The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.

MR. MacNeil: And I'm Robert MacNeil in York. After tonight's News Summary, we look at the last chapter of the Navy's Tailhook scandal and whether justice was done. Then Correspondent Elizabeth Farnsworth reports on the military tensions caused by North Korea. Finally, two media analysts evaluate the Viacom victory and the battle for Paramount. NEWS SUMMARY

MR. MacNeil: Adm. Frank Kelso, the chief of naval operations, announced his early retirement today, saying he'd become a lightning rod for the Navy's Tailhook scandal. Kelso said he'll retire in April, two months earlier than originally planned. Last week, a Navy judge said Kelso knew about the sexual abuse of women by Naval aviators at the 1991 Tailhook Convention -- Association Convention in Las Vegas and had attempted to thwart the Navy's investigation of it. But Kelso denied the charges, and the Pentagon's inspector general said he'd found no credible evidence against the admiral. At a news conference at his Pentagon office today, Kelso explained his decision.

ADM. FRANK KELSO: Well, I'm the senior naval officer here that attended Tailhook or had anything to do with it, so when the issue of Tailhook comes up and with the Navy, it strikes me I think it's timefor me to step away to bring a new leader in so that the lightning rod is gone.

MR. MacNeil: Kelso said he would not have resigned if questions about his honor and integrity remained. Today, Defense Sec. William Perry and Navy Sec. John Dalton both issued written statements saying they believe Kelso to be a man of both honor and integrity. We'll have more on the story right after this News Summary. Jim.

MR. LEHRER: U.S. Trade Rep. Mickey Kantor today accused Japan of keeping its cellular phone market closed to U.S. products. Kantor said the Motorola Company brought the complaint accusing Japan of violating a 1989 agreement to open up that market. He said a list of proposed trade sanctions would be published within a month. Kantor spoke at a Washington news conference.

MICKEY KANTOR: This is a clear cut and serious case of a failure by Japan to live up to its commitments. Our efforts to negotiate and resolve this issue with Japan has spanned nearly 10 years. Each time we thought that we reached a solution or removed market access barriers in this key high-technology sector, we have found only that new barriers appear to take its place. In my tenure as trade representative, I have noticed that some Japanese government officials are fond of blaming insufficient evidence or a lack of competitive products as a reason for limited success of foreign producers in Japan. Let's be clear that this excuse is false and disingenuous.

MR. LEHRER: Kantor did not specify what sanctions were being considered in the Motorola case.

MR. MacNeil: North Korea today agreed to allow international inspections at seven of its nuclear sites. The pact covers only facilities identified by North Korea as part of its nuclear research program. The U.S. and other western governments suspect North Korea has a nuclear weapons program underway at two other sites. Access to those sites is the subject of current talks with the U.S. We'll have more on the story later in the program.

MR. LEHRER: A man opened fire with a semiautomatic pistol at a Wendy's Restaurant in Tulsa, Oklahoma, today. Six people were wounded, two critically. At least three of the victims were high school students. The others worked at the restaurant. Police said the gunman was, himself, a Wendy's employee. They said he began shooting after an argument with the manager. He surrendered when police arrived. In Gainesville, Florida, today Danny Rolling pleaded "guilty" the murders of five college students in 1990. He had earlier pleaded "innocent," and a jury was about to be selected to hear the case. Prosecutors said they had been able to tie Rolling to the murders through genetic testing of evidence at the scenes. The judge said a jury will be empaneled now to recommend the death penalty or life in prison.

MR. MacNeil: President Clinton went to a police training academy in London, Ohio, today to talk about his anti-crime proposals. He asked the 350 officers and trainees to push Congress to pass a tough crime bill. He said the bill should include funding for 100,000 new police officers in the next five years.

PRESIDENT CLINTON: It will be paid for not by new taxes but through a violent crime trust fund that will pay for the entire crime bill, through reductions in the federal bureaucracy, reductions by attrition. We have proposed to reduce the number of federal employees over the next five years by 252,000. That's a 12 percent reduction, would make the federal government the smallest it's been in 30 years, and take the entire amount of money we get from the savings and put it in to fighting crime. I think it's a good swap.

MR. MacNeil: First Lady Hillary Rodham Clinton attacked the insurance industry again today, saying their media campaign against the administration's health care reform proposal was false. The industry ads criticize the Clinton plan for limiting health care options. Mrs. Clinton spoke to an American Legion Convention in Washington.

HILLARY RODHAM CLINTON: Do you know, these television advertisements that they've spent about $20 million on saying that we're going to take away your choice, well, that's just flat untrue. In fact, we're going to give you more choice, because the choice is not going to be your employer's and the choice is not going to be the government, the choice is going to be yours to make. The only choice we're trying to take away is those insurance companies that are funding that ad so that they can no longer choose to disqualify you from health care because they want to do so, or charge you more than they would have otherwise. We do want to take that choice away.

MR. MacNeil: The executive vice president of the Health Association of America said Mrs. Clinton has "chosen to be a broken record in attacking the industry." He said the Clinton plan was in trouble and the administration was shooting the messenger rather than discussing the issues.

MR. LEHRER: Viacom edged out the QVC Network today for control of Paramount Communications. It will pay nearly $10 billion in cash and stock for Paramount. Viacom owns Nickelodeon, MTV, and other cable channels. It signed a merger deal with Paramount in September, but QVC made a counter-offer, touching off a bidding war. We'll have more on this story later in the program. The Federal Reserve reported industrial production rose .5 percent last month. Most of the gains were at utilities to meet the demand for more electricity and gas.

