The MacNeil/Lehrer NewsHour

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

MR. MacNeil: And I'm Robert MacNeil in New York. After the News Summary tonight, our major focus is the battle to take over Paramount Communications. Paul Solman reports, and four media watchers analyze the multi-billion dollars struggle and future impact on consumers. Bruce Van Voorst of Time Magazine reports on how court decisions are cutting across the new Pentagon policy on gays in the military, and we have a report from Portland, Oregon, on experiments with accupuncture for drug addicts. NEWS SUMMARY

MR. MacNeil: President Clinton had two events today dealing with the issue of crime. Tihs morning he awarded the first of $150 million in new federal grants to cities to help hire more police officers. In 74 communities, there were grants received today. Mr. Clinton called it a down payment on ihs pledge to put an additional 100,000 police on the streets. Later, he signed the National Child Protection Act at a White House Ceremony attended by advocates for the legislation, including talk show host Oprah Winfrey. The bill establishes a database to track reports of child abuse and makes the information available to people who employ child care workers. Mr. Clinton had this to say about it.

PRESIDENT CLINTON: For the first time, we'll have a system in place to protect the many millions of American children who receive care and supervision in formal day care and in other settings from other organizations. This law will give us the tools we need to safeguard children from those have perpetrated crimes of child abuse or sex abuse or drug use, or those who have been convicted of felonies. It's very important that we give working parents peace of mind about child care. The majority of mothers with young children now work outside the home. Six million children are placed in formal day care settings every day. Balancing work and family is hard, and parents are worried about their personal security, the security of their children in an increasingly violent world.

MR. MacNeil: Later, the President met with the father of a 12- year-old, Polly Klaas, who was kidnapped from her California home and murdered. Mark Klaas told reporters that he and Mr. Clinton talked father to father about children's issues and new ways to combat crime. Police in Little Rock, Arkansas, today charged the son of U.S. Surgeon General Joycelyn Elders with selling cocaine. Twenty-eight-year-old Kevin Elders was released on bond and ordered to appear in court in February. Police allege he sold an eighth of an ounce of cocaine to undercover officers last July. If convicted, he could get up to life in prison. Surgeon General Elders caused a controversy two weeks ago when she said the government should study legalizing drugs as a way to reduce crime. Jim.

MR. LEHRER: Defense Sec. Bobby Ray Inman failed to pay Social Security taxes for a part-time housekeeper. A White House statement said Inman filed the proper forms with the Internal Revenue Service today, and he paid about $6,000 in past taxes owed. President Clinton's first choice for attorney general, Zoe Baird, withdrew her nomination after it was disclosed she failed to withhold Social Security taxes for an illegal alien who worked in her home.

MR. MacNeil: Ukraine announced today it had dismantled half of its 46 SS-22 long range nuclear missiles. Officials in Kiev said the rest would go by the end of 1994. Ukraine ratified the Start I Nuclear Arms Reduction Treaty in November, but it set conditions on its implementation. Today's statement made no mention of Ukraine's other long range missile, the SS-19, or its battlefield nuclear weapons. Russia's new constitution was officially approved today. The Central Election Commission reported that just over 58 percent of voters supported the document which gives Russian President, Boris Yeltsin, broader powers. Parliamentary election results are still unofficial, but returns show anti-reform candidates picking up an unexpectedly large number of seats. In Washington, U.S. Ambassador at Large Strobe Talbot was asked if that meant the U.S. would accept a slower pace for reform in Russia. He spoke at the State Department.

STROBE TALBOT, State Department: Rather than in thinking of it in terms of slowing reform down, I would say it's more a matter of broadening the concept of reform both in what they do in russia, and what we do to try to help it, i.e., rather than focusing just on the, the economic indicators which are important and which will remain important, they and we also have to factor in to our policies the social factors which you might call the misery index, unemployment, people's sense of being afraid on the streets, being afraid of the future, that kind of thing.

MR. LEHRER: In Serbia today, the ruling Socialist Party of President Milosevic claimed victory in Sunday's parliamentary election. Official results were not expected until Wednesday, but it appeared the socialists had enough votes for a simple majority in parliament. Opposition groups did make some gains. The country has been experiencing severe economic problems since the United Nations imposed sanctions because of Milosevic's support for Serb rebellions in Bosnia and in Croatia.

MR. MacNeil: The United Nations today formally created the first High Commissioner for Human Rights. U.S. Amb. Madeleine Albright called the resolution creating the job "a major milestone for world human rights." However, it remains unclear how free a hand the commissioner will have to intervene in countries where basic freedoms are being suppressed. It's expected that much will depend on the person appointed to the job by the U.N. Secretary General.

MR. LEHRER: That's it for the News Summary tonight. Now it's on to the battle for Paramount, gays in the military, and accupunture for drug addicts. FOCUS - LET'S MAKE A DEAL

MR. MacNeil: First tonight, in the words of Hollywood, this year's super-collossal spectacular, the largest Wall Street takeover battle of '93, the struggle for Paramount Communication. Today, after weeks of street fighting, two rival suitors submitted secret, multi-billion dollar bids for Hollywood's last major studio and media conglomerate. Why do they want it so badly, and what it means for consumers we'll examine after this backgrounder from Business Correspondent Paul Solman.

