The NewsHour with Jim Lehrer

PHIL PONCE: Good evening. I'm Phil Ponce. Jim Lehrer is off. On the NewsHour tonight sizing up the economic impact of holiday shopping, a Chicago newspaper tries to come to terms with the Internet, our regular weekly political analysis with Mark Shields & Kate O'Beirne, sitting in for Paul Gigot, and a David Gergen dialogue with the authors of Requiem, a new book about the photographers who died covering the War in Vietnam. It all follows our summary of the news this Friday.NEWS SUMMARY

PHIL PONCE: Americans' incomes kept growing last month, and so did their rate of spending. Commerce Department figures released today showed a 1/2 percent gain in U.S. incomes for October. They've gone up steadily now for the last 12 months. Spending was up an identical 1/2 of 1 percent. Most of the increases was in services. Americans continued their spending today, the traditional start of the holiday shopping season. In Atlanta, people packed a toy store to fill out their holiday gift lists. In Minneapolis people crowded the Mall of America, the largest in the country. Some shopped as others took time out to ride the mall's roller coaster. And in Arlington, Virginia, children lined up to visit Santa. That gave the adults they were with a break from shopping. We'll have more on the holiday retail story right after the News Summary. In Bosnia today British Prime Minister Tony Blair said he was ready to keep his country's troops there beyond the current mandate for the international stabilization force. The 30,000-member force, known as SFOR, is scheduled to leave next September. In the past, the British government has said its forces would depart if the 8,000 American soldiers in SFOR were pulled out when the current mandate expires. But today in a visit to British troops in Banja Luka Blair said a longer commitment might be necessary.

TONY BLAIR, Prime Minister, Great Britain: I believe it's important that we see this thing through. And one of the reasons I wanted to come here today and to see and to meet you is just to say that even if it's not in the news headlines the whole time, this work is vital.

PHIL PONCE: There are some 5,000 British troops in Bosnia. On the Haiti story the United Nations Security Council today unanimously approved plans to keep an international police force in that Caribbean nation. The vote came as the remaining 1,000 U.N. peacekeeping soldiers get read to leave Haiti next week. Some 300 international police officers had been in Haiti training a local force and will stay there another year. International troops have been in Haiti since former President Jean Bertrand Aristide was restored to power in 1994. In Des Moines, Iowa, all of the McCaughey septuplets were breathing on their own today for the first time. Hospital officials took the last of the babies off his ventilator this morning. All remain in fair condition. The four boys and three girls were born November 19th, nine weeks premature, to Bobbi and Kenneth McCaughey. Doctors have said the babies will likely stay in the hospital until January. That's it for the News Summary tonight. Now it's on to holiday shopping expectations; newspapers go on-line; Shields & O'Beirne; and a David Gergen dialogue. FOCUS - GREAT EXPECTATIONS?

PHIL PONCE: The retail season ahead is up first tonight. Kwame Holman begins with some background.

KWAME HOLMAN: On this traditional first day of the holiday buying season many retailers opened their doors hours early. This year's buying surge is spurred by government and private economic reports of strongly positive news, including rising incomes and low inflation and unemployment. Consumer confidence is at a 27- year high.

MALE CONSUMER: From my own experiences I have to say that the economy is stronger now than it was even last year. Where it's going, it only seems to be getting better.

FEMALE CONSUMER: I was very proud of myself last year for not charging a single item, but--and I feel like I'm going to be able to do that again this year.

SECOND MALE CONSUMER: I think the economy drives people as to what they should and shouldn't spend. And things look pretty promising.

KWAME HOLMAN: Some retailers share the optimism.

ELLEN NOONAN, Manager, Crate & Barrel: Well, we're definitely above numbers last year. You know, we're above our budget. We're expecting really good things this Christmas. People are really spending cash. You know, they're not as much charging. You know, there's a lot of big bills in the drawer and checks in the drawer, so people are really out there spending.

KWAME HOLMAN: Still, it is not clear the strong economy will be a boon to retailers and shopping malls. For most of those merchants the holiday shopping season accounts for half their annual profits. An Associated Press poll released this week did not bring good news. Nearly a third of respondents said they'll spend less on gift items this holiday season than last. 56 percent said their retail spending will be about the same as in past years. Experts say Americans who are working harder and longer are devoting more of their rising incomes to travel and dining out, cutting into retailers' profits, despite overall favorable economic trends. Many economists predict the U.S. economic expansion, now in its sixth year, could continue through 1998. One of the few clouds on the horizon is the fear recent financial instability in Southeast Asia eventually will have negative implications for the flush American economy. Already, the downturn there means Asian consumers have less money to spend on American products, eroding the profits of U.S. exporters. On the flip side devalued Asian currencies mean their products will be cheaper for the American consumer.

