The MacNeil/Lehrer NewsHour

Intro JIM LEHRER: Good evening. Leading the news this Wednesday, the government's monthly economic index had its largest drop in six years. The sale of a popular three wheel all terrain vehicle was stopped for safety reasons, and the U. S. expelled two Chinese diplomats reportedly for spying. We'll have the details in our news summary in a moment. Charlayne Hunter Gault is in New York tonight. Charlayne? CHARLAYNE HUNTER-GAULT: After the news summary, the latest problems with the space shuttle leads our focus segment. We'll talk with a key NASA official. Then a debate over alcohol ads on television and their effect on young people. Next, a background report on the profit problems of two newspaper giants, and finally Robert MacNeil talks with Walter Cronkite.News Summary LEHRER: There was bad news today about the economic future. The Commerce Department's index of leading economic indicators dropped 1. 7 points in November, the steepest decline in six years. The index is made up of eleven key economic factors, and one of those eleven is the stock market. The October 19th crash in stock prices was the major reason for today's indicator drop. But six other indicators were also down. This was a relatively stable day for the price of the dollar on foreign currency markets, a fact that caused the stock market today to go up. The Dow Jones Industrial Average gained 23 points. Charlayne? HUNTER-GAULT: The makers of a three wheel vehicle responsible for more than 900 deaths have agreed to stop selling the product. The agreement, announced by the Justice Department, fell short of a demand by consumer groups for a recall of the estimated two million such vehicles already in use. In addition to the deaths, mostly of children driving the three wheel vehicles, nearly 7,000 injuries are reported monthly. Under the court ordered decree, manufacturers will be required to post warning signs about risks, and provide free driving lessons on the new four wheel models. LEHRER: There was disappointment today on Detroit's two major newspapers, the Free Press and the News. An administrative law judge turned down the papers' request to merge business and printing departments. The two papers wanted the protection of the failing newspaper act. But the administrative judge said the Free Press did not prove it was dominated by the News, or was in a downward financial spiral. The final decision on the antitrust exemption request will be made by the Attorney General. HUNTER-GAULT: Formal murder charges were filed today against R. Gene Simmons, the man accused of one of the country's worst mass killings. Simmons was charged with two counts of capital murder, and four of attempted murder. The Arkansas prosecutor said he will eventually charge Simmons with 16 murders, including his wife and other relatives, and that he would seek the death penalty. LEHRER: The U. S. government expressed outrage today over the release of two El Salvador guardsmen who murdered two Americans. The soldiers were serving 30 year prison sentences for the killing of American agricultural workers Michael Hammer and Mark David Perlman. They and an El Salvadoran man were shot to death at a Sheraton Hotel coffee shop seven years ago. Today it was revealed the two killers were freed December 19, when an El Salvador judge ruled the crimes were political and thus the defendants were eligible for parole under the new Central American peace plan. In Washington, State Department spokeswoman Phyllis Oakley had this to say about what has become known as the Sheraton case.