MR. SOLMAN: From a distance, corporate takeovers can look like a game, and an easy one at that. All it takes to win, it seems, is to outbid opponents for the target company. But often when you actually play the game, it isn't that simple. In fact, it can become a trail of treacherous traps, unholy alliances with players not even in the game, and of course, you're playing with real money, even if it's not exactly your own. Now in the latest version of the takeover game, the grand prize at game's end is a company that began life as a movie studio back in 1912. Eighty-one years later, the studio is still reeling out hits, such as this season's "Wayne's World 2," and "Addams Family Values." LBut there's a lot more behind the Paramount gate, TV programs, for example, such as the seemly immortal "Star Trek," the ever-enthusiastic "Arsenio Hall," the relentless "Entertainment Tonight," Madison Square Garden and its resident teams, the New York Knicks and Rangers, a series of theme parks around the country, and a vast complex of publishing companies that put out everything from best sellers to software to instructional videos, and even a book I once co-wrote now sadly out of print. Two two companies trying to take over this mountain of merchandise are mainly the retailers. They don't manufacture much of anything. Instead, they concentrate on distributing and marketing what others produce, and that's what makes Paramount so attractive to them. It's got the products; they've got the channels of distribution, literally. Player No. 1, 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. In addition, it sells TV programs all over the world. Viacom grew enormously a few years ago when movie theater mogul Sumner Redstone took it over, creating a powerhouse of entertainment distribution that could drive a hard bargain with the makers of product. Even better, however, would be to own some product, itself.

SUMNER REDSTONE, Chairman, Viacom: Paramount-Viacom will combine publishing and cable firms, Newhouse and Cox. This added $3 billion to the QVC warchest. In late October, both sides sweetened their offer by raising the portion of their bids that would be paid to Paramount's stockholders in cash. And in late November, QVC took a great leap forward when the state court in Delware ruled in its favor and de-toxified the Paramount-Viacom poison pill. The state supreme court upheld that decision, so Paramount felt it had no choice but to auction off the company to the highest bidder, and it did so today.

MR. MacNeil: And where we go from here is a topic for Ken Auletta, a media columnist at the New Yorker Magazine, the author of the best-selling book Three Blind Mice, How the TV Networks Lost Their Way, and for Richard MacDonald, an investment banker at First Boston. This past year, Mr. MacDonald was a fellow at the Freedom Forum Center for Media Studies in New York. He joins us from Tampa. Mr. MacDonald, from what we know from the public bid so far, what would you guess the range of today's sealed bids would be?

MR. MACDONALD: Oh, Robin, that would be a very difficult call. I think that there's probably some indication that they went modestly higher, but I think it'll be a more complicated structure in the deal. There will be more -- there will probably be a reinforcement of the so-called "back end." In other words, the cash portion may be slightly enlarged, and there may be something to, to strengthen the stock portion of the deal.

MR. MacNeil: So -- but we're talking in excess of 8 or 9 billion dollars in each package, is that right, something like that?

MR. MACDONALD: Yeah. Of course, over 10 actually.

MR. MacNeil: Over 10, over 10 now. Ken Auletta, why do they think Paramount is worth so much?

MR. AULETTA: Well, because it is a library. Everyone talks about the new information superhighway. The superhighway is just a wire or two wires. The people don't watch wires. They watch programs, and the presumption is that this is the last independent prize, a private studio that might be for sale with a library of TV shows and movies, and the ability to manufacture many more. So it's, it's a prize that people want. That's one reason. That's the business reason they want it. But the personal reason they want it has to do -- anyone gets caught up in the emotion of a bidding contest, and I think these bidders are caught up in that emotion as well.

MR. MacNeil: I'll come back to that in a moment. Mr. MacDonald, does Wall Street think Paramount's worth that much, both it's Hollywood end, and all the other stuff that goes with it?

MR. MACDONALD: I think there is -- there are two theories. The first theory is that just on the strict, so-called valuation measures Wall Street uses, it's not worth that much money. On the other hand, there are long-term and strategic reasons to both of these buyers why they have a different opinion, will have to rely on their analysis in terms of what they think they can do with it because at the end of the day it's going to be theirs to work with.

MR. MacNeil: What do they think they can do with it?

MR. MACDONALD: Well, I think that in both instances with QVC, I think that it totally alters the nature of the company. Barry Diller, as you pointed out in the lead, was at one time the president of Paramount Pictures Corp. and made his name in that division before he went to Fox. I think that he's got a great deal to offer to the management of, of Paramount. On the other hand, Sumner Redstone of Viacom did a fantastic job with MTV, Nickolodeon, a lot of the basic cable channels they worked with over the years. And I think that their notion is they can bring a lot of that same programming expertise to Paramount in the new age basically to exploit the pay-per-view possibilities, all the transaction things that, that Ken pointed to.

MR. MacNeil: The interactive stuff. They think they can take, Ken Auletta, a leap into this future that is coming down the line.

MR. AULETTA: They both think that. They also think there's a great potential in terms of Euroep and the rest of the world. I mean, China is a market with 800 million television sets, and people want to get in those, those markets. So they see it not just interactivity. I mean, Barry Diller sees the possibility, as does Sumner Redstone, of taking Paramount Books, Simon & Schuster, or Prentice Hall education affiliate and not only doing, selling books on home shopping, they're also doing educational control, and really basically expanding the book market as well. Also, it's just a basic business of selling movies and television shows all over the world, not just the interactive element.