PHIL PONCE: We get four perspectives now on the season ahead and the broader picture of the U.S. economy. Sandra Shaber is an economist and executive vice president the WEFA group, a retail consulting firm; Jim Oesterreicher is the CEO and chairman of J.C. Penney; Jerry Kalov is president of Cobra Electronics Corporation and chairs the Electronic Industries Association; and Harry Alford is the president of the National Black Chamber of Commerce. And welcome all. Sandra Shaber, what kind of Christmas season are businesses expecting?

SANDRA SHABER, Economist: Well, the economy certain has been doing well, and this has led to great expectations on the part of the retailers. Maybe those expectations are a bit too high.

PHIL PONCE: Mr. Oesterreicher, what are your expectations?

JIM OESTERREICHER, J.C. Penney Co.: Oh, my expectations are for a strong holiday season. The customer is in good shape; however, they do have lots of options for their buying choices. But Christmas comes every year, and we're very excited about being able to serve them well.

PHIL PONCE: Jerry Kalov, that sounds like pretty rosy predictions. Do you agree?

JERRY KALOV, Electronic Industries Association: I do agree, indeed. The consumer electronics business has been growing steadily all year. And the trend coming into the holiday has been up in the range of 8 to 9 percent. And we're looking forward to that continuing.

PHIL PONCE: Mr. Alford, what kind of Christmas are the business constituents of your organization expecting?

HARRY ALFORD, National Black Chamber of Commerce: I think it's going to be brisk, but I tell you, in looking at all of the newspapers, local newspapers, black radio stations, and such, there is an encouragement to buy locally in the local neighborhoods, as opposed to going out to the malls. Some of the larger churches here in D.C. today open up retail outlets on their properties for the Christmas shopping season. So you're going to see a trend. And I see Sears and others starting to look at inner cities replacing new stores. But you're going to see a trend of those dollars, those $85 billion in the inner city communities staying closer to the neighborhoods than before. So the shopping will certainly be there.

PHIL PONCE: Sandra Shaber, there's high consumer confidence. There's low inflation and low unemployment, and yet, consumers are cautious about spending their money in the next couple of months. Why is that?

SANDRA SHABER: Well, there isgood reason for consumer caution. There's also some good reasons for retailer caution. Consumers probably are a little bit concerned about high levels of debt, and personal bankruptcies of course have been rising for sometime now. Also, while most of the news about the U.S. economy is really terrific, I think for some people what's going on in Southeast Asia, the effects on the stock market have been a little bit rattling. But there's also other reasons for some caution here. There are levels of debt, as many of the lenders have cut back on lines of credit. That's one of the reasons why consumers are using their credit cards more cautiously than before. I think it's also important to point out, as we noted a few minutes ago, that increasingly people are buying things that aren't sold at stores, experiences like travel and education, recreation and so forth. That continues through the holiday shopping season.

PHIL PONCE: Mr. Oesterreicher, how do you explain why consumers are cautious in light of all this wonderful economic news?

JIM OESTERREICHER: I think I'd use the word discriminating, instead of cautious. The consumer is absolutely going to find the best value of all their choices, and if that's apparel, the business that we're in, they're going to be certain that they're getting the very best value that they could get.

PHIL PONCE: Mr. Kalov, your take on consumer caution this Christmas season.

JERRY KALOV: Well, there may be caution out there, but it's not displaying itself in the electronics industry. We've just entered sort of the digital revolution. And there are an awful lot of people out on the market buying computers, and cordless telephones, communications devices of various kinds, of course, video games, digital display devices for their TV sets. So it appears that it's going to be a family Christmas. There seems to be a lot of electronic products being bought for the entire family use, and we see great growth in that area, so I don't know if there's caution in general, but it's really not in our industry at the moment.

PHIL PONCE: Mr. Alford, are some of the members doing better than others, depending on the nature of the businesses that they're in?