PHYLLIS OAKLEY, State Department spokesman: We are appalled and outraged at the court decision rejecting the government's appeal of an amnesty grant in this case, which was not in our view a political crime. The Sheraton Case was tried as a common crime, and the killers were convicted under purely criminal statutes. We particularly object to the procedure followed by the courts in this case and unusually quick decision, with release occurring on the eve of a court recess. Given the situation, we are reviewing possible responses. LEHRER: The State Department confirmed today that two Chinese diplomats were expelled from the United States last week. The Department said the two had done things incompatible with their diplomatic status. The Washington Times reported the two had been arrested by the FBI for espionage. There was no official confirmation of that. HUNTER-GAULT: There were conflicting reports today about the outcome of a major battle in Afghanistan. The Soviet backed Afghan government said a relief convoy of 150 vehicleshad arrived in the besieged city of Khost. But Western backed rebels in Pakistan called the report a total lie. The rebels have kept the eastern town isolated from the provincial capital for the past three months. Earlier this month, thousands of Soviet and Afghan troops lost a major offensive, resulting in heavy casualties on both sides. LEHRER: And that's it for the news summary. Now, NASA's decision to delay the next shuttle, alcohol ads, a major newspaper decision, and Walter Cronkite. Shuttle Setback HUNTER-GAULT: Our lead focus tonight is on the nation's space program, which has been undergoing some rough times of late. Yesterday, NASA announced that the planned June 2 launch of the next space shuttle would have to be postponed. The reason: the failure of a nozzle component during a test firing in Utah last week. Here with us tonight to update the story and explain what the failure means for the shuttle program is J. R. Thompson, director of the Marshall Space Flight Center in Huntsville, Alabama. Mr. Thompson, in the simplest terms, what happened? J.R. THOMPSON, NASA: Well, we had a failure of what we call the outer boot ring. It's in the aft end of our nozzle, and approximately 180 degree suction during our post test inspections had failed and was laying in the bottom of the motor. We're in the process of analyzing the part now, and trying to establish exactly what the mechanism was that contributed to the failure. HUNTER-GAULT: What does this part do? I mean -- Mr. THOMPSON: It's really a structural part that holds what we call a rubber boot that provides thermal protection to our gimbel joint. So it's a nonfunctional part in the motor. It just provides the thermal support for this rubber boot, and the failure occurred in a very benign fashion and did not affect the outcome of the test at all. HUNTER-GAULT: So you're saying that this wasn't a serious -- isn't a serious problem? Mr. THOMPSON: Well, it's serious in the sense that we didn't expect it and we want to make sure that we've got plenty of margin in all of our nozzle components, as well as other parts throughout the shuttle. HUNTER-GAULT: Well, if the shuttle -- sorry -- Mr. THOMPSON: So from that standpoint, we want to make sure we thoroughly understand it and take the proper corrective action. HUNTER-GAULT: If the shuttle had been launched with this defect, would you have had the same kind of disaster, for example, that you had with the Challenger, or anything near that? Mr. THOMPSON: No, from everything I know so far, had this failure occurred in flight exactly the way it occurred during this test, then we would have completed the mission and have had no impact at all. But that doesn't mean we want to fly this part, it doesn't mean it's got acceptable margin in it, and it's for that reason we want to stop and make sure we thoroughly understand it and then take the proper corrective action. HUNTER-GAULT: How long do you think this is going to take, to be able to do that? Mr. THOMPSON: Well, we've got several teams set up now to evaluate what happened and what the corrective action should be. It's my guess -- we're not talking about a few days in terms of the (unintelligible), but on the outside I would expect it's measured in weeks, perhaps a couple of months. No more than that. HUNTER-GAULT: Well, what exactly happens now. I mean, do you try to fix this part or do you have to make a new one, or do you have to redesign the part, or what? Mr. THOMPSON: Well, our first priority of business is to understand what happened and why. From there I think fixing the problem is going to be fairly straightforward. We've got several backup designs that we've been carrying along. One that we tested successfully on our last solid rocket motor firing. That's certainly an option. But we don't want to jump in that direction until we really understand what happened on our last test. HUNTER-GAULT: If you have to go to a new part or a redesigned one, I mean, this was the second of four tests required in order for the shuttle to be certified, as I understand it -- I mean, if you have to go back to a new part, do you have to begin the process all over again, say, at stage one, instead of picking up at stage two or three? Mr. THOMPSON: I don't expect any additional tests being required, but I think we've got to discuss that thoroughly with NASA. I think that's particularly the case if we go back to the design that we had on our last solid motor firing, which worked quite well, and so that would certainly count in our test certification. But this is something we still have got to discuss within NASA. HUNTER-GAULT: How long do you think it will be before these discussions come to a point where you'll know what you have to do? Mr. THOMPSON: I think in the next week or two we will start getting some good insight into what caused the problem and what the proper corrective action will be. So within another couple of weeks, I think we can lay out a good plan. HUNTER-GAULT: So that you're not back to square one, as it were. Mr. THOMPSON: By no means. From everything we've seen, from all of our redesign on the solid rocket motor, it's gone quite well. HUNTER-GAULT: One of the members of Congress called this a devastating blow to the recovery program. How do you see it? Mr. THOMPSON: I certainly wouldn't call it that. It is a setback to us. I won't belittle that. But I think we can recover very quickly here. And the primary purpose of our ground test program is to uncover these failures on the ground and not during flight. So from that standpoint, I'm glad we found it now and not later. But, no, I don't see it as having a big impact of what we're overall trying to accomplish within NASA, and that is to rebuild our space transportation system. HUNTER-GAULT: Well, what suffers as a result of a launch delay? Let's say, just for the sake of argument, that you come up with something that says you have to put off the test that is scheduled now for June 2. I mean, what kinds of things are either hanging in the balance or suffer because you can't get off the ground on time? Mr. THOMPSON: Well, we've got a number of payload, scientific payloads that are now grounded that we're most anxious to start flying again. We have some payloads allocated to the Department of Defense. We've got our Hubble Space Telescope that's due to fly in about a year and a half from now. We're very anxious to get that in the air. So it means a lot to our science people to get our shuttle program flying again. HUNTER-GAULT: How embarrassing was this -- you say that you don't see any serious problems with the delay, but, I mean, on the day that this all happened, the Soviets successfully completed a 326 day space flight. How embarrassing was it that these two things were happening simultaneously, the success of the Soviet Union and even a little failure, that's what it was, here in the United States? Mr. THOMPSON: Well, let me take them one at a time. I certainly applaud their accomplishments. I'm not embarrassed by this. I certainly am disappointed. But I know the job we've got to do. We'll fly the shuttle I think soon, and will do it safely and we'll be back on track. So we've still got our work cut out in front of us. But I think if you're in the test business long enough, you're going to encounter a few surprises like this. Again, I think the key point is that we have a very aggressive ground test program, and we find these problems out on the ground, and that's exactly what we're doing. HUNTER-GAULT: Well, Mr. Thompson, thank you very much for being with us. Mr. THOMPSON: Well, thank you very much. Brew-Ha-Ha LEHRER: This is the season to be merry and be happy, and for some to be drunk. The National Council on Alcoholism says the normal holiday tendency toward drinking is made worse by alcohol commercials on television aimed at teenagers. A charge hotly denied by the industry. We will join that argument after this setup report by June Massell. [clips from TV commercials] JILL, High hool student:Sc The minute they put the music on, we know it's Budweiser because we're so ingrained with the music and the ads. They didn't even have to show us a drink, they didn't even have to tell us what it is. But they're showing us that if you drink this beer, you're going to come in first, you're going to be the best. High School Student: They're trying to sell an image, if you drink Bud, you're somehow going to join this exclusive club which you can be in no way part of if you don't drink Budweiser.