MR. MacNeil: Okay. The -- Mr. MacDonald, the -- Paramount dropped the two sealed bids today. What happens next?

MR. MACDONALD: Well, I assumed the boards opened them. They're reviewing them now. We'll probably get a leak before their official announcement. It's unclear when they're going officially describe what's in them. I assume that at some point some newspaper will get ahold of it. But my guess would be that both sides take a look at what the other guy's put on the table and then makes up their mind about what they'll do next.

MR. MacNeil: And then -- could the bids then be improved? Is that the idea?

MR. MACDONALD: I presume that they'll either --

MR. MacNeil: It's not --

MR. MACDONALD: -- that they'll either fold their hands, or they'll, they'll deal up them.

MR. MacNeil: It's not settled by the bids that were sealed today?

MR. AULETTA: No. The procedure allows the Paramount board and Paramount officials to negotiate and to try and get them to sweeten or clarify.

MR. MacNeil: You, you mentioned this is also a matter of personalities. The Wall Street Journal said today, "It's become a battle of egos." And describe what's going on between Mr. Redstone and Mr. Diller.

MR. AULETTA: Well, each of them said they don't want to lose, and their career is about winning or trying to win. And so they're very competitive, and it's very hard when you're dealing with people who put their pants on one leg at a time to come in here and ignore the fact that they are human beings who want to win and see themselves judged, in part, by whether they win or lose this battle. And, and, I mean, Sumner Redstone has publicly declared it would take a nuclear war for him to lose this battle so he's -- and Barry Diller not only wants a win because of what he thinks he could bring to, to the merged company, but the truthof the matter, he hates Martin Davis.

MR. MacNeil: Why? Why does he hate Martin Davis?

MR. AULETTA: Well, Martin Davis was the chairman of Paramount at the time he left the company. And he left on his own because he couldn't bear to work with the man. The truth is if you look at the depositions that these two men have given on this case, the hatred for each other comes out, much more so in Davis's case, by the way, but Diller, you talk privately with Barry Diller, as his friends do, and he doesn't like Martin Davis, and the feeling is mutual.

MR. MacNeil: Mr. MacDonald, is Wall Street concerned that the ego side of this is, is going behind the, the financial calculation? I saw also in the Wall Street Journal, a money manager in Boston said, "Both parties are legally drunk, and they're about to have one more drink." Is Wall Street concerned that the ego element of this is carrying it further than the economic realities?

MR. MACDONALD: I think, Robin, I think that the economic reality is simplyveiled at the moment. We're at a complete inflexion point in the development of communications in the country, basically what Ken alluded to when he was talking about two wires going into the home. It's very difficult right now to paint a perfectly clear picture of what the communications role will look like 10 years from now. Paramount is going to be an enormous part of that in all of its businesses, and I think that Wall Street looking in reverse, in effect, has underestimated a lot of the potential value that's inherent in something like Paramount. The other thing they're ignoring, and I think this is key, is that to some extent, the other institutional players in this game which would include those two phone companies, Bell South, the cable companies, Comcast and Blockbuster Video, have all signed on for reasons that have nothing to do with ego here because they're all a small part of it. I think what they see in the future is they see either that they get involved in this, or they, they're marginalized, that, in effect, without a position in something like Paramount or one of the key motion picture franchises, the studios, then they won't have a central position in this communications entertainment enivronment 10 years from now.

MR. MacNeil: Okay. Well, let's move this on to another aspect. The Paramount battle has revived the debate over whether such consolidation of media interests is healthy for free expression and consumer interests. We sample that now with George Gerbner, a professor and dean emeritus at the Annenberg School for Communications at the University of Pennsylvania in Philadelphia, and with Alfred Sikes, who was the chairman of the Federal Communications Commission during most of the Bush administration. He's now president of new media at the Hurst Corporation, where he's in charge of developing interactive television. Prof. Gerbner, how will this deal touch the fare that average people consume?

PROF. GERBNER: There's a lot of talk about economic realities and about personalities, but who is talking about human reality? This is a long step on the road. It's by no means the biggest step, but it's a big step on the road to total control by a handful of conglomerates. A child today is born into a home in which television is on seven hours and forty-one minutes a day. And before long, most of stories that most of our children hear most of the time are told no longer by the parent or by the school or by the chuch, and in many places not even by the native country, but by a handful of global conglomerates that have something to sell. This transforms the nature of our culture, the way our children are, are growing up, and if this is what we're looking forward to, to next year, I think George Orwell should have written 1994 and not 1984.

MR. MacNeil: What is the -- apart from the effect on children, what bad things do you see flowing say for adult viewers here and abroad from conglomerations like this?

