

But first, your "Tip of the Day."

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Building a new home is exciting, but be careful about getting into business with the wrong people. Obtain bids from at least three licensed contractors. And make sure you understand the reasons for the variations in price. Ask for references or better yet ask to see some of the contractor's previous work. You can also call your local Better Business Bureau to check on any disputes or canceled contracts.

Speaking of contracts, make sure yours has all the details, including start and end dates, material specs and a payment schedule. Put just 10 percent down. Pay 25 percent when plumbing and electrical work are done, 25 percent after cabinets and windows, and 25 percent for flooring and painting. And don't hand over the last 15 percent on the final day. It's called retainage and you should keep it for 30 extra days just to make sure everything is in working order.

More importantly make sure your contractor is properly insured, otherwise, you could be held accountable. And that's your "Tip of the Day."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: It's one thing to design your home like Martha Stewart would, it is an entirely different thing to live in an actual Martha home. But some folks in Atlanta will soon have the chance to do just that.

Minutes after she inspected the new homes for the very first time, Martha gave us a personal tour.

(BEGIN VIDEOTAPE)

WILLIS: OK. Martha, here we are on Martha Stewart Lane, surrounded by your houses.

MARTHA STEWART, FOUNDER, MARTHA STEWART OMNIMEDIA: Aren't they pretty?

WILLIS: They're very pretty. It's one thing though to have products in Kmart, it's another thing to have a TV show. But people are going to grow up in this community. What is that like for you?

STEWART: Well, I think it's very appropriate, actually, because I am really interested in how people live. I based my entire career on good living and good examples for good living. And living on Martha Stewart lane here in Atlanta is to me -- I want to buy one of these houses.

WILLIS: So tell me, these are all based on your own home designs.

STEWART: They are. I own several homes. One in Maine called Skylands, one in East Hampton called...

WILLIS: Would we see that here.

STEWART: You'll see several Skylands. This is a Skylands. That is a Skylands, with the stone. There is Lily Pond Lane, which is in East Hampton, Long Island, on a beautiful street called Lily Pond. And that is a shingle style house with a bright green trim. And that's a big Lily Pond version right there.

WILLIS: This is a big Lily Pond?

STEWART: Yes.

WILLIS: Let's go look.

STEWART: OK.

WILLIS: You have got to show me the interior.

STEWART: OK. Come on in. Nice side lights on the doors. Beautiful clear glass on the doors so you can get lots and lots of light. Thank you.

(LAUGHTER)

STEWART: Thank you for wiping your feet.

WILLIS: Let's talk about this room. This is the living room but it is not the grandest room in the house.

STEWART: Well, it's one of the living rooms. This is a gathering room. I call it sort of a gathering room.

WILLIS: Grand foyer.

(CROSSTALK)

STEWART: And a wonderful, wonderful hallway which takes you right outside. All these rooms face this very oversized terrace. Now two big tables can be here. And you can sit with your friends and have 12 people easily for dinner. And that's nice. And it's easy access to the kitchen right through the dining room. Here you have -- you know, down south we have found that dining rooms are still important.

WILLIS: So for me -- for my money, the big room in the house is the kitchen. It's all about the kitchen for me.

STEWART: Well, here you have I think one of the most generous- sized kitchens ever for a house of this kind, and I am very pleased with this. This is modeled after my Lilly Pond kitchen and I have an island a little bit bigger than this one, believe it or not, and I love it.

We have a nice sink there, two dishwashers, which again, for modern entertaining is a big time saver because you can put pots and pans in one and dishes in the other. Lots and lots of storage space. Also your microwave, your oversized stove. I love this stove. Isn't this great with eight burners?

WILLIS: That's so entertaining. STEWART: Yes, just think, if you're making crepes for 20 people. You can have eight crepe pans going at the same time.

WILLIS: Did KB ever come to you and say, OK, you've got calm it down, enough here, no eight burners?

STEWART: They have been the most wonderful partners with us. Because they listen, they accommodate our desires, and they know that we know the customer.