JUNE MASSELL: Alcohol is America's number one drug problem among youths. About 70% of high school seniors report they drink at least once a month. Even more startling than that, a recent survey found that 30% of fourth graders said they received peer pressure to drink. Because of the statistics, American Automobile Association asked several academics to analyze beer commercials and see what values they promote. Lance Strate, a communications instructor at the University of Connecticut, was a coauthor of the study. LANCE STRATE, University of Connecticut: Drinking beer itself is a challenge, drinking alcohol in general is seen as a challenge in our culture. That is, a man, a real man knows how to drink, knows how to hold his liquor, and so in the commercials beer acts as a reward for facing up to the challenge. [beer commercial]

MASSELL: Strate says the commercials frequently paint a picture of life that many people, teenagers included, want to participate in. [TV commercial] Mr. STRATE: They use Genesisplaying their top 40 hit, Tonight, and they have this wonderful presentation of the city as a kind of urban playground, a nighttime playground for young people where they go out and find romance and romance is facilitated by Micheloeb. [TV commercial] FRED HERSHKOWITZ, Students Against Drunk Drivers: Everybody loves Rap music, and young kids know it and they sing along to it.

MASSELL: Fred Hershkowitz is a coordinator of a New York City sponsored program called Students Against Drunk Drivers. He goes into high schools weekly and cautions students about alcohol. Frequently they discuss the ads on TV and their appeal. HIGH SCHOOL STUDENT: They're encouraging young adults to go out and say I want this beer, I'm going to feel good after I drink it. HIGH SCHOOL STUDENT: When you watch the commercial you feel good, you feel like, wow, that was great, just like the soft drinks they do that, so they're trying to tell you, like, see you enjoyed this commercial, you can enjoy this night, too. [commercial]

MASSELL: Spuds McKenzie. Perhaps the most popular and most controversial beer ad on television. The Spuds character is a bull terrier, affectionately referred to as the original party animal, and brought to you by Anheuser Busch. RICHARD KESSEL, New York Consumer Affairs: It not just about a cute party animal, it's about appealing to young kids to get them to drink at an early age. That's wrong, and the Federal Government ought not to allow that to happen. MASSELL: Richard Kessel is the New York State Commissioner of Consumer Affairs. He has petitioned the Federal Bureau of Alcohol, Tobacco and Firearms to ban Spuds ads from television. He objects not only to the commercials, but to the spinoff items, like stuffed animals, tee shirts and mugs that Spuds McKenzie has inspired. Mr. KESSEL: I think Anheuser Busch is trying to get people today to hold a Spuds doll and tomorrow to hold a brew. Who does this dog represent? It represents a beer company! So obviously when you pick up a dog, or you put on a Spuds McKenzie tee shirt, what are you really representing? You're representing beer. And what do we do next, we make rattles? You know, Spuds rattles for babies? I mean, where does it stop? THOMAS SHARBAUGH, Anheuser Busch: We think the Spuds campaign is appropriately targeted to adult beer drinkers, and so we make no apologies for that. We think it's doing its job and it's been quite effective amongst adults.

MASSELL: Tom Sharbaugh is responsible for the Spuds advertising campaign for Anheuser Busch. Mr. SHARBAUGH: From a business standpoint, it makes no sense for us to sell beer or target our marketing activities to children. Children are not capable legally of buying beer. Our marketing resources are limited. We're interested in selling our products and marketing our products to people who can buy them legally.

MASSELL: Senator Strom Thurmond has carried the debate about Spuds McKenzie to the floor of the U. S. Senate. Sen. STROM THURMOND: At this time I would like to introduce to you Spuds McKenzie. It encourages the youth, it encourages the children to start to feeling that it's alright to drink alcohol.

MASSELL: Thurmond has introduced legislation to issue new regulations on the advertising of alcohol and warning labels on all alcoholic beverages. He's especially concerned about drunk driving. [commercial]

MASSELL: In response to growing criticism, Anheuser Busch began a new Spuds campaign last Thanksgiving. The message? It's okay to drink, but not too much. [commercial]

MASSELL: Alcohol related highway deaths are the number one killer of 15 to 24 year olds. Approximately 10,000 adolescents are killed each year due to drunk driving. [skit]

MASSELL: This is a musical revue performed by a not for profit theatre group. They take their show, Numb for the Road, to high schools around the country as a way of communicating the serious effects of alcohol to teenagers. Bob Newmayer sometimes goes with them. Ten years ago he drove drunk on New Year's Eve and ended up in a wheelchair for life. Now he tries to show the students how the image of alcohol in commercials is different from real life. BOB NEWMAYER, DWI Victim: Everybody is bright and cheery and alive and alert, and you're not like that, because alcohol is a drug and is a depressant. You're not that sharp. And they give the impression, well if you drink this beer, you do all these good things. And it's a lie.