PROF. GERBNER: Well, of course, this doesn't only affect children. This affects all of us. That one wires or two wires will soon be controlled by a handful of global conglomerates. There's no talk about vision. They're acquiring an already existing film library, and who is going to be the new product? Who is going to provide alternative vision? What happens to the independent? What happens to the native, cultural industrie, the movies, the television industries, and other countries? Last week, we heard talk about GATT, the General Agreement on Trade and Traffic [Tariff]. And we notice that the rest of the world is revolting, is rising up, is objecting to our flooding the, the global market, with standardized, homogenized, uniform product. Well, we're doing that because a producer of television programs barely breaks even on the domestic market. They're forced onto the world market to make a profit, and they are looking for a formula that sells well. It so happens that this is violence, and violence is driven by global marketing as well as many other things that are homogenizing, reducing alternatives, squeezing out the independents, and I think are very damaging to our democracy.

MR. MacNeil: Mr. Sikes, do you share such anxieties?

MR. SIKES: No. In fact, I think that's -- what you just heard would, would be sort of the conspiratorial view of the world, and I don't share that at all. In fact, we have a much more diffuse situation today than we had say ten years ago when the predominant television companies were ABC, NBC, and CBS. And, in fact, Viacom and, and QVC are relatively recent phenomena on the media scene. I certainly share Prof. Gerbner's concern about some of the violence on television, for example, but I don't think stopping transactions like this is the right bullet for that problem.

MR. MacNeil: What do you think should be done about the dangers you see, Prof. Gerbner?

PROF. GERBNER: Well, may I first differ with Mr. Sikes. What is happening now under the heading of competition is that the green light is given to a few of the sharks in this pool, in this tank, in which the sharks are going to gobble the small fish, and before long they're going to gobble up each other. I think there are two things that we ought to do: One is the dynamic of the technology, the global rate of the technology seems to be inexhorable. There seems to be no way, or perhaps no good reason to really stop this. What we have to do is erect certain safeguards, instead of reducing the regulations that the administration has declared this morning, perhaps the old regulations don't work, but we should provide resources, and we should build a people's movement to make sure that there is public participation in, involved in making our cultural policy. It's no longer a matter of choice. There are many channels, there are many more channels, and that, of course, is true. But more and more of these many channels are owned by fewer and fewer owners. The creative sources are drying up. The newscasts are designated. The creative workers in Hollywood are complaining that they are fewer demanded to produce more in less time, so that where is the diversity going to come from? There are two sources of, I think of creative ideas. One is not so new. Herbert Hoover first proposed that there should be a tax on radio sets at that time. I think that a 5 percent tax on new television sets will probably help to pay for alternative, independent productions. Second, my friends and I are advocating what we call a cultural environment movement. That's a coalition of people, citizen groups, that will see to it that this money is well spent, it's spent on alternative movements, and there is some public participation in cultural decision making, as you have in every democratic country. We're the only country that has no public input into what our cultural policy should be.

MR. MacNeil: What do you think of those ideas, Mr. Sikes?

MR. SIKES: I think they're crazy. First of all, to state that there's no public input, I mean, the public decides every time it uses a remote and chooses a channel what to watch. And if you don't produce things that people watch, you lose money and you go out of business. We're also in a world where we're talking about 500 channels, where we're talking about to fiber-optic systems that will have an infinite channel capacity. We've never had so much diversity. And part of the complaint is that a lot of the diversity we have people don't like. And I don't like some of the diversity we have, but, again, stopping transacitons like this is not going to get to the problem that Prof. Gerbner seems to be so upset about.

PROF. GERBNER: Well, we have many more channels with fewer owners and fewer creative sources. The facat is that diversity is declining, that there is greater uniformity. It's a myth that people are getting what they want. People are born into -- people don't ask for it -- they're born into an environment in which by the time they get to be five, six years old, they're totally indoctrinated as to what it is they should want.

MR. MacNeil: Let me ask Ken Auletta to come in on this. What do you make of this argument?

MR. AULETTA: It's hard to make the argument, it seems to me, that Prof. Gerbner is making. I think there's a legitimate argument that he makes which is a half-truth, which is that there is more concentration of ownership, and that is the direction, global communication giants, and that, that raises a real concerns from public policy point of view. At the same time, something contradictory is happening, which is you have many more channel choices. It's hard to argue when you see that the average home say 15 years ago had nine channels and the average home today has 40, and soon they're going to have 500, and soon beyond that in this decade. The viewer will watch what they want, when they want to watch it, and won't even think about 500 channels, or 5,000. It will be many more than that. So you have more democratic choice and yet more concentration of ownership. There are two, separate issues that we have to talk about, but you can't combine them.

MR. MacNeil: Prof. Gerbner.

PROF. GERBNER: Well, may I address the issue of many more channels, whether it's 500 or 5000. That is quite true. But many of these channels will be electronic magazines that will reduce what you see on your newsstand. Many of these channels will be devoted to redefining the American marketplace. They will all be shopping, and the entertainment and news channels will be delegated to a few blockbuster programs that will be available not once a week or once a day but every fifteen minutes.

MR. AULETTA: But if I am getting my magazine electronically, why should I be wedded to the notion of print? I'm getting the same magazine. It seems to me you're defining every change as bad and it may not be bad.

PROF. GERBNER: You're not getting the same magazine.

MR. AULETTA: I'm not speaking for myself.