MR. MacNeil: That's our summary of the news. Now it's on to the Tailhook scandal, military tensions in Korea, and Viacom wins the Paramount battle. FOCUS - TAILHOOK

MR. LEHRER: Adm. Kelso is our lead story tonight. Tailhook is the scandal and the convention where Navy and Marine fliers allegedly and blatantly abused several women. Adm. Frank Kelso is the chief of naval operations. He announced his early retirement today, saying he hoped it would help the Navy put an end to the Tailhook affair. That is one of the questions we'll ask after this backgrounder by Kwame Holman.

MR. HOLMAN: Ten months ago, Adm. Frank Kelso apologetically announced a Pentagon report accusing more than 175 Navy and Marine personnel of misconduct at the Tailhook Convention.

ADM. FRANK KELSO, Chief of Naval Operations: [April 23] This has been a difficult issue for the Navy, because it told us some of our people were not upholding the standards of behavior we expect of them. Tailhook also brought to light the fact that we had an institutional problem in how we treated women. In that regard, it was a watershed event that has brought about cultural change.

MR. HOLMAN: The investigation had focused on events at this Las Vegas hotel in September 1991, where a group of Navy and Marine pilots known as the Tailhook Association held their annual convention. Navy Lt. Paula Coughlin was the first of 26 women to come forward and say they were sexually assaulted at the convention. Coughlin said she was forced to run a gauntlet of officers who lined a hallway.

LT. PAULA COUGHLIN, U.S. Navy: [ABC News] I went down a hallway where every man in that hallway got a shot at me. They knew I was an officer. They knew I was an admiral'saide, and I think that that made the sport that much more rewarding. I -- they chanted "Admiral's aide" as I was passed down this line. There were hands down my, down my blouse. At one point when I dropped to the floor and I was biting the man who had his hands in my blouse, people were grabbing me, trying to pull my panties off, trying to shank my skirt.

MR. HOLMAN: Last April's report concluded that during the three days of the convention 83 women were assaulted by men, six men were assaulted by women, that there were instances of public and paid sex and that in those instances the people involved participated willingly.

ADM. FRANK KELSO: I didn't have any idea the sort of things that are in this report went on.

REPORTER: If I can follow on that, the report says there was -- it assumed an aura of tradition, and the young officers who attended Tailhook '91 felt the excesses that occurred there were condoned by the Navy. That's it.

ADM. FRANK KELSO: I'm telling you, I don't condone them, the sort of things that are reported in this report.

MR. HOLMAN: Then Navy Sec. Lawrence Garrett and two admirals had resigned over the Tailhook incident. The focus then turned on Kelso, the highest-ranking officer at the Tailhook Convention. He was among 32 top officers censured by the Pentagon over Tailhook last October. Then last week, a Navy judge said Kelso's attendance at Tailhook and interference with the investigation afterwards forced him to dismiss cases against two officers facing Tailhook charges. In announcing his retirement, effective at the end of April, Adm. Kelso stressed statements released today by Defense Sec. William Perry and Navy Sec. John Dalton attesting to his integrity.

ADM. FRANK KELSO: I could not have taken this course of action without the issue of my integrity and honesty being addressed. I believe the Secretary's statement and Sec. Dalton's statement address that and lay to rest any question about my honesty and integrity. I've told you all on several occasions that I would not retire until the end of Tailhook. I didn't want somebody else to come along and have to do that. I wanted to put into place the sort of actions we needed to fix the cultural problems that that showed, and I think I've done that. And I now think it's time for me to move on. It's -- and I do feel that I had a responsibility in this office to take on those actions and do that, and I have done that.

REPORTER: Adm. Kelso, what is the greatest lesson learned from Tailhook as far as you are concerned?

ADM. FRANK KELSO: Well, I think the greatest lesson learned from Tailhook is that we have to be more attentive to our house and what we do and how we act so that we can prevent something like Tailhook from happening. I greatly regret that I did not have the foresight to be able to see that Tailhook could occur. In hind sight, I clearly can see that. We need to work harder to be able to understand the changes that are taking place around us and to deal with them in a more, in an earlier time than to let us get into a case like Tailhook where we have a very difficult problem. It's - - as you've all noticed -- it's very, very difficult to come to an end to. I think this is the end of Tailhook.

MR. HOLMAN: The Kelso resignation comes just after the last of 140 Tailhook cases was dismissed, leaving no one court-martialed over the affair. Meanwhile, the woman who first brought the charges, Lt. Paula Coughlin, resigned last week from the Navy, citing continued harassment on the job.

MR. LEHRER: We get four views of this now. Barbara SpyridonPope was Assistant Secretary of the Navy for Manpower in the Bush administration. Congresswoman Pat Schroeder, Democrat of Colorado, is a member of the House Armed Services Committee. Commander Rosemary Mariner is a Naval aviator among the first group of women the Navy trained as pilots. She is here expressing her own views, not those of the staff or the Joint Chiefs of Staff, where she is now posted. And Robert Dunn, a retired vice admiral, was Deputy Chief of Naval Operations for Air Warfare and was a Naval aviator for 38 years until his retirement in 1989. Congresswoman Schroeder, is Tailhook over? Did Adm. Kelso's resignation put it behind the Navy today?