MASSELL: By the time students graduate from high school, they have seen as many as 100,000 commercials advertising beer or wine. While the commercials may or may not encourage teenagers and younger children to drink, the message from groups like Students Against Drunk Driving and from performances like this is simple. Knowing when to stop is a sign of strength, not weakness. [skit] ACTOR: Wow, what a great party! ACTRESS: Yeah, I wish I could remember it! ACTOR: You better go easy, girl. What were you drinking anyway? ACTRESS: Oh, anything I could find in a glass. How about you? ACTOR: I stopped counting after two six packs. But I'm still standing! LEHRER: We go on with the discussion of this issue now with Tom Seesel, Executive Director of the National Council on Alcoholism, and Don Shea, consultant with the Beer Institute, a brewery industry trade association. Mr. Shea, do you believe that ads like the ones with Spuds McKenzie and others encourage young people to drink? DON SHEA, spokesman, Beer Institute: No, I don't. Indeed, I think that advertising bans is what we're talking about here when we're addressing the issue of advertising on television and radio. They've been shown wherever tried not to work. Some examples would include France, Norway, indeed the Soviet Union. If you take the proponents of ad bans, you take that argument to its logical conclusion. those countries should have fewer alcohol related problems, certainly, than a society like ours, a free society where you're allowed to advertise. And yet I think even before the year of glasnost, it's been known that the Soviet Union is reputed to have one of the worst rates of alcohol problems in the world. Indeed, prohibitions of any variety don't work. I think another point -- if you start here -- if you start down the slippery slope -- beer advertising today, car advertising tomorrow, sugar advertising the next day. How do you distinguish between advertising for any legal product and say, ''We don't like it, so we don't want it to go on our airways. '' LEHRER: You jumped ahead of me a bit. My question was, were these ads designed to encourage young people? Or do you believe that they do encourage young people to drink? Mr. SHEA: No. Indeed, the ads, the brewers, the advertisers and indeed the networks themselves, have their own standards as to the models that you can use. It's my understanding that in almost every case, if not every case, the models must not only appear to be over 21 years of age, but indeed be 25 or older so that we're not using models that are below the legal age of purchase. More importantly, the science -- and let's not mix politics with science -- the Congressional Office of Technology Assessment several years ago looked a a ream of studies and said that the two major influences for youthful drinking misbehavior were parental influence and peer influence. Advertising wasn't mentioned once in that rather exhaustive study by that bipartisan congressional office. LEHRER: You're not challenging, though, the basic purpose of advertising, which is to get people to buy the product -- in this case, it happens to be an alcoholic beverage, correct? Mr. SHEA: The purpose of beer advertising, like any advertising, is to get those of legal age, who are allowed legally to purchase the product, to buy my brand. I don't want that consumer buying my competitor's brand. That's why I'm advertising. LEHRER: Mr. Seesel, what's wrong with that? TOM SEESEL, National Council on Alcoholism: Well, I think that it's unfortunate that the beer industry continues to stonewall about its responsibility in this situation. I think that we have a case where alcohol promotion, marketing and advertising are pervasive in the society. It's not just television and radio, it's the beer people for example spend $15 to $20 million a year on promotions, marketing and advertising on college campuses where most of the students are by law illegal drinkers. So that we have a case of mounting studies that show an association between exposure to ads and favorable impressions of alcohol, we have the recent American Automobile Association study cited in your segment earlier that associates beer commercials with drinking and driving, we have beer companies blatantly showing commercials that associate drinking with dangerous activities, such as driving. You showed the Budweiser racing car -- what clearer case of juxtaposing alcohol with driving could there possible be? We have daily exposure to alcohol commercials which show high risk activities, such as boating, skiing, building a skyscraper, hitting homeruns -- we have alcohol advertised on MTV, which is watched by children. And then we have the really egregious case of Spuds McKenzie, dog toys that are sold in toy stores. Well, I hardly believe many adults are shopping for themselves in toy stores this Christmas season. So I think it's really too bad that the beer industry persists in denying any responsibility for this activity and denying any of its share. The liquor companies, to their credit for the past 50 years, have refrained from advertising their products on radio and television, recognizing a special responsibility to the public from this potentially very dangerous and addictive product. There's as much alcohol in a can of beer as there is in a shot of whiskey. So I see no reason why the beer and wine companies can't take a page from the responsibility book put out by the liquor companies over these many years. LEHRER: Mr. Shea? Mr. SHEA: I think the self imposed ban to which Mr. Seesel referred is more an historical anomaly, if you will, a remnant of prohibition. Again, with reference to the AAA Foundation study -- well, it's really not a study, it's a report, it's a pamphlet, it's a brochure. But a study, a scientific study -- and again I refer to the differentiation between politics and science. A report, a study is published in an academic journal, and peer reviewed. LEHRER: All right. Make the distinction for me. What do you mean when you say the difference between politics and science -- you mean Mr. Seesel is playing politics? Mr. SHEA: I don't quarrel with anyone's abilities or right, indeed, to play politics. If groups are in favor of an advertising ban, fine, go out and try to accomplish that. LEHRER: But don't expect you all to do it on your own? Mr. SHEA: Not only expect us, but don't expect us to say that there isn't science, when indeed there is, which says that beer advertising isn't causing young people