PROF. GERBNER: On the contrary, I would like to see a lot of good change taking place. The trend, the direction in which we're going, is a direction in which I think is damaging to our children, damaging to our growth. It is going in a direction of total control of more and more channels. There's nothing wrong with having electronic magazines. And you reach the crossover where magazine production will be -- in print will be too expensive, most of them will go electronic, and if you reduce the diversity, not all magazines will go electronic, and the total orchestration involves print, involves going out to the movies, and what comes to television. If everything shifts to electronic, there are a handful of electronic firms that have bought up all the publishing houses, all the motion picture studios, that have bought up all outlets, and now can control the global market.

MR. MacNeil: Richard MacDonald, do you have a view on this, whether diversity is declining or increasing with this trend?

MR. MACDONALD: Yeah. Robin, I think the only -- the issues here are whether the economic incentives for the new owners are to become more conservative, in other words, to become more risk averse and by becoming more risk averse to reduce the amount of, of creative risks they're willing to take. I think it's not clear whether that's the case at all. I think that there's going to be, that the market which is, in effect, a sort of ultimate democracy in this sort of thing, the market will find in a 500 channel world will provide opportunities for both small producers as well as large producers as long as we keep access open. And I think that's the key policy issue here, that as long as the distribution channels are not shut off to any particular producer, then I think that you're going to enhance the amount of creative output that comes through in this country particularly, and provided you're worried about international markets, I think international markets are going to guard their cultural borders quite vigorously, and I think that we're going to have to -- as one entrepreneur said to me the other day -- be a lot more respectful of those cultures with whatever the products are that we sell to them.

MR. MacNeil: Mr. Sikes.

MR. SIKES: Yeah. I'd like to reinforce what Rick said. I quite agree. I think access is the key point. I think that the Federal Communications Commission, if necessary the Congress, needs to work on access and make sure that you can't have a monopolization and then a closing of those monopoly toll gates. I'd also raise a question as to whether re-purposing Beavis and Butt-head, example, is going to be a better success in interactivity, the world of interactivity, than some of the, of the new characters like Super Mario or, or Carmen San Diego that have come out of the small creative shops which, by the way, are the shops, the companies that command the large market multiple today. And I would contend that some of the, the most creative work and some of the work that's going to command the future is coming out of the small, creative shops today.

MR. MacNeil: Gentlemen, I thank you all, and we have to leave it there. Jim.

MR. LEHRER: Still to come on the NewsHour tonight, gays in the military and an accupuncture solution to drug abuse. FOCUS - GAYS IN THE MILITARY

MR. LEHRER: Next tonight, gays in the military, that issue that won't go away for the Pentagon and the Clinton administration. What began in January as a political battle is now being fought in several courts. Our update is from Bruce Van Voorst, senior national security correspondent for Time Magazine and a frequent contributor to this program.

MR. VAN VOORST: Walter Keith Meinhold had pursued an outstanding career in the Navy until he went on television last spring and said he is a homosexual.

WALTER KEITH MEINHOLD: Yes. I am, in fact, gay. There's a time when you have to stand up for what you think is right.

MR. VAN VOORST: After that appearance, the Navy took Meinhold off active duty. Meinhold's outstanding military service -- the court described him as a "dedicated and disciplined sailor" -- counted for nothing when the Navy moved to discharge him. The Navy's sole complaint against Meinhold was that his self-declared homosexuality violated military regulation. These bar service to persons who engage in homosexual conduct, or who by their statements demonstrated propensity to engage in homosexual conduct. William Woodruff, an expert of some 20 years standing in military law, explains this policy.

WILLIAM WOODRUFF, Law Professor, Campbell University: Well, the policy is based on the determination that homosexuality is incompatible with military service. You reach that conclusion from looking at the impact upon unit discipline, morale, readiness, unit cohesion, those sorts of factors that are necessary to field an effective fighting force.

MR. MacNeil: Meinhold was not charged with actually committing an actual act. His ouster was based on the assumption by the military that if he says he's gay, that is status, he will commit homosexual acts, that is conduct. Prof. Woodruff argues that with homosexuals status is conduct.

PROF. WOODRUFF: You must look and remember one thing, that policy is a conduct-based policy. There's a lot of talk about status and conduct being two different things, but what the policy is designed to do is say, look, homosexual conduct occurring in the military setting, in a military environment, is bad.

MR. VAN VOORST: But in January, a federal district court ordered Meinhold restored to active duty. The district court called the military's policy unconstitutional. Now the administration is seeking to reverse the lower court ruling and proceed with Meinhold's discharge.

UNIDENTIFIED PERSON: We believe the district court failed to give adequate deference to the military.

MR. VAN VOORST: The Clinton administration pursued the case against Meinhold despite Bill Clinton's campaign promise to allow gays and lesbians to serve openly.

GEN. NORMAN SCHWARZKOPF, U.S. Army [Ret.]: [May 11] In every case that I'm familiar with, and there are many, when it became known in the unit that someone was openly homosexual, polarization occurred, violence sometimes followed, morale broke down, and unit effectiveness suffered.

MR. VAN VOORST: The issue touched off a political firestorm with the new administration and Congress. This fall, the Congress passed and Clinton signed legislation called "Don't Ask, Don't Tell." According to this doctrine which the Pentagon is putting into regulation, service personnel are not asked their sexual orientation at the time of enlistment but they cannot reveal homosexuality while in service. Sen. Dan Coats, who opposes gays in the military, explains how that is supposed to work.