REP. SCHROEDER: Well, I'm very sad to say I suppose they pulled the plug on it and, and they're going to try and make it over. I'm very saddened by it. I thought that one of the cartoonists in Denver captured it the best. They had a picture of a sinking ship with Tailhook written on it, and all of the officers out in a little life boat, all the male officers, saying, "Well, it's a Navy tradition. The women always go down with the ship." That's exactly what happened. And to say that Tailhook was unique and this was the only one that got out of control is wrong. I think the judge's decision was very clear. There had been a long pattern of this. There had many, many memos to the command structure, including Adm. Kelso, that this was out of control. Any person in the Navy knew about this, and I think it's just very sad that at the end of these three years where we have been hoping for justice, we found those who worked the hardest to bring it are the ones who became victims of this whole thing. And that's tragic.

MR. LEHRER: Do you find it also tragic, Commander Mariner?

COMMANDER MARINER: I find many aspects of this whole episode something like a Greek tragedy, but I do think that this is the end of it. It should be the end of it, and there cannot be any more serious advancement for women in the Navy or for the Navy until we put this behind us and get on with the business at hand.

MR. LEHRER: When you say end of it, you mean end of the Tailhook investigation, what happened in Los Vegas in 1991, or the end of the kind of abuse and harassment that was seen at Tailhook?

COMMANDER MARINER: The kind of things that occurred at Tailhook were, in my opinion, an anomaly. There was a lot of spring break type behavior, and I have been to quite a few Tailhooks. The actual assault charges that were levied I think were still unusual behavior and has never been the norm in naval aviation.

MR. LEHRER: Sec. Pope, what's your view of what Adm. Kelso's resignation means to the end of or not the end of Tailhook? Should it mean the end of it?

SEC. POPE: I hope it does. I hope it closes the chapter on the Tailhook investigation. Adm. Kelso all along had said he would see it to the end. What the Navy has done throughout the last two years and since Tailhook came to light was to look at serious integration of women as a readiness issue, not as a social issue or a gender issue, but focus on, on full integration of women, admitting that there is a problem and trying to look at the future and not focusing on the past. And I think that Adm. Kelso's resignation with the Navy can now do this. He has been a lightning rod.

MR. LEHRER: Deservedly so?

SEC. POPE: No. I think whenever Tailhook comes, it focuses on, on the CNO. He is the senior Naval officer. I disagree with Congresswoman Schroeder on Judge Best's decision of last week. I've worked with Adm. Kelso for over four years, both personallyand professionally. The man has high integrity, high personal integrity, and high honor. He did not try to in any way influence the investigation, try to remove himself back from it. He wouldn't subject himself, you know, to putting pressure on another officer. So I think the kinds of decisions the judge made were without a lot of validation.

MR. LEHRER: Congresswoman Schroeder, you feel differently.

REP. SCHROEDER: You bet I do. I want to ask you, is there anywhere else in society where someone could be so damned by a decision -- and this was a very damning decision about Adm. Kelso's role in this and the role in the cover-up -- can you think of any place else where you could just say, well, we don't go along with that decision, that decision wasn't right? Of course, we're not going to appeal it and prove we were right because, you see, it would just take more time and money. Everything is fine. I'll just retire a couple of months early. Have a nice day. Meanwhile, the women who supposedly are now operating under much better conditions and so forth, we see the leading spokesman, Paula Coughlin, saying, I've had it, I'm up to here, I'm out of here. I am very troubled. I think the message of this is justice in the Navy is for the admirals, by the admirals, and of the admirals. If you look at this history, the people I respect were the Secretary of the Navy, Mr. Garrett, who stepped down and took responsibility, and now we've had three long years, and a very serious decision saying the cover- up has gone on and on and on and on. And all they were trying to do was hold junior officers accountable. I think under that situation the judge was right. Junior officers shouldn't have been held accountable if the top Navy brass was out there hobnobbing, watching the leg shaving, watching all the sexual chants and everything else, and not paying any attention to it. It looks like they're winking at it. And I just am very, very saddened that all this time and all this money, it came back to, well, you know, it's important, but it's not that important, and on to the bigger issues, and, well, a couple of months early, and that will pay it all off.

MR. LEHRER: Is that how you see it, Adm. Dunn, speaking of Admirals? You heard what the Congressman said, what we essentially have here is justice by admirals for admirals, and they're the only ones.

ADM. DUNN: Well, I'm very saddened that Congresswoman Schroeder has an attitude like that, and she's had that attitude for some time. And nothing we do seems to be able to change that attitude. Her mind is made up. But for the vast majority of people who have an open mind, I'd like them to know that some admirals have, in fact, received some very serious punishment. Vice Adm. Dunleavy, for example, could have retired as a three star; instead, he's retiring as a two-star admiral, which is a significant reduction in pay. I forget, but it goes into hundreds of thousands of dollars over a normal longevity. The Uniform Code of Military Justice spells out the way we conduct investigations. That's a law that was passed by the Congress of the United States. And as far as I can determine, the UCMJ was followed. There were some mistakes made along the way. Due process was violated for some people. That's unfortunate, but that's hind sight. I agree with Mrs. Pope and Rosemary and the others who say it's time to put Tailhook behind us. We can all look back. We can all grind our teeth. We can grind our axes, but the Navy's taken steps to move forward. I would hope that the others, the media, the Congress would take steps to move forward now.

MR. LEHRER: But as a practical matter now, Admiral, isn't it right for the people in charge to take responsibility when something goes wrong?

ADM. DUNN: Absolutely.

MR. LEHRER: What's so unusual about that?