WILLIS: Obviously the master is really something to see. Can you show me that?

STEWART: Oh, I love this room. I love it.

WILLIS: I like the yellow.

STEWART: Oh, isn't it pretty? So here you can sit and watch the fire. You can read, you can talk in this beautiful sitting area and then in here is the bedroom. Again, with a fireplace.

WILLIS: Well, you know what I find interesting, his and her bathrooms. The key to marital bliss.

STEWART: Oh yes. Oh yes. So here is the his bathroom. And a wonderful storage spot here for all his toiletries and his -- he can keep his traveling things in one side. So it is easy to pack. Extra tall shower.

And then over here is the ladies bathroom. The her bathroom.

WILLIS: now this is a -- much more feminine.

STEWART: I want to get dressed in front of this big mirror. I think this is fantastic. You will never go out with a crooked hem or a torn stocking, you know?

WILLIS: Absolutely not.

STEWART: A big closet. And a very spacious bathroom. With a makeup table.

WILLIS: Is the woman's bathroom just a little bigger than the...

STEWART: It is bigger, but women tend to spend a little bit more time in the bathroom than men do. And, you know, I could do my yoga here. I can do my Pilates right on this floor, it's very nice. And then I can take my soaking bath. How great.

WILLIS: Perfection.

(END VIDEOTAPE)

WILLIS: The new homes represent an important step for Martha and her company. It's a step away from what she calls her personal problem, and what she hopes is a step toward bringing her company back to the success it once was.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Martha Stewart, there's the woman, and then there's the Martha brand. The magazines, the TV shows, the Web site, the books, the products, 12 months after Martha Stewart paid her debt to society for lying to investigators about a suspicious stock trade, questions linger about the company that markets her brands.

Can Martha Stewart Living Omnimedia return to its glory years?

(on camera): What will it take to get earnings and revenue to those levels again?

STEWART: We have, in the last year, done a tremendous amount to repair the damage done by my personal problem. And everything is going great guns. Publishing is doing extremely well.

WILLIS (voice-over): In fact, ad sales at Martha's signature magazine are up 29 percent this quarter over the same period last year. With a new magazine just getting started and that's not the only positive.

STEWART: We just signed the wonderful Federated Department Store deal. You know that Federated is now Macy's 813 stores nationwide, so it is the nationwide chain and we are designing a tremendous number of wonderful products.

WILLIS: The Macy's deal is part after broader effort to merchandise Martha. A recent earnings report was well received but the true test of Martha's power as a brand, her stock price, continues to languish.

IVAN FEINSTEIN, MATRIX INVESTMENT RESEARCH: One, you have a difficult media environment. Two, you have I think even before she had her personal problem, her popularity was kind of peaking and revenue had seen the kind of peaks. You know, she reached the saturation of her core market.

WILLIS: And while the company in the short term can rely on new Martha products to boost profits, it's the continuous exposure of daily TV that delivers consistent product sales. And there could be more trouble on the horizon.

This fall Food Network star Rachael Ray will take on Martha in markets across the country with her own syndicated TV show.

(on camera): Is she a competitive threat in any way?

STEWART: Who?

WILLIS: Rachael Ray.

STEWART: Oh, Rachael. I don't know yet. I'm waiting to see.

WILLIS (voice-over): One thing is for sure. If Martha Stewart the brand is still in recovery, Martha Stewart the woman is back in charge, charting her company and her brand's future even though she is not sitting at the CEO's desk.

STEWART: I have a very broad role in the company. I am the creative force behind the entire company. And as such -- and I always have been, the company is well on its way to total recovery and to a new area of growth. A new period of great growth for Martha Stewart Living.

WILLIS: Martha talks a lot about her company being back on top. Some perspective, though, despite her personal appeal and her big fan base, right now the stock of Martha Stewart Omnimedia sits just above its 52-week low.

Still ahead, did you know you could have an energy efficient mortgage? Learn how to get one and how it could save you money.