to drink. Young people were drinking long before television and radio were invented. I'm not saying that those problems ought to be addressed, indeed during the film segment there was a reference made to SADD, Students Against Driving Drunk. I think one of the professional affiliations with which I am most proud is the fact that I was a board director of that organization for six years. Indeed, when that group was founded, in dire need of financial assistance, it was the beer industry which was the first major corporate sponsor of its activity. So we're not myopic, we're not saying the problem doesn't exist. But we're saying let's be realistic as well and not say that a simple solution, an ad ban, is going to do away with the problem. LEHRER: Let's go to that point. Mr. Seesel, you've heard Mr. Shea and other representatives of the industry have said this before that they are not going to do what you're suggesting, which is to voluntarily stop advertising on television. So what is your next step? What would you like to see done? Mr. SEESEL: I think there are many reforms and I think that the word that's most useful here, as opposed to revolution. I think there are many reforms that need to be considered by our policymakers. I think it's important to understand also that we're only talking about one segment of the alcohol problem, which is advertising, marketing and promotion. There are other elements that have been allowed to flourish in a really rather permissive public policy environment -- for example, no warning labels on beer, wine and liquor bottles and cans, a very low rate of excise taxation. The last time taxes were raised on beer, federal excise tax, was 1951. So we're talking about a high permissive public policy environment in which many reforms need to occur in order to control and reduce our problem with alcohol, the number one drug problem as was referred to in your segment. In the case of advertising, I think the reform that ought to be considered first is an equivalent time requirement so that radio and television stations that show these ads have an obligation to the public to provide an equal amount of time for public service messages that warn about the multiple health and safety risks of drinking. It's not just drinking and driving. There's the risk of -- elevated risk of cancer, hypertension. From consuming alcohol there's the problem of fetal alcohol syndrome. And numerous other cases. So I think a first step in the direction of reform in the case of advertising would be an equivalent time revision. LEHRER: What would the industry say about that? Mr. SHEA: I think the Federal Communications Commission would have a great deal of problems with it. Back in the late '60s, early '70s, when the equal time provision, or Fairness Doctrine, I believe it is, was invoked toward another product, it proved to be unworkable because every advocacy group in the country for a singular cause, whether it be anti sugar, anti salt, anti alcohol, you name it, came out of the woodwork and said we want equal time. Well, equal time may mean no time for anybody. I think that the broadcasting industry by and large has given time for worthy causes such as helping to alleviate the alcohol problem in society. By doing that we can look toward effective treatment and effective education, not panaceas such as bans and the like. LEHRER: Your industry does not deny there is a drinking problem in the United States, right? Mr. SHEA: The overwhelming majority of people who drink in the United States drink responsibly and moderately. That is not to deny that those who drink irresponsibly need to be treated and assisted. LEHRER: Mr. Seesel? Mr. SEESEL: Well, if this is the fiction that's been perpetrated by the beer, wine and liquor industries over many years, there is a sharp line of division between those who are responsible and who don't have any problem and those who the industry likes to call irresponsible. In fact, studies have shown the alcohol problems are distributed throughout a very wide segment of American society. Of every ten adult drinkers, two have very serious alcohol problem. Among adolescents, three of ten have experienced a negative consequence of alcohol problems. LEHRER: Let me just see -- would you agree with those statistics, Mr. Shea? Mr. SHEA: Statistics -- I've seen all sorts of statistics. They would be on the high end of what I've seen. LEHRER: Go ahead, Mr. Seesel. Mr. SEESEL: Well, I think that the problem is much more pervasive and much more imbedded in society than the industry would like for us all to believe. They would like to have us believe that it is confined to a very few people that they call ''irresponsible. '' I think the concept of addiction doesn't square very well with their idea of responsibility. But the problems are widespread in society. The economic impact is estimated at close to $120 billion a year, a 100,000 lives are lost. I think that it's the kind of pervasive and widespread problem that requires a lot of reforms on a lot of fronts. Advertising, promotion and marketing reforms are one set of those. In some future discussion we could explore a tax policy, we could explore a need for warning labels, and some of the other policy measures that the National Council on Alcoholism feels would contribute to a solution. LEHRER: In a word, you don't see the problem in as drastic terms as Mr. Seesel, I assume? Mr. SHEA: Not necessarily. What I do see though is a far different solution. I think you can cloak prohibition differently, as Mr. Seesel was trying to do, with taxes, raise the price and sick people won't drink. Well, that's nonsense. Indeed, those sick people need treatment. And I believe I called it irresponsible behavior rather than irresponsible people. But there indeed is moderate drinking. There has been for centuries. Else society would have been drinking. LEHRER: All right. Mr. Shea, Mr. Seesel, thank you very much. The Press for Profits HUNTER-GAULT: Next tonight, a story about competition and survival in the newspaper business. Today, a Justice Department administrative law judge recommended that Attorney General Meese reject a bid by Detroit's two major newspapers to merge their business operations. The judge said he was not convinced the proposed merger was the only way to overcome the huge losses at both papers. Fred Sam Lazaro, Public Station KTCA, has looked at the newspaper business story in Detroit and in his own hometown, Minneapolis/St. Paul. Here is his report