ADM. DUNN: It's not unusual, and they did take charge. Adm. Dunleavy said it's my responsibility. Adm. Kelso said I was the senior one present, it's my responsibility. That doesn't necessarily mean that he has to jump off the ship. He might serve the Navy better -- and, in fact, I think Adm. Kelso did serve the Navy better by staying on where he could effect the reforms that were necessary as highlighted by this unfortunate Tailhook incident.

MR. LEHRER: Commander Mariner, the message -- you heard what Congresswoman Schroeder said and others have also said -- what message does -- you're there, you're in the Navy. You're a woman aviator. You're still in the United States Navy -- what message have you and your colleagues received from Tailhook as we sit here tonight?

COMMANDER MARINER: The message and what happened with Adm. Kelso today was one that there is great leadership in the Navy still. What Adm. Kelso did today was the mark of a true professional. He put the Navy in front of himself, and he resigned for the good of his service and for all of us. And the captain of the ship, to continue the metaphor, was Sec. Garrett. And that was appropriately handled. But you still need someone to handle tiller in rough seas. We needed Adm. Kelso's leadership. And that has been going on now not only in the context of Tailhook but in the changes that have occurred with the repeal of the combat exclusion law and the fact that Adm. Kelso has started that process where the playing field is level in the Navy for all sailors and officers.

MR. LEHRER: And yet, I read the summary today, 140 officers were involved in one way. Charges of some kind were preferred against 140 officers. And those 28 received some kind of administrative punishment. Thirty-three admirals received in addition to those twenty-eight, thirty-three admirals received some kind of punishment, including Adm. Kelso, and nobody else did. There were no criminal charges filed or whatever. Is that summary okay with you?

COMMANDER MARINER: There were criminal charges filed. There are many details of this investigation which I think someone else can dissect, but non-traditional punishment was appropriate for the cases where it was awarded. In order to take the case to a court martial you have to have evidence. It is very difficult to gather evidence when an investigation has taken so long and been delayed for many other reasons. But it is more important to maintain the integrity of our judicial system than it is to go out and conduct a witch hunt.

MR. LEHRER: So within the Navy, you're feeling is that the processes, even though they went astray, were essentially followed, and the reason these people were not, not tried on criminal charges was that the process didn't allow it? In other words, due process prevented that from happening?

COMMANDER MARINER: In the essence of it, yes. You have to have evidence.

MR. LEHRER: Congresswoman Schroeder, you don't see it that way?

REP. SCHROEDER: As a lawyer, it always makes me crazy, because, again, what I really want to do is have the Judiciary Committee look at this. It doesn't pass the giggle test. But let me tell you, it sounds like three on one, so let me put another person in here with me. The Navy Times editorial -- and you can say that they're a little bit different than I am -- the Navy Times editorial speaks out very clearly, talking about the shame of Tailhook and says, really, Adm. Kelso should have gone and should have gone long ago. Look at all the things that didn't work. The Navy criminal investigation service had to be removed. That didn't work. The Navy investigators had to be removed. We had trouble with the Inspector General in the Defense Department. And now we have this courageous captain down there who tries this case and says, look, this was all about throwing over some younger officers to preserve some admirals' tail. Now I think that judge was right. And I think we ought to be talking about him. He really is saying this is a government of laws and not of admirals, and he should be the hero here. And yet, I hear everybody trashing him and saying, oh, well, no, no, but no one wants to test his decision in a court of law outside the military system. I don't think it would hold up. And I think we ought to be candid about that.

SEC. POPE: Jim, I'd like to come in on that, because I went down and testified before this judge, Judge Best, in Norfolk, and I think the judge made two very serious errors in his decision. And I don't question his motives, because I think he did the best thing possible. He found Adm. Kelso guilty of undue command influence. That was based on Adm. Kelso assigning Paul Reason, who is a three- star admiral in Norfolk, to head up this appeals court. That decision was made by the previous Secretary of the Navy, Sean O'Keefe. It was a decision that Frank Kelso signed off on as the acting secretary. But the mistake that was made is that Sec. Aspin left Frank Kelso as the head of the Department of the Navy knowing that the Tailhook investigation was going on, knowing that Kelso had been there, so he put Adm. Kelso in an untenable situation, because had there been a civilian person acting as the Secretary of the Navy, that individual would have signed that order. The issues of undue command influence would have never come up, because the person sitting in that seat, the civilian, would have been the person signing that decision. The other thing he did was -- excuse me because I'd like to finish a second -- is that he chose to believe the aviators who testified at the hearing above Frank Kelso, above myself, above Larry Garrett, a lot of other admirals and civilians who were there who talked about what -- forget everything else -- whether Frank Kelso would lie or not lie. And so what the judge decided is he believed the aviators who had been lying -- 1500 of them who'd been interviewed by the Department of the Navy, more than that by the Department of Defense -- they lied! And people know they've lied. They've not been able to prove it. The judge chose to believe some of those aviators who lied, some of them who then changed their story above Adm. Kelso. And I think Adm. Kelso did the right thing.

REP. SCHROEDER: Well, if they're so confident, why don't they appeal this decision, if they're that confident? Besides, I have put that decision in the Congressional Record, so every American can go to the library -- the library in their area -- and get this. This decision goes into much more than that. It talks about the admiral's aides who were escorting Adm. Kelso around at Tailhook. You know, admirals don't travel alone. And they're saying he's out on the patio, he's around where there are these huge 15-foot signs talking about leg shaving for women. I think that's fairly extraordinary, and a recently prudent admiral would see that. I think he would have seen the leg shaving going on five feet from him. There were any number of people, not just the aviators, involved, but the escort officers for them. And even you, Barbara, you changed your testimony. You said you assumed he was on the patio. Why would you say that in sworn testimony if you didn't think he was out there? The Secretary was out there. You know people were there. I just think what this judge was saying is that there was such clear evidence, and they were having so much trouble trying to get any help sorting it all out, he wasn't going to hold these fliers accountable. And if everyone's so confident he was wrong, then appeal it! But to just say, well, it was all wrong, and here we all are, and we're going to say he's a great guy and he's wonderful and we'll close the book, I just don't know that that's a good message. It wouldn't stand up under the justice category in any other part of our country, thank goodness.