HARRY ALFORD: Yes. I think that those in the electronic industry and the high-tech industry, those businesses are certainly booming. We're in the food chain where we run behind General Motors or General Electric. If they're doing well, we're doing well. I think there is some concern on this globalization of the marketplace. General Motors is building four high-tech, state of the art motive plants in India, Thailand, China, and in Brazil right now. Where do we fit in that mix? That's a little scary. I think next week the global climate treaty that's going to be in Kyoto, Japan, is going to have a serious impact long term on our economy, and that's going to relate to jobs. And, of course, that's going to relate to retail.

PHIL PONCE: Do you agree that some of these global issues--what's happening in Japan and that sort of thing--do you think that has an impact on consumer spending?

HARRY ALFORD: It has a great impact when you start putting the factor of jobs in the way of it. The global climate treaty, where we are going to have to hold our energy output, whereas, China, India, and Brazil can go all night long, the sky's the limit, that's going to encourage some of our U.S. steel type manufacturing facilities to build there and put jobs there, take away those jobs from the United States. Take away that money, the costs, those are going to end up in consumable dollars, less here, more over there.

PHIL PONCE: Mr. Oesterreicher, speaking of jobs, what do you make of these reports that some retailers-- let me ask you if it's happening with your company--some retailers are having trouble finding workers this holiday season, is that so?

JIM OESTERREICHER: Oh, unemployment is at an all time low. I believe it's 4.7 percent. And so everyone is searching for that additional Christmas help, which for us is over about 20,000 additional people that work at the holidays. But you become more innovative, we make a lot of use of retired Penney associates, referral of associates that currently work with us, job fares, working with schools, and so it's difficult. But we're finding sufficient help for this holiday season.

PHIL PONCE: Ms. Shaber, why is it that some retailers, according to reports, at the very high end are doing well, and some retailers at the discount end are doing well, but some people who are sort of positioned in the middle may not be doing so well this Christmas?

SANDRA SHABER: That's an ongoing trend, and I think it's the result of two factors. One is there's been a polarization of income for some years now, and there are all sorts of explanations as to why that's going on. But certainly this buoyant stock market has helped. At the same time many goods look like commodities to consumers, and so if they can buy them at a discount store, you know, that's really very good. And they'll do so.

PHIL PONCE: Mr. Kalov, do you find a lot of people who seek your products are anxious to find them in a discount setting?

JERRY KALOV: Well, surely, there is a lot of business being done in discount centers, but I would counter the point that was just made. There's also movement underway to get more service-related retailers to revive the elements of service that are needed. Some of our products are fairly technical; they do require some assistance. I know a lot is true of that in the computer business, where you can buy a computer and get lots of software, but you still have to learn how to operate it. Surely that's true as we get more complicated with our audio and video equipment. We are seeing a resurgence of specialty retailing in electronics. That's not to the exclusion of discount stores but surely is in addition to it. And it seems to be satisfying a need that the consuming public is asking for. For example, some of the main growth that we're seeing is in high end audio and video equipment, where clearly there's a service factor involved with the installation of those products. And that has experienced very good growth this year.

PHIL PONCE: Mr. Alford, you agree with the observation of some people that there may be a sea change underway in which people are spending less on things and more on experiences, more on maybe entertainment or eating out?

HARRY ALFORD: Well, I think so. I know in my household that's the case. And when you start talking about looking for the best price and the best product, my two sons want a certain item this Christmas, and they've been studying all of the retail outlets for the last forty-five/fifty days, where the best value, best buys are going to be. Service is also a concern.

PHIL PONCE: Ms. Shaber, continuing concern about over-capacity, too much inventory, is that something that is on the minds of people in the industry this Christmas?

SANDRA SHABER: There certainly is a problem that's going to be made worse by what's going on in Southeast Asia. First of all, many of these countries now are much more competitive in world markets because their currencies have fallen. Second of all, some of them have just produced goods, whether cars or semiconductors, or polyester fibers have continued to produce goods no matter what the demand is. So there may be some over-capacity in the United States. We've seen inventories rise in some areas, but however bad that's been, it could get very much worse if all of these goods from Southeast Asia start entering world markets through 1998.

PHIL PONCE: How about too many stores, Ms. Shaber, are there too many stores in the United States?

SANDRA SHABER: There still are. I mean, that's been a continuing story now for 10 years. There have been too many stores, too many malls, and we've seen over the years a shakeout here with many very famous retailing names bite the dust. It also means for consumers that they must be very discriminating. We heard that comment a few minutes ago, and I think that's absolutely right. Consumers are going to look for the best products, the best price. This Christmas retailers have to provide a reason for consumers to walk in their door and not somebody else's.