SEN. DAN COATS, [R] Indiana: Well, in practice, it's -- it would be very difficult for someone with a homosexual orientation to believe that they could successfully have a military career. Technically, it's possible because no question is asked on the entrance into the military and, therefore, you're not required to lie in order to gain entrance into the military. But declaration of status or any kind of conduct is going to lead to discharge, which means that essentially the situation is as it was, i.e., if you are totally private about your sexual orientation and totally refrain from conduct, you can serve in the military. But that's going to be difficult, and even the gay rights advocates or homosexuals say that's almost impossible.

MR. VAN VOORST: What's new about the new policy then?

SEN. DAN COATS: It's not all that new. The only change is that the question's not asked on entrance.

MR. VAN VOORST: That's precisely the view of the litigants in the outstanding case that's now before the courts. Although they differ in detail, they all, like Meinhold, argue that the ban on gays and lesbians serving in the military is unconstitutional, and more and more, the courts are listening.

SGT. JUSTINE Elzie: I'm up here today as a Marine.

MR. VAN VOORST: One case of particular interest is that of Sgt. Justin Elzie, a highly decorated Marine veteran. Despite an outstanding 11-year career, the Marines moved to discharge Elzie after he had publicly declared his homosexuality. Allan Moore of the prestigious Washington law firm of Covington and Burling took on Elzie's case.

ALLAN MOORE, Lawyer for Justice Elzie: On the record of the Elzie case, it's absolutely indisputable that they have gone after him not for the fact of being gay but for the fact that he spoke out about it. And that clearly flies in the face of the First Amendment.

MR. VAN VOORST: Why?

ALLAN MOORE: It flies in the face of the First Amendment because you can no longer say that you're punishing the person on the basis of something they're doing. You now have to go further and say that it's statements about homosexuality that are a problem, and that is a, a direct violation of the First Amendment.

MR. VAN VOORST: From a legal standpoint, the case of Midshipman Joseph Steffan is probably the most interesting of all. For one thing, it embraces most of the main constitutional arguments, but furthermore, Steffan has already prevailed in a landmark circuit court appeal. Steffan describes his situation.

JOSEPH STEFFAN, Former Midshipman: In 1987, I was one of the ten highest ranking midshipmen at the U.S. Navy Academy in Annapolis. During that year, I also made the decision to come out to several close friends of mine because I had come to terms with my homosexuality. Unfortunately, that confidence was broken, and I found out shortly before I was set to graduate that I was under investigation based on a rumor that I was gay. I confronted the administration, was asked outright if I was gay, and I said, yes, and based solely on that statement, with no evidence of misconduct of any kind, I was discharged from the Naval Academy. In December of 1988, I sued the military, seeking not only to overturn my own discharge but also the military's policy of banning gay men and lesbians. Unfortunately, at least the district court ruled in favor of the military.

MR. VAN VOORST: In November, a three-judge panel, the trend- setting District of Columbia Court of Appeals, reversed the district court and ruled in Steffan's favor. There is no dispute, the court said, that laws forbidding homosexual conduct are constitutional, however, it is a violation of the Fifth Amendment, due process, right to equal production under the Constitution, to exclude persons for just being homosexual. In other words, status as opposed to conduct. Judge Abner Mikva wrote the opinion. America's hallmark has been to judge people by what they do and not by who they are.

JOSEPH STEFFAN: This opinion is about the reality. The military's ban on gay and lesbian service members is all about enforcing private prejudices against gay men and lesbians. It's using the United States Government as a sword to give power to those prejudices.

[SOLDIERS MARCHING]

MR. VAN VOORST: The court also rejected the traditional military argument that the mere presence of a gay or lesbian is disruptive of unit morale and discipline. Writing for the unanimous panel, Judge Mikva said, "A cardinal principle of equal protection law holds that the government cannot discriminate against a certain class in order to give effect to the prejudice of others."

ALLAN MOORE: That is why this is perhaps the predominant civil rights issue of our day. What we have here is an extraordinary situation. We have the United States Government saying that an American citizen must be deprived of the opportunity to serve their country, the ultimate act of patriotism, on the basis of a criterion that has nothing to do in the military's own admission with that individual's ability to perform their job. It has only to do with the perception of that individual's colleague. Nowhere else in American law, nowhere else under the Constitution is that permissible.

MR. VAN VOORST: Yes, it is, say opponents of gays and lesbians serving openly in the military. The exception is the military, which they claim differs so markedly from civilian life that special rules must apply.

SEN. DAN COATS: You're on a sub under the arctic ice for six months at a time and you're sleeping six inches or three inches away from your bunk mate, and you're together 24 hours a day, showering together, sleeping together. That's an entirely different situation than exists in life outside the military.

MR. VAN VOORST: Judge Mikva dismissed this argument out of hand. "The courts must not give automatic deference to the military," said Mikva, "even when the military presents a national security argument." Mikva wrote, "There is no military exception to the Constitution." William Woodruff disagrees.

PROF. WOODRUFF: The question is: To what extent should the judiciary substitute its judgment for the political branches, for the Article I and Article II branches of government whom the Constitution has specifically given responsibility and charge of material affairs? And the Supreme Court has developed a rather impressive and long line of cases that indicates the courts should be very, very, very reluctant and accord a tremendous amount of deference to the political branches in excercising their constitutional responsibilities.