MR. LEHRER: Speaking of messages, what do you think the message, Ms. Pope, is of Tailhook, what it sends to people, to women who might be interested in coming into the Navy and being aviators, to people who are already there, men and women, what do you think?

SEC. POPE: I think today's Navy and Captain -- Commander Mariner -- I'm going to promote her early -- could speak, you know, better to it, but I think the Navy today is a much different place than it was almost three years ago when Tailhook occurred. I think it is continuing -- it, the Navy is continuing to address the issue of the integration of women. I think in many areas it's far ahead of the other services. I think the Navy is serious about changing behavior and trying to change attitude.

MR. LEHRER: Let me ask the admiral that. Do you think the Navy is a better place for Tailhook having happened, or what Commander Coughlin did, blew the whistle on this, made this the issue that it has become?

ADM. DUNN: There are certainly certain aspects of the Navy which are better for the incident. To say the Navy's better off having had the incident, I couldn't agree with that. The best of all possible worlds would have been for it never to have happened in the first place.

MR. LEHRER: No. But I mean assuming that -- we know that Tailhook happened.

ADM. DUNN: Right.

MR. LEHRER: Okay. But for it to come out into the public, for there to be this scandal and this inquiry, is the Navy in better shape because of that?

ADM. DUNN: Yes. The Navy has taken advantage, I believe, of that incident to look at itself in great detail, to examine what went wrong, and to decide what to do to avoid future wrongs, and everything associated with that. There's now in place a very dynamic program on equal opportunity for women as well as for minorities, continuing education. Rosemary mentioned the introduction of women into combat units. It's not perfect -- a long way from perfect. I mean, this has been going on for hundreds of years. It's going to take a few years -- not hundreds -- but a few years until everybody gets the word and everybody understands. But the Navy is making progress.

MR. LEHRER: But in a word, Congresswoman Schroeder, I hear you're saying that they still don't have the word, is that right, from your perspective?

REP. SCHROEDER: Well, ask Paula Coughlin. I mean, Paula Coughlin, to me, is the true victim in this. And for three years, she's waited for justice, and she had to leave. Also, look at the tremendous cheating scandal at the Navy Academy. I think it's sending wrong messages to our young people.

MR. LEHRER: All right. I've just got a message. We have to go. Thank you all very much.

MR. MacNeil: Still ahead on the NewsHour, tensions in Korea, and Viacom's Paramount victory. UPDATE - SOUTHERN EXPOSURE

MR. MacNeil: Next tonight, tensions over North Korea's apparent effort to develop nuclear weapons. Today North Korea said it will allow some international inspections of its nuclear sites, which it says are exclusively for civilian use. The North Korean move seemed to push back at least for a while the prospect of United Nations sanctions. North Korea has called sanctions an act of war. Elizabeth Farnsworth recently visited the demilitarized zone separating North and South Korea to talk with American officers and troops about their readiness to fend off an attack from the North.

MS. FARNSWORTH: Korea's demilitarized zone. From this point on a hill near Panmunjom, North Korean towns appear ghostly in the mid-day haze. Pyongyang, North Korea's capital, is about 90 miles away. South Korea's capital, Seoul, is just 25 miles to the South. Around 180 U.S. soldiers perform police and counterinfiltration duties in the DMZ. Captain Kevin Warren.

CAPTAIN KEVIN WARREN: But everything you see out here, this is all North Korea.

MS. FARNSWORTH: What do the signs say over there?

CAPTAIN KEVIN WARREN: There are two signs up on the hill that are kind of hard to see right now because of the way the sunlight's on 'em. One says "Anti-American," and one says, "Yankee Go Home." The larger sign here just behind this pole says, "South Korea is a Colony of the Imperialist United States."

MS. FARNSWORTH: So where are the million troops that are supposedly massed along the border?

CAPTAIN KEVIN WARREN: Well, basically beyond Pyongyang and here is the majority of the North Korean Army.

MS. FARNSWORTH: South of the DMZ, more than half a million South Korean troops man extensive lines of defense. On the highway to Seoul, huge cement structures known as "ROK drops" are ready to spill obstacles onto this historic invasion route. Seoul is the prize that must be protected. It's a booming metropolis of 12 million people that produces about 46 percent of South Korea's goods and services each year. North Korean troops easily overran Seoul in 1950, and millions of refugees fled South. In the first days of the invasion, only a handful of U.S. military advisers were in Korea. But by the end of the war, more than 5 million U.S. soldiers had served. Fifty-four thousand, two hundred and forty- six Americans were killed. In all, 2 million soldiers and 2 million civilians perished in the three years of fighting. The war ended not with a peace treaty but with an uneasy armistice which is administered in the DMZ at Panmunjom. Now North Korea apparently has enough plutonium to build a nuclear device. But Col. Mike Sullivan, the U.S. Army spokesman in Seoul, says the key threat remains North Korea's conventional forces.