FRED SAM LAZARO: At first glance, the Star Tribune, inaugurated with great fanfare at last summer's Minnesota State Fair, would seem like a sound business proposition. The old Minneapolis Star and Tribune dropped Minneapolis from its masthead to become the Star Tribune, newspaper of the twin cities. For most practical purposes, Minneapolis and St. Paul separated only by the Mississippi River, are one metropolitan area. They share the same radio and television stations, the same hockey, football and baseball teams. However, historic loyalties and rivalries die hard. And a newspaper of the Twin Cities might get some getting used to. At least in St. Paul. Its newspaper, the Pioneer Press Dispatch, is an institution almost as old as the city itself. Besides the new paper used to be the Minneapolis Star Tribune. That's an attitude officials with the new Star Tribune hope to soon change. Executive editor Joel Kramer: JOEL KRAMER, Star Tribune: We will cover all the news in St. Paul and the suburbs of St. Paul that we think is worth covering. To a significant degree I'm sure the Pioneer Press and Dispatch will cover many of the same stories. DEBORAH HOWELL, Pioneer Press Dispatch: They can take Minneapolis out of their nameplate, but they can't take it out of their soul.

LAZARO: Deborah Howell is executive editor of the St. Paul Pioneer Press Dispatch. She says in order to succeed, a paper must be part of its community. In St. Paul, she says, only hers is. Ms. HOWELL: The vast majority of the people who work at this newspaper live in this market. The vast majority of the people who work at their newspaper live in their market. [TV ad for Pioneer Press]

LAZARO: The verbal combat has reached prime time airwaves. In addition to hyping the hometown sentiment, the St. Paul paper has argued simply that it is a better paper, one which has lured some popular local columnists from across the river. [TV VOICE:] So they left to find freedom of the press. Joe Suchare and Nick Holman. Read 'em in the St. Paul Pioneer Press Dispatch.

LAZARO: The smaller St. Paul paper has more than good writers to fend off any threat. It is part of the giant Knight Ritter newspaper chain, a parent company many times larger than the family owned Star Tribune. Knight Ritter has been willing to spend large sums of money on its properties, whether to lure reporters, build modern printing plants or wage price wars with competitors in various cities. Although better known for its prolific automobile production, Detroit has been home to one of the bloodiest newspaper wars in recent years, between Knight Ritter's Detroit Free Press and longtime rival Detroit News. Bob Nelson has done combat duty for the News. BOB NELSON, Gannett Co. , Inc. : The Free Press and Knight Ritter position was pretty simply, ''We got deeper pockets than you have. And we'll outlast you. '' When they said that, of course, I went into orbit for about three or four weeks. And you know, you sort of say to yourself, bullshit, it ain't gonna work out that way, friend.

LAZARO: One big reason Knight Ritter's Free Press hasn't been able to outlast its rival is that last year the Detroit News was purchased by the Gannett company, the only newspaper chain with deeper pockets than Knight Ritter. Gannett owns USA Today and about 100 other dailies and several television stations. The price war in Detroit has continued, but last year the newspapers agreed to a partial truce. They proposed a joint operating agreement, which is allowed under the 1972 Newspaper Preservation Act. The two newspapers want to merge their advertising, production and circulation facilities. Under the plan, Gannett and Knight Ritter would split profits from the joint business operation down the middle. However, the two newspapers would maintain separate reporting and editorial staffs, except for some collaboration on weekend editions. David Lawrence is publisher of the Free Press. DAVID LAWRENCE, Detroit Free Press: What's proposed will in fact for the first time in a decade provide a firm financial underpinning to these newspapers. And I think they will continue to see at the Free Press, and at the News, for that matter, truly competitive first rate journalism.

LAZARO: Whether or not it produces good journalism, joint operating agreement will produce higher prices at the newsstand and for the advertiser. As a result the papers now claiming to lose about $30 million a year are expected to rake in annual profits of over $100 million in just five years. Lou Mleczko, a Detroit news reporter and local union chief, says joint operating agreements are no longer a means to save a failing newspaper. Rather, he says, they have become a license to mint money, incentive to run a losing paper. LOU MLECZKO, Detroit Newspaper Guild: Knight Ritter had no intention of wanting to make money with the Free Press, because the intention was not to put out a competitive product, but to undercut the Detroit News, drive it out of business, and create a monopoly situation in Detroit, where they could maximize the profits. When that did not happen, the next obvious target for them was to go to a joint operating agreement. And when Gannett purchased the Detroit News in 1986, Gannett was very willing to accommodate Knight Ritter and to split the pie here and share the spoils of victory without having to compete against each other.

LAZARO: Mleczko and other critics note that ad rates and newsstand prices, 20 cents for the Free Press, 15 cents for the News, are well below costs. They say raising these prices close to a national average could result in moderate profits for both papers. Newspaper executives disagree. Mr. NELSON: Yeah, the people who say that of course are the ones who believe in the Tooth Fairy. Circulation has always been the big fight, because advertising comes from circulation. And if your circulation drops over a period of time, your advertising will disappear and go to the guy who's picked up circulation.

LAZARO: Bob Nelson says ad rates, newsstand prices and circulation are three crucially intertwined factors. Raise a newspaper's price, he says, and it immediately loses circulation to its rival, which in turn becomes more attractive to advertisers. A big concern among newspaper workers is job security. A joint operating agreement is expected to cost about 1,000 jobs. But without it, newspaper executives say many more jobs will be lost, since one of the papers will have to close. Mr. NELSON: It's better than having only one paper. So certainly JOA is a lesser of two evils. And at least you're gonna have two papers that can stay in business, should be able to make a profit for their owners, and still be able to present, you know, different editorial viewpoints and different news coverage to the community.

LAZARO: The union's Mleczlo argues a second voice under a joint operating agreement may not be worth saving. Mr. MLECZKO: People do not understand what has happened. In other cities where there have been joint operating agreements, such as Seattle, Cincinnati, San Francisco, none of those cities are examples of quality newspaper towns. They're making a lot of money for their parent corporations. But the products they put out are garbage. There are many, many stories that we publish, the Free Press publishes, that would never have seen the light of day if there wasn't the fear that if we didn't publish that material, the other guy would.

LAZARO: The debate over Detroit's joint operating agreement is now Attorney Edwin Meese's to resolve. So far, the Justice Department's Antitrust Division has sided with opponents. Knight Ritter officials warn that the Free Press will be shut down if the plan is rejected. If it's approved, opponents say it will open the floodgates to similar applications from across the country. Mr. MLECZKO: I think the trend over the last 20, 30 years in the United States has been to establish one newspaper cities. And you can enjoy a monopolistic situation. And they will do it either by phasing out other papers through acquisitions or mergers, or they'll do it through the Newspaper Preservation Act.