MR. VAN VOORST: These cases coming through the court vary considerably, some applying to the old, pre-Clinton policy, others to the new formulation of "Don't Ask, Don't Tell." And they all in one way or another are preliminary in that they are reversible on technicalities or ultimately by the Supreme Court. Sen. Coats is confident that the lower court support for gays and lesbians, in particular, Judge Mikva's decision in the Steffan case will be reversed.

SEN. DAN COATS: I think it's an exception that the Supreme Court will not uphold, and I think when the courts look at both the past precedents that were set in other cases and look at the new law that's been signed by the President and the extraordinary amount of effort and work that went into it and the support for it by all branches of government, they'll conclude that the decision by Judge Mikva was not a proper decision.

[DEMONSTRATION]

MR. VAN VOORST: But many observers argue that the cases all share a major constitutional vulnerability which favors gays and lesbians. Each cases challenges the right of the military to ban service by anyone who merely admits to being homosexual, that is mere status as opposed to conduct.

ALLAN MOORE: This is class Bill of Rights litigation. You go to the courts under the Fifth Amendment and under the First Amendment when the majority in the political process is intolerant of your individual rights. That's what these cases are about. These were not meant to be issues to be decided in the political branches, and I don't think they ultimately will be decided in the political branches.

MR. VAN VOORST: Last week, Petty Officer Meinhold reenlisted in the Navy. The Department of Defense under injunction by the court not to discriminate against him posed no objection. Although the lower courts are sending some new signals, there may well not be a clear resolution of this controversial issue until it goes to the Supreme Court as now seems virtually inevitable. FOCUS - POINTED SOLUTION

MR. MacNeil: Next, a new age approach to the age old problem of drug abuse. The solution to some people in Portland, Oregon, at least is accupuncture. Correspondent Lee Hochberg of Oregon Public Television reports.

KEVIN WOOD: Have me tested Monday. Man, I'm supposed to work tomorrow. I'm serious.

MR. HOCHBERG: Kevin Wood has just been plucked off a downtown Portland street, charged with possession of cocaine.

KEVIN WOOD: I've got an 11-month-old baby, and one on the way. You think I want to screw that up? I'll lose my job, man, you guys understand that? I just moved here, you people, man.

MR. HOCHBERG: In many cities, Wood's cocaine possession would trigger a felony charge or jail time, but under an unusual merging of the justice system and new age drug treatment, he's being offered a year-long protocol of accupuncture, visualization exercises, and group therapy to help curb his addiction. The felony will be struck from his record and jail time cut to a minumun.

UNIDENTIFIED PERSON: [courtroom] Kevin Scott Wood, C [case] Number 93-1137766.

MR. HOCHBERG: The program is called "Stop." It's the brainchild of Multnoma County's Circuit Court Judge Harl Haas.

JUDGE HARL HAAS: The idea is to be helpful to be people, let them get their own lives together again, and if the person treats, then the court will dismiss the case. The question is: Do you want to get in the Stop Program, or do you want to go ahead and have your trial on the issue?

KEVIN WOOD: I can go ahead and, I'll go ahead and do the Stop. I don't need this on my record.

JUDGE HARL HAAS: Okay. Good luck to you.

MR. HOCHBERG: Haas says the program is a response to the madness of the revolving door justice system. Prison space limitations have left Portland, like most cities, in an endless cycle of drug arrests, releases, then rearrests.

UNIDENTIFIED PERSON ON SCREEN: Didn't you just come in here yesterday? When did they let you out, this morning?

PRISONER: Last night.

JUDGE HARL HAAS: What you're seeing is really sick people being caught up in a system of criminal justice that offered nothing for them and offered nothing for the public, that it was bureaucracy in action.

ELLEN SHEFI, Accupuncturist: I want to tell you a little before the accupuncture before we actually start needling. It will decrease cravings if you're still having cravings or desire to use.

MR. HOCHBERG: After programs in New York and Miami showed accupuncture helps detoxify addicts, Portland made the still not completely understood treatment the centerpiece of its approach.

ELLEN SHEFI: Sometimes there's like a half a drop of blood, and so you just want to make sure that, you know, you clean yourself up.

ELLEN SHEFI: [talking to Wood] A little bit nervous, huh?

KEVIN WOOD: Just a touch.

UNIDENTIFIED WOMAN WHO ADMINISTERS ACCUPUNCTURE: Now if you need like me to slow down or whatever, you let me know. Okay. [putting needles in Wood's ear]

MR. HOCHBERG: After some initial discomfort, Wood is relieved to find the treatment soothing, and he wonders if it might also help him kick his cigarette habit. Accupuncturist Ellen Shefi says many addictions may be caused by so-called "body imbalances" that prevent organs from functioning properly.

ELLEN SHEFI: There are ideas that meridians flow up and down the body or channels of energy where chi flows, which is the vital force or the vital energy inside the body. And what happens as it flows up and down it might encounter some kind of a blockage.

MR. HOCHBERG: Accupuncture theory says that blockage starts the disease process, or the addiction. Placing needles at key points in the body, like the ear, removes the blockage and eliminates the disease. Western scientists can't explain how that happens and neither can accupuncturist Shefi.