COL. MICHAEL SULLIVAN, U.S. Army: What needs to be understood is that more than 2/3 of a million-man army is positioned within a hundred kilometers of the DMZ. The nuclear question is virtually irrelevant to us. What we're about is deterring the conventional threat.

MS. FARNSWORTH: Col. Sullivan insisted that U.S. military planning was not affected by the diplomatic flap over North Korea's nuclear potential. But in recent months, Gen. Gary Luck, the commander of the 36,000 U.S. troops here, has made a number of significant changes. About three dozen Patriot missiles will be introduced soon to guard military installations against North Korean SCUD missiles, and two battalions of Apache helicopters will be assignedto the army's Second infantry division. But for most troops little has changed. Last month,a combined task force of the Second infantry division was in the field for two weeks playing war games.

MS. FARNSWORTH: So tell us, what are you preparing for right now? It's about 6:30, 6 o'clock in the morning, and it's dark, and we're about, what, ten miles from the demilitarized zone here?

SGT. CHARLES LEE, U.S. Army: That's right.

MS. FARNSWORTH: What are you preparing to do?

SGT. CHARLES LEE: Right now, we are doing what we call our prep and fire checks. We check all our fire control systems, making sure all of our radios work, make sure we have the graphics, we know where we're going. We've got the 50 caliber weapon here. We've got the gunners, the gunners' main gun. This basically is a pre-check to make sure that when we roll out that we are prepared to fight the enemy and kill the enemy when we meet 'em.

MS. FARNSWORTH: So when you move out from here, you're looking for another tank battalion?

SGT. CHARLES LEE: I think today we're going up against two companies, yes, ma'am.

MS. FARNSWORTH: And look for two companies who are pretending to be North Korean forces?

SGT. CHARLES LEE: Yes, ma'am. Yes, we are.

MS. FARNSWORTH: And do they have tanks anything like the North Korean forces?

SGT. CHARLES LEE: No, ma'am, but what they do is they have, they have American vehicles. Sometimes what they do is they scale down their limitations, because the North Korean vehicles can't do what our vehicles can.

MS. FARNSWORTH: They pretend not to be quite as good?

SGT. CHARLES LEE: Well, it all depends how the crew is. Now the crew out there, they want to win too. They want to beat us, and we want to beat them. So sometimes they use the full-up system too, and of course, it makes it harder, but that's what we're simulating today. We're going up against the North Koreans in the defense.

MS. FARNSWORTH: Have you all changed anything in the way that you're functioning since there's been this worry about a nuclear weapon in North Korea?

SGT. CHARLES LEE: Not at all, ma'am. We are -- we get along with our day-to-day activities, and we just continue to train. But hopefully -- I don't know -- maybe it'll blow over; maybe it won't. It'd be a big mistake for them to come South, that's for sure. What's going to happen next? The battalion commander, he's got all his key leaders together, all his company commanders, and they're going over final preparations right now.

UNIDENTIFIED MILITARY LEADER: We re-thought the attack here, and I think it's too, too risky to try to put all of Bravo's Bradleys on this trail here.

[TRAINING MANEUVER]

MS. FARNSWORTH: As the United States and the South Koreans learned during the Korean War, this is tough terrain to fight in. It's very cold, and these roads are narrow. In this exercise today, an M-1 tank went off the road, and an armored personnel carrier got too close to the side and just fell right over. By midafternoon, the vehicles pretending to be North Korean, those marked with blue, seemed to have the upper hand. They had taken up fixed positions in narrow canyons and fired as the opposing vehicles slowed down on the congested road.

UNIDENTIFIED SOLDIER: Well, we were moving to contact in battle, and we set up our fire position, and that's when we started receiving artillery. I -- our lieutenant just jumped tracks. He started backing up, and it was too late. They had already hit us and killed us.

MS. FARNSWORTH: This war game was based on the premise that North Korea had broken through South Korea's front-line defenses at the DMZ. And, in fact, these are the defiles and valleys North Korea swept through in 1950 to get to Seoul. U.S. military planners here insist it couldn't happen again. They point to U.S. air power in Korea, including about two dozen A-10's and forty-eight F-16's. Also, the ROK, Republic of Korea forces have been transformed.

COL. MICHAEL SULLIVAN: The U.S. forces constitute a very small part of the, of the forces over here, and the DMZ is defended by two huge ROK field armies that are extremely well led and extremely well trained by any standard.

MS. FARNSWORTH: But a 1991 Pentagon report, parts of which were revealed in December, has raised questions about the defense of South Korea. Robert Gaskin, a retired Air Force colonel, wrote the report.

ROBERT GASKIN, Former Pentagon Official: The primary problem with the defense of South Korea is the fact that the South Korean forces are deployed to stop a North Korean type invasion 1960's-style. They're deploying in a very thin line across the top of Korea in a cordon defense, what military historians and analysts call. The problem with cordon defenses is historically they always fail. Very few successful cordon defenses are found in history.

MS. FARNSWORTH: Gaskin says his investigation of U.S. and South Korean forces along the DMZ convinced him that not enough troops are held in reserve to counterattack if a breakthrough occurs.

ROBERT GASKIN: The United States would lose somewhere between fifteen to twenty thousand casualties in the first month of war. Most of our troops are army. Most of those troops are well forward. Most will be swept up, annihilated, or taken prisoner in the initial offensive.

MS. FARNSWORTH: Marine Major General James Myatt serves a senior liaison between the U.S. Command the Korean military.

MS. FARNSWORTH: Is the general strategy a basic cordon defense, a line defense?