LAZARO: With more and moreAmericans turning to television for their news, and with advertisers turning to television, radio, even billboards, newspapers have had to get larger to survive. HUNTER-GAULT: But surviving does not necessarily mean consolidating -- at least in Detroit. Today's recommendation to Attorney General Meese says market conditions in Detroit justify keeping both major dailies in their ongoing competition for readers and profits. WALTER CRONKITE LEHRER: Finally tonight, a conversation with a most famous man of broadcast journalism, Walter Cronkite. Robert MacNeil had the talk before leaving on vacation. They talked about a lot of things, starting with Cronkite's recent CBS documentary about South Africa, Children of Apartheid. MacNEIL: Walter, let's talk about your documentary about South Africa, Children of Apartheid, for a moment. It seems a puzzle what to do about South Africa. Mary McGrory, the columnist said that ''While people have disappeared before, South Africa is the first case of a whole country to slide from the public's view. '' What is American journalism's responsibility now, do you think, in South Africa? WALTER CRONKITE: Well, if you get to the bottom line, should we be there, suffering censorship as we are. My answer is definitely yes. I certainly think we should be there. We have been in a lot of other countries where censorship has been as severe and sometimes more onerous than it is in South Africa today. There's no excuse to not be there. We should do our very best to report as well as we can out of there. I would like to see more emphasis put on the fact that what we do get out is coming from a country that practices censorship, whether that piece itself is censored or not. I've been a part of that argument for unfortunately 50 years, I think, after -- when I was in the Soviet Union living there as United Press correspondent right after the war. Some of us in the Soviet Union felt that our dispatches ought to carry a line at the top of them wherever printed, ''Passed by Soviet Censors,'' and tried to convince our bosses that they should do that. And they made the point at the time that a lot of other countries with some area of censorship -- it may not be as total as it was in the Soviet Union at that time -- but it couldn't have been much worse than the Soviet Union at that time -- but how are you going to grade these things, really? And they decided since it was impossible to do so, they wouldn't do it at all. That is, put such a disclaimer on dispatches. So I think we still have that problem today. We need to be in South Africa, we should have our eye, the eyes of the people as represented by the press, present. If only to write the truth when they get out. That's important in itself. And whatever they can get out while there, so much the better. MacNEIL: Is it different for TV? The argument is made here, and it's implied by what Mary McGrory said there, that when then the political heat is off when the picture is turned off, and effectively the South Africans have turned off the daily news picture, the South African government. Mr. CRONKITE: That's true. And there might be one solution to that that I've tried to sell around to some of my friends still active on the news programs, and without success. And that's that I think that when we have a story out of there without pictures that discusses terror tactics on the part of the police or on the part of the militant blacks, either side, the riot situations in Soweto, Crossroads, or wherever, I think we ought to resurrect old footage. I'd bring out some old footage and say, ''file footage. '' We've done that on other things. Why don't we do that every time? Why don't we do it every time there's a story? You only use 20 seconds, 30 seconds of it to remind people that this is what's happening, that we're prevented from reporting. MacNEIL: In the few years that you've been doing the daily news show, the TV news business has changed a lot, its financial crisis, the shrinking share of the audience, the competition for local stations and cable and everything -- do you have a sense -- everybody in this wants to know where it is going -- do you have a sense of where it is heading? Mr. CRONKITE: I have a sense of where it's heading, but I wouldn't make any guarantees that I'm right. I wouldn't put one red penny on my forecast, if it's even that. I am -- I happen to believe that there will be a strengthening of the local stations and expansion of local station reporting and that there will be an improvement in services available to the local stations so that they will have something available in a syndicated daily news service similar to the newspapers' AP and UPI. And that will expand their influence. It very possibly will cause some of those stations to (unintelligible) off from network coverage. I wouldn't think a lot of them would quit network coverage, because the network coverage comes to them as part of a package and why should they not take it? It would strengthen, in other words, independent stations considerably, those stations that are not connected with the networks one way or another. I think in the long run, it probably would be an improvement if the local stations in beginning to expand their news, including world and national news, buying a syndicated service, they're having a world desk as well as a local desk, it increases their sense of responsibility in what they're doing so that they really begin to put out a responsible news service. And then we're all to the good. The more we (unintelligible) out there, the merrier. I like competition in news. I think it's a safeguard for our free press and our democratic practices. If, on the other hand, they don't do it -- many of them -- any better than they're now doing local news, then it's going to be a serious problem if they think they can get along with that alone and cancel the network coverage, then we're going to see a shrinking of the information responsibly presented to the people. And that would be unfortunate. MacNEIL: Do you think there are going to be five, ten years from now, nightly network news programs of the kind that you spent much of your career in, playing as important a role in the public affairs of the country as they have in the past? Mr. CRONKITE: Well, going from back forward, forward back, back forward, the important role -- probably not. Because of the proliferation of access of available sources. So therefore there won't be quite as important as they were in the past. Their share audience will be smaller. The style that they'll have, I think that likely will remain fairly much as it is. But it could change. The network news programs could become much more akin to the New York Times Syndicate Service, the Los Angeles Times Syndicate Service, stories in depth by reporters who spent some time developing them. If they're only limited still to 20 minutes, they're not