Then, dogs and cats can bring so much joy into a home. But they can also cause quite a bit of damage, as well. How to pet-proof that home when we come right back.

(COMMERCIAL BREAK)

WILLIS: Dogs and cats can bring so much love into a home. And they can also cause quite a mess. But if you take the right steps, pet-proofing could pay off big time.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): When you think pets, you probably think of cute, adorable, fuzzy, but what you may not realize is that this could turn into this, and do a real number on your home. Pet expert Bobby Dorafshar recommends a busy schedule and boundaries to prevent pet messes.

BOBBY DORAFSHAR, NEW LEASH ON LIFE PET RESCUE: Keep them a little bit busy. Socialize them, work with them, and let them know what is not acceptable.

WILLIS (on camera): That sounds like a good idea, but putting it in practice could be harder.

DORAFSHAR: It is very simple, actually. If you don't want your dog to jump on the couch, for example, you've got to teach him it's not acceptable to go on the couch.

WILLIS: You know, one of the big problems is the dogs are constantly chewing on the furniture and the carpet. You name it. And they are really, really cute, it's hard to tell them no. But...

DORAFSHAR: One of the things you can do, you can get actually toys which the dog get busy with them. And very soon it gets so tired of chewing on that, the last thing he wants to do is chew on anything.

WILLIS: And the other problem of course is dog hair all over everything. DORAFSHAR: One of the things you want to do, you do not want to give them a bath every day or every week. You want to make sure you give him a good quality food. You want a daily brushing to get all the dead coat out.

WILLIS (voice-over): Bobby also recommends keeping the dog away from places where it can do damage while mom and dad are out.

(on camera): So, Bobby, you say to put the dog in a place where they won't do any damage. Enclose it off. How do you do that?

DORAFSHAR: Well, this is a great example. Perfect kitchen, all I do, get a baby gate. Put him at the door, and I'll make sure to the front, which there is no arm so the dog cannot climb over it.

WILLIS (voice-over): Keeping them confined inside and out is crucial.

(on camera): Here's my question for you, people spend a lot of money on plantings. How do you keep your dog from digging up all the plants and you know essentially wasting hundreds of dollars?

DORAFSHAR: You need to keep them busy a little bit outside. So get him to stop.

WILLIS: What, do I need a babysitter?

DORAFSHAR: Well, it's not that, it's just a matter of if they are home doing nothing, you bring the toys which actually dogs mentally keep themselves busy. Kong, very simple toy, or even he can get a beef bone. Put peanut butter inside of here. Let them have it and go.

WILLIS (voice-over): With a little work, your house and your four-legged friend can co-exist without any problems.

(END VIDEOTAPE)

WILLIS: As always, if you have an idea for a "Weekend Project," send us an e-mail to OpenHouse@CNN.com. And you can watch past "Weekend Projects" on our Web site CNN.com/OpenHouse.

Saving energy and saving money at the same time. How to get your hands on an energy efficient mortgage. That's coming up next on OPEN HOUSE.

(COMMERCIAL BREAK)

WILLIS: Let's face it, home improvements like replacing your furnace, can cost a bundle, but energy efficient mortgages let you roll in the cost of these improvements into your mortgage. Now that means higher monthly payments, but ideally lower utility bills.

To qualify for an energy efficient mortgage, get an appraisal with a certified energy rater in your state. Check out natresnet.org. Now these raters determine how you cut down on your utility bill. Then go to energystar.gov and look for lenders who offer special financing.

You will also want to choose the contractor wisely. There is no point in paying a largely monthly mortgage if your utility bills don't go down. So if you have any questions or tips you want to share with your fellow OPEN HOUSE, viewers send us an e-mail to OpenHouse@CNN.com.

As always we thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week right here on CNN.

And you can also catch us on HEADLINE NEWS every Saturday and Sunday at 5:30 p.m. Eastern time.

Don't go anywhere, your top stories are next on CNN SATURDAY.

Have a great weekend.

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