MAJ. GEN. JAMES MYATT, U.S. Marine Corps: No. But I'm not going to talk much about the operations there, but I'll tell you that we -- I'm very much pleased with the Republic of Korea adaptation to what we call maneuver warfare and their thought process, so --

MS. FARNSWORTH: So there have been a lot of changes in the last four years?

MAJ. GEN. JAMES MYATT: Capitalized, a lot of it capitalized on the lessons learned from the Gulf War and from the thought process and the professionalization, the way I look at it, of our own military.

MS. FARNSWORTH: Gen. Myatt wouldn't reveal details, but he and other officers indicated that U.S. military planners here are emphasizing a more aggressive and mobile strategy than critics recognize. At the same time, U.S. officials insisted that even with the crisis over North Korea's nuclear potential, war is no more likely on the Korean Peninsula than it has been for the last 40 years. Robert Gaskin agrees.

ROBERT GASKIN: The North Koreans are not convinced that they will do very well, and they know more than I know. If they're not convinced they will do very well, then perhaps that will be enough to keep them exactly where they are. That turns out the best for everyone.

MS. FARNSWORTH: South Korean analysts are equally optimistic. Kim Kyung Won is a former ambassador to Washington.

KIM KYUNG WON, Former Ambassador, South Korea: My view fundamentally is that most Koreans do not underestimate the U.S. military strength. They have seen what it can be like during the Gulf War.

MS. FARNSWORTH: But in Pusan, the southern port city that would be the main debarkation point for U.S. reinforcements, American officials have warned U.S. citizens, including the Nike executives based here, to be prepared for the worst. Jerry Hauth is general manager of Nike in Korea.

JERRY HAUTH, General Manager, Nike Korea: The American embassy has briefed us on evacuation, a government evacuation policy called NEO, Non-combatant Evacuation Operations. And the government checklist in the event of an evacuation, what we're supposed to do, you know, carry our passports with us at all times now, keep a couple of hundred dollars U.S., keep some Korean money, keep a duffle bag backed with a toothbrush, medical supplies, baby foods, things like that.

MS. FARNSWORTH: In Pusan and along the DMZ, North Korea's nuclear program has raised tensions but hasn't yet changed daily life. Americans here say that war would be catastrophic, yet, they seem optimistic it can be avoided. They are also getting prepared in case it can't. UPDATE - A DONE DEAL

MR. MacNeil: Next tonight, Viacom wins the Paramount battle. The five-month long bidding war for Paramount Communications ended last night at midnight, and this morning Viacom was declared the victor. Tonight we examine what Viacom has won in this long, drawn-out brawl of corporate strategies and egos with the creation and control of the much ballyhooed information superhighway as the backdrop.

MR. MacNeil: The prize is a company that's been making movies since 1912 and is still known primarily for its film studio. But Paramount long ago began to expand its entertainment empire to popular television programs such as "Star Trek" and "Arsenio Hall," to ownership of Madison Square Garden, and sports teams, a series of theme parks around the country, and book publishing. For Paramount suitors, the idea was to match their distribution and marketing know-how with its programming power.

SUMNER REDSTONE, CEO, Viacom: Paramount-Viacom will combine two companies with different, yet complimentary strengths.

MR. MacNeil: Viacom runs some of cable television's most popular networks. It has a stake in two more, owns several local cable systems, as well as broadcast TV and radio stations, and sells TV programs all over the world. It's rival was QVC, a home shopping the process, I think, of making decisions about all of those right now. The one that is -- where the decisions are going to be the most intense, I would think, would be on the, on their books business, which is very large. It constitutes a big portion of Paramount earnings right now. And they've never been in the books business before.

MR. MacNeil: How much does the book side of all this?

MR. AULETTA: About 40 percent of their revenues.

MR. MacNeil: Of revenues of what?

MR. AULETTA: Of Paramount. Paramount has about $6 billion worth of revenues and 40 percent of them are produced by the book publishing.

MR. MacNeil: Book publishing.

MR. AULETTA: Well, it's also education. It's Simon & Schuster, which is obviously a very successful trade division. But it's also the educational -- Prentice-Hall --

MR. MacNeil: Now why would Viacom all in electronic entertainment and everything, why would they be interested in book publishing?

MR. AULETTA: Oh, God, you think about -- everyone talks about the notion of interactivity. Well, take -- take a book -- I'm not talking about a book like Howard Stern, which Simon & Schuster to its discredit publishes, but take some of the education books.

MR. MacNeil: Discredit maybe but profitable.

MR. AULETTA: Very profitable. No. 1 for a long period of time, but you wouldn't let your kids read it. But the truth of the matter is you could run education tutorials with Simon & Schuster books and have an interactive where your kids can talk back and say, well, tell me more about ancient Egypt. So it becomes an interactive tutorial, an education tool. That's one of the reasons why [Barry] Diller was so excited with QVC. He could not only sell potentially books on QVC but do this interactive thing.

MR. MacNeil: So in other words, if everything is ultimately going to get electronic or digital or whatever, what Viacom is really buying is a huge electronic publishing house, publishing movies and books --

MR. AULETTA: It's a factory.

MR. MacNeil: -- and television and everything else.

MR. MacDONALD: And republishing and repackaging and putting them into different categories. It's like exploiting all of these -- and who knows even what they're exploiting, whether they're exploiting characters or story ideas or concepts.

MR. MacNeil: What do you mean exploiting?

MR. MacDONALD: Well, in an economic sense, selling, you know, creating something and taking value out of it in one way in four or five different ways.