going to be in very great depth, but they'll be in more than we have today. There'll be three or four stories with some depth, probably more commentary and analysis than today. Andnot so much breaking news stories. The breaking news stories would be supplied by the syndicated people. MacNEIL: Your great love as a reporter -- television reporter -- was space. You've said that the moon landing in 1969 will be seen by history as important as Columbus's discovery of America. What do you think of the U. S. space program now, where it is? Mr. CRONKITE: Near disastrous state as far as manned space exploration goes. We're way behind. And I don't see the drive to catch up at the moment. I think we're tragically behind, really. In unmanned exploration of space, we're probably behind as well. But we're a little better off there. We are mounting our Jupiter flyby program, and that's a major project, Mars/Jupiter flyby. But basically, we've let the leadership slip from our grasp. The Russians are doing far more than we're doing in space. MacNEIL: Could they develop an uncatchable lead as this goes on? Mr. CRONKITE: Probably not uncatchable over a longer period of time. But certainly there's a gap. We have a space exploration gap today. That means it's uncatchable over a period of four, five, six, seven years, perhaps. Something like that. I think there's a reason to have some concern over the actual state of our communications capabilities today, and our other satellite capabilities with the fact that we're lacking launch vehicles. We've got a bunch of communications satellites up there on which our whole nation depends, hangs today. All of our communications, or most of them, are through satellites, data transfer, stock market figures, everything. Moving by satellite. Those communications satellites are wearing out. They were depending upon being replaced at a given schedule. Over the last couple of years since the Challenger episode and our space launch program came to a dead screeching halt, and we don't have anything up there now. MacNEIL: We did a feature the other week here on the energy the Russians are putting in to try and sell their launch vehicles commercially, and the U. S. government is preventing American satellite firms from putting them on the Russian markets. Mr. CRONKITE: And they may not be able to prevent that for very much longer. We may be in the position we have to buy Soviet launch vehicles. Because if those communications satellites -- we're living now on borrowed time. They're lasting longer than they were supposed to last. And that's the only pad that we've got. Instead of wearing out in eight years or something, they're still going, and they've got another couple of years maybe to go. That's our pad. And if that pad disappears, we're going to have to go somewhere to get launch vehicles very quickly. MacNEIL: Looking at space a bit more philosophically, Carl Sagan, of course, has an interest in space exploration, professional interest -- wrote recently a very critical article about the state of America's space program. And then he said, ''And what kind of vision are we projecting of the future for the imaginations of our children?'' What do you think about that? Mr. CRONKITE: Well, I think that the space program only has to take its place along with a dozen other things that are failing to give our young people vision in this country today. The whole state of our industrial development, of our electronic development, of our R and D for peaceful purposes rather than war. This -- we've fallen behind in all of this. Where is the American Get up and Go? Where is that spirit that inspired generations of American youth? I don't see it anywhere today. The self aggrandizement, selfishness of the producers in America today has I think counter inspired -- if there is such a thing -- a generation of young people. And we see them coming along today figuring out how to make money. We don't see a lot of them coming along trying to invent things and trying to serve mankind in other ways. How can they make the most money in the quickest form? And then presumably get out, buy their boat and retire. I think that's the tragedy. MacNEIL: What do you feel about the state of your country, the triumphs and tragedies you've covered for 50 years now? Mr. CRONKITE: Well, that's I think where I start. I'm really appalled as I look around today at our failure to get involved in the basics that any free society must concentrate on if it expects to survive and prosper. And primarily that's education and health. That's two things that are absolutely essential. And I don't see where we're doing anything really. We've got some very concerned citizens who are meeting and writing reports on education, the state of our health, and what happens? Reports get filed away. Everybody talks about them for 24 hours after they've appeared on the front page of the newspapers or discussed on MacNeil/Lehrer. And then they disappear. Where is the leadership to concentrate our attention on these problems? We can't expect to survive in the fashion that we believe that America's entitled to and that we have always dreamed of if we have a nation 50% illiterates that can't function in society at all. We can't do it if we've got a nation that has to be concerned about catastrophic illness to the degree that it tries to put more money aside than it probably can ever use. I don't understand the hospital system in which we're closing hospitals because there's no business for them and we've got people on the streets who don't have anywhere to go. There's just something wrong with our whole concept of a viable republic. Foreign policy -- I mean, we don't have a cohesive foreign policy today, which is what results, I think, in the runaway defense expenditure. We have to have a cohesive foreign policy to tell the Pentagon what to build, what to defend against. And unless you put those two things together, you're going to have a Pentagon which builds for everything, everything from a shooting war at 13th and Walnut in Kansas City, Missouri, to a global nuclear conflict. MacNEIL: Are you about to give us a headline that you're putting your hat into the presidential ring (laughter)? Mr. CRONKITE: Well, if Gary Hart can do it, why can't I? I've got about as many strikes against me as all the candidates put together. MacNEIL: Well, Walter Cronkite, thank you for joining us. Mr. CRONKITE: You notice you didn't get a flat no? Recap HUNTER-GAULT: Once again, today's top stories. The government's monthly index forecasting the future course of the economy had its largest drop in six years. Murder charges were filed against an Arkansas man implicated in the deaths of 16 people. And late today, seven persons were found dead in an Iowa home in what police believe may have been a multiple murder/suicide. Jim? LEHRER: Good night, Charlayne. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.