ELLEN SHEFI: No one really knows the mechanism of action, how putting a point in here starts a whole cascade of biochemical and physiological changes. We do know those changes occur. [soothing music playing]

MR. HOCHBERG: Patients are needled, as it's called, in 45-minute sessions, six times a week in the early months of their treatment. Later, accupuncture is accompanied by visualization and other relaxation exercises together with group therapy.

UNIDENTIFED ACCUPUNCTURIST: Don't forget that you're in your most favor place, your favor spot in nature that you feel really comfortable in. And this is your time that you have to heal yourself, and as this life energy flows into you, you can feel yourself almost getting lighter.

MR. HOCHBERG: Almost 1400 people have taken the accupuncture. A quarter of them have been expelled from the program for bad attendance and repeated dirty urinalysis. A smaller number, 15 percent, have graduated the year-long program. That means their urinalysis in the final two months of the program showed them to be drug free. Treatment experts call that a good result.

ROSE FRANKLIN, Recovering Addict: It's working for me. It's working for me. I have money in my pocket that I never had before, and I'm buying things that I've never been able to buy.

MR. HOCHBERG: After 16 years of drug use left her homeless and penniless, Rose Franklin is a believer. She's been through seven months of treatment.

ROSE FRANKLIN: I work from 3:30 in the afternoon until 2 o'clock in the morning, and I work with seven different guys, and I'm the only girl, I'm the only girl packer on my shift. I feel great. I'm making, I'm making it. I'm happy.

MR. HOCHBERG: But for addicts on Portland's streets for whome accupuncture treatment has failed, there are pained reminders of its limits.

MAN ON STREET: I hated it. It sucks. They stick needles in your ears, man, and they say it don't hurt but it hurts. And then they get done, nothin's changed. I don't know about esoteric, Far East secret medecine. I don't know. I don't know nothin' that makes somebody stop usin' drugs until they, themselves, personally make that decision.

MR. HOCHBERG: And some experts in the drug treatment field say the Portland program's reliance on accupuncture is desperate public policy.

DR. ROBERT MATANO, Stanford Drug Recovery Program: There has yet to be a study to prove that accupuncture works. It has not been demonstrated to be an effective treatment process for drug addiction.

MR. HOCHBERG: The head of Stanford University's alcohol and drug recovery program, Dr. Robert Matano, supports treating addicts rather than jailing them. But he likens accupuncture to snake oil.

DR. ROBERT MATANO: We're marching people into a black box and we don't know why or what's happening to them once they get into that, and I think that's dangerous. If we're desperate and we buy into desperate solutions, snake oil solutions, we're actually just confusing the picture.

MICHAEL SCHRUNK, Multnomah County District Attorney: I'd ask them do they have a better bottle of snake oil, do theyhave a better program? To others it may be snake oil, it may be black magic and voodoo, but if it works, let's try it.

MR. HOCHBERG: Multnomah County District Attorney Michael Schrunk argues drug problems have proven so daunting that even if accupuncture's methods are mysterious, its placebo effect is enough to justify it.

MICHAEL SCHRUNK: If you told me, you know, chewing on gumdrops would, would stop the craving and make you more amenable to treatment, I would probably at the next meeting of this diversion program suggest that we add that as a requirement to entry of the diversion program.

MR. HOCHBERG: One essential the program has added in is compassion.

JUDGE HAAS: Anything else we can do to help you?

MR. HOCHBERG: Judge Haas has emerged as a father figure for hundreds of addicts. As they report to him every 30 days on their progress, Haas has learned to cajole and encourage those relapse and celebrate with those who get clean.

JUDGE HAAS: We're real proud of you. You ought to feel good about yourself.

UNIDENTIFIED WOMAN: Thanks, Judge.

JUDGE HAAS: See, these people for the most part have never had an authority figure do anything but threaten and you've just got a marvelous opportunity to give 'em, to give 'em hope, and to give 'em encouragement from the source that they didn't expect it.

MR. HOCHBERG: Haas has drawn broad praise from drug users. One recent graduate upon kicking his cocaine habit even turned to Haas to conduct his marriage ceremony. The judge recognizes that his personality-driven court might be hard to duplicate in other jurisdictions with less willing jurists.

JUDGE HAAS: If you're going around the country, you see a resistance to that. Like the judge I told you in Alabama said, why don't you get a social worker to do that, well, a social worker can't do it as well as a man and a woman in a black robe can.

MR. HOCHBERG: Whether it's the support of judge, new age medicine, or freedom from jail, the Portland program is turning some people back to the streets cleaner than they started. The administration's call for similar programs nationwide seems acknowledgement that even mystical strategies need be employed to combat one of the nation's most vexing social problems. RECAP

MR. LEHRER: Again, the major stories of this Monday, President Clinton awarded the first of $150 million in new federal grants to cities to hire more police officers. He also signed the National Child Protection Act. It establishes a database to track reports of child abuse to assist people who employ child care workers, and a White House statement said Defense Sec. Nominee Bobby Ray Inman failed to withhold Social Security taxes for a part-time housekeeper. He just paid $6,000 in owed taxes. Good night, Robin.

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