PHIL PONCE: Mr. Oesterreicher, is over-capacity, too many stores a concern of yours?

JIM OESTERREICHER: Well, there's about 20 square feet of retail space for every man, woman, and child in America today, and that's certainly a lot greater than it was in times past. That competition should make every retailer absolutely focus on what they do best and provide the services that are needed for their customer base.

PHIL PONCE: Mr. Kalov, do you ever worry about producing just too much of the stuff that you make?

JERRY KALOV: Well, we always worry about producing too much if we don't sell enough, of course, but that hasn't been the case. If I may, I'd like to comment on this whole Asian situation. I had an office in Hong Kong, and I'm there very frequently, and although it is true the currency situations in Asia and the stock markets there have changed dramatically, there does not seem to have been any impact of any consequential way on the American marketplace. Many investors here in the United States of all walks of life have done quite well here in the American market. And though it is true that some of the costs are coming down in Asia by virtue of the currency exchange issues, they also correspondingly have some of their costs going up because they have to import a lot of products from other countries using their devalued currency to make their products, and so there seems to be, at the moment, an offset there. Overall capacity issues and retailing and being over-stored is a phenomenon that's true in this country. And, again, I'd make the argument that those who are going to add some additional levels of service are going to find some happy hunting grounds here this Christmas season.

PHIL PONCE: Mr. Alford, do you ever worry that if the economy is as good as it is--low in inflation, low unemployment, and yet there are a lot of people who aren't participating fully, or getting some of the benefits of these good times, is that a concern of yours?

HARRY ALFORD: Well, the chamber, the National Black Chamber's concern, of course, is in the urban areas, in most places where there is a double-digit unemployment. The economy is great overall but there are still some special concerns that we have So there's different standards and different reactions, I believe.

PHIL PONCE: Does that trouble you, that if this is as good as it gets, it's still not very good for a lot of people?

HARRY ALFORD: No, I don't think so. When self-employment levels for black communities is at 3 percent of total and Hispanic is 16 percent, Asian is 20 some odd percent, we probably can improve a lot without even making a dent on the meter just by learning capitalism, learning entrepreneurship, and learning what this country is based on--capitalism, money. And that's what's missing in urban communities.

PHIL PONCE: Ms. Shaber, what is 1998 shaping up to be?

SANDRA SHABER: The events in Southeast Asia so far don't look as if they're going to have a major impact on the United States as a whole. I think, for example, it may shave 3 percentage--three-tenths of a percentage point, perhaps even a half a percentage point off the U.S. economy. But one thing we need to keep our eye on is the regional impact. That's very, very important. For example, the Pacific Northwest and California, half or more of the exports in those parts of the country are destined for Southeast Asia. So for parts of the country that are dependent on that trade next year could look a lot less optimistic than this year.

PHIL PONCE: Mr. Oesterreicher, how does 1998 look to you?

JIM OESTERREICHER: Well, the economic fundamentals that are evident in this fourth quarter, we are planning to continue into next year. That doesn't mean there couldn't be some surprises like was just discussed with certain parts of the country.

PHIL PONCE: Mr. Kalov, your take on 1998?

JERRY KALOV: Well, if unemployment continues low, which it appears that it will, there's plenty of opportunities for people to go out and earn money and feel good about themselves. I think the '98 outlook is very good, and we expect continuing growth in that period.

PHIL PONCE: And that'll have to be the final word. I thank you all. FOCUS - NEWSPAPERS ONLINE

PHIL PONCE: Still to come on the NewsHour tonight, newspapers on the Internet, Shields & O'Beirne, and a David Gergen dialogue. Elizabeth Brackett of WTTW-Chicago has the Internet story.

ELIZABETH BRACKETT: This is the Chicago Tribune, a major metropolitan newspaper with a 150-year tradition. And this, only a year old, is part of that same venerable institution: The Internet Tribune. Clicking on their web address brings up the site that was recently voted the best online newspaper of the year by the National Newspaper Association.

HOWARD WITT, Chicago Tribune: Over here you see news headlines; everyday we keep the top five stories updated throughout the day.

ELIZABETH BRACKETT: In addition to breaking news, there's the complete contents of the daily paper and special reports designed for the web site. A staff of 20 work virtually around the clock to update information.

SPOKESPERSON: Check out the time line early on, so we get--because it's going to be huge, and we have to see what format to use.

SPOKESMAN: We're going to do like last week and get it early, okay.

ELIZABETH BRACKETT: The Internet, is changing the economics of the newspaper business so dramatically that to keep the presses rolling, it's essential to be on-line. Yet the battle in cyberspace is more about advertising dollars than it is about journalism. The 50 cents charged for the Tribune covers only 28 percent of the cost of putting out the paper. It's advertising, particularly the big display ads that wrap around news stories that takes up most of the freight-- the salaries, the presses, the building, and so on. But even with these ad revenues the newspaper barely breaks even. The profit comes from an unlikely source--these are buried deep inside the paper--the classifieds. Howard Witt is the associate managing editor for interactive news.

HOWARD WITT: Classifieds are the key to the whole game. And this is why newspapers are all over the Internet now because newspapers understand that their classified advertising is highly vulnerable.

ELIZABETH BRACKETT: That's because on the Internet anyone can start a classified ad site cheap. All that's needed are classified listings and a computer, the ideal tool for creating a searchable data base. Jeffrey Rayport teaches about managing on-line at the Harvard Business School.

JEFFREY RAYPORT, Harvard Business School: The web is full of individual sites, new startup businesses that have taken a look at those wonderful classified advertising franchises that the newspapers have owned for time immemorial, and they've said gee, I think we can do this better electronically, so that the web is full of examples of people who have created category killer sites for things like jobs, things like cars, things like apartments and real estate.

ELIZABETH BRACKETT: For example, Autobytell a new site on the web, sells new and. used cars. It's run by Peter Ellis.

PETER ELLIS, "Autobytell" Web Site: We appear to be a pretty good threat because when we try to run ads in certain papers in Canada, Boston, Seattle. The newspapers didn't want to take our ads because they felt that our programs were sucking their classified advertising out of the newspapers.

ELIZABETH BRACKETT: But the Tribune has more to worry about than Autobytell. Monsterboard is a help wanted site; so is Career Mosaic. And Realtor.com and Cyberhomes.com both list houses on the web. But more worrisome still are the sites owned by the behemoth of the information age, Microsoft. One of them, Carpoint, is a national site that sells automobiles Another, Expedia, is an on-line travel agency. And by spring, Microsoft intends to roll out its own real estate site, code name: Boardwalk.

JEFFREY RAYPORT: The Tribune Company is smart to be concerned about Microsoft for a very simple reason Microsoft has traditionally done what Willy Sutton did with the banks, which is go where the money is.

ELIZABETH BRACKETT: Owen Youngman knows just how essential that money is to the Tribune. His job as director for interactive media is to devise a strategy to hold onto the business. Known to his colleagues as the visionary, Youngman has a penchant for high technology and the cartoon geek Dilbert.

OWEN YOUNGMAN, Chicago Tribune: Financial strength is what makes it possible for us to do good journalism; makes it possible for us to have hundreds of people on the street covering news, writing stories, testing recipes, all the things a newspaper does, that's paid for by our advertising, and our classified advertising is a big high-margin chunk of that.

ELIZABETH BRACKETT: So the Tribune has gone on an on-line offensive. In the past year it's created its own sites to sell used cars, to help you find a job,,or a house.

HOWARD WITT: Where do you want to look for a house?

ELIZABETH BRACKETT: Lincoln Park.

ELIZABETH BRACKETT: Howard Witt likes to emphasize the many possibilities of the on-line paper.

HOWARD WITT: We give you at kinds of community information. There is some basic demographic information: the population, typical income, typical home price $420,000; we are a newspaper; we can bring to bear a lot of resources more than just the basic listing.

ELIZABETH BRACKETT: If the Tribune can hold onto its classified listings, then it can attract advertisers to pay for the site. That flashing rectangle is an ad. The more listings the site has, the more people may visit, and then the more advertising may follow. But according to Jeffrey Rayport you don't have to be a newspaper to win in this business.

JEFFREY RAYPORT: The terrifying thing for newspaper publishers, especially for the editors who work for the newspaper publishers, is that good journalism is not the description of an economic model for most publications. In other words, the economic model for most publications is bringing eyeballs to advertising, literally connecting buyers and sellers. Now it may be that by creating a marvelous set of contents for the news hole of a major daily you bring people who now bump into your classified and display advertising. But the fact is what Microsoft and others competing on the web have discovered is that you can make connections between buyers and sellers without creating a wonderful department store of