MR. AULETTA: And Viacom has been a company at the frontiers of some of this research. They've invested heavily in a lot of different experiments to test things like interactivity. So I think it's a natural fit. The question is if they have all this debt, do they have to sell off some of the assets to pay it off?

MR. MacNeil: How much of this contained within the market in this country, and how much of this is looking to the world market?

MR. AULETTA: Well, if you look at the movie business today, it's flat in the United States. Where is it growing? It's growing overseas. MTV is probably the most watched network in the world. It's on and like 260 million countries -- or citizens -- 260 million citizens watch MTV around the world. So it overseas is exploding, particularly as television stations, public television stations privatize, and new means of reaching viewers open up in say China.

MR. MacNeil: During the course of the bidding, Viacom also made a deal with Blockbuster Video, one of the ways in which these, these -- this deal was put together. What has that got to do with all this?

MR. MacDONALD: It seems far afield but what it really does, Blockbuster does is provide Viacom with --

MR. MacNeil: They're in the business of leasing videos.

MR. MacDONALD: Yeah.

MR. MacNeil: Stores all over the country.

MR. MacDONALD: They're the biggest renters of videos, and what they do, they're also the biggest purchasers of those rights in Hollywood, so they command enormous economic power when someone's making a movie. And to have that power connected to their cable networks, their cable systems, and all the other businesses, when buying copyrights either for a book or a movie or from whatever really adds to their ability to put together packages and films and so on.

MR. MacNeil: How much does a -- of a movie made nowadays -- how much does the video sale, the rights and the leasing and people renting videos -- how much does that represent?

MR. MacDONALD: Children's films, children's videos for animation, it can constitute as much as 2/3 of the total income that's available to the copyright, in effect, you know, for adult action or adult drama, or comedy, it's a lot less. It's probably about 50/50. But the home video segment in the movie business is at this point larger than going to the theatrical box office, itself.

MR. MacNeil: So -- being -- having the largest, they are the largest video outlet in the country than, in other words, that isn't so dumb, having that part of the same package.

MR. AULETTA: It's smart in the short run. Whether in the long run it's smart is another question, because the truth of the matter is electronically you'll be able through the so-called "super highway" to call up a movie at home without having to get at the store, without having to send it back, and being able to get any move you want any time you want it, which when you go to the video store, the top 20 are often out, you can't get them, so in the long run it's probably not a smart investment, but in the short run it is. But essentially, the larger point here, what these people are up to, this is a global battle. Viacom-Paramount today becomes the second largest communications company in the world. And what they are about is trying to create trademarks to control access to the programs, the brand names you want to watch in China, in Thailand, in Arkansas. It doesn't matter where you're from; you want your MTV, we've got it. You want your Beavis and Butt-head, we've got it. That's what they're up to.

MR. MacNeil: It doesn't matter what the outlet is necessarily. It's what going down the pipe on that outlet.

MR. AULETTA: Basically they've made the assumption here that what matters most in the future is being a software factory, that people don't watch wires. And I don't care how it gets to your home, via direct broadcast satellite or microwaves or broadcasting, we have the product. You need our product.

MR. MacNeil: One of you said in the pre-interview today -- I can't remember which one -- it might even be coming into people's home down the line through your utility, your electric company, I mean, which now provides the wire that sends the current in, they could hook up with it.

MR. MacDONALD: Well, that's one of the reasons why we've gotten this whole thing, the battle itself drew NYNEX and Bell South and a number of phone companies because their businesses are also equally dependent on controlling the content as Blockbusters is.

MR. AULETTA: They're the wire, and they're desperately afraid that they're going to get shut out, because they know that people need --

MR. MacNeil: They have nothing to put over their wire but a phone conversation, and when they could be putting all this. Let me ask you finally about the personalities. Much was made in the, the media coverage of all this of the personal battle. I mean, Barry Diller of QVC wanted Paramount because he had a falling out with Martin Davis when he was there and everything. I read today that Martin Davis was going to be -- was going to run Paramount in the original Viacom deal but now isn't. Do you know what's going to happen?

MR. MacDONALD: I think it's very unlikely that he'll end up with as big role as it was envisioned before. And I think his role will be very reduced at the end of the day, and I think that's only because the process got out of his control, and that it became a battle between people outside Paramount. He was trying to control the process from the very beginning, and he lost control of it.

MR. MacNeil: Does that mean Barry Diller gets his revenge in the end?

MR. AULETTA: Well, he's probably --

MR. MacNeil: Was there a real sore feud there between Barry Diller and Martin Davis?

MR. AULETTA: The truth is they'll say otherwise, but these two men don't like each other, and there's no use pretending. And the truth is that Barry Diller is a fierce competitor and so is Sumner Redstone. And part of his battle, not the major part, but a part of it was these -- each of these two competitive men wanted to win. Redstone won. And Diller is probably squirming. He put out a very taught statement saying --

MR. MacNeil: They won, we lost.

MR. AULETTA: -- we lost, let's move on.

MR. MacNeil: Let's move on. Okay. We'll move on. Thank you both. RECAP

MR. LEHRER: Again, the major stories of this Tuesday, the chief of naval operations, Adm. Frank Kelso, announced his early retirement, saying he had become the lightning rod for the Navy's Tailhook scandal. U.S. Trade Rep. Mickey Kantor accused Japan of keeping its cellular phone market closed to U.S. products. He said a list of proposed sanctions would be published within a month. And North Korea agreed to allow international inspections at seven of its nuclear sites. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour for tonight, and we'll see you tomorrow night. I'm Robert MacNeil. Good night.