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[[underlined]] THE SECRETARY'S REPORT [[/underlined]]

Mr. Adams mentioned a variety of Smithsonian developments which had not been represented in the agenda papers distributed in advance of this meeting.

Purchase of the Cooper-Hewitt's Fox House

As approved in principle by the Regents on January 30, 1989 and subsequently in particular by the Chairman of the Executive Committee, the Institution closed on the purchase of the Fox House, a townhouse apartment building adjoining the Miller House of the Cooper-Hewitt Museum, for a total price of $3,727,000. With assistance from New York attorneys, the Museum currently has a petition pending before City authorities for permission to deny further tenancy upon the expiration of the tenants' present leases. Renovation of interior spaces will be undertaken as the apartments are vacated.

[[underlined]] Air & Space [[/underlined]] Magazine

The Secretary noted that expectations of an earlier payback from [[underlined]] Air & Space [[/underlined]] magazine have been dashed by the publication's inability to increase the subscription base beyond approximately 330,000 without a larger than prudent investment to that end. Accordingly, the magazine faces continuing losses of approximately $500,000 in accrual accounting, which requires reserves for the completion of paid subscriptions. While that does not represent a loss in cash flow, it appears on the books and raises questions about how long such losses ought to be sustained. Coincidentally, there is a feeling in some quarters that the magazine could be strengthened editorially, and steps are being taken in that direction. The Secretary mentioned that editorial and fiscal improvements for the magazine may redound to the benefit of an eventual fund-raising drive for the Air and Space Museum extension and to the credit of the Smithsonian should the magazine be continued as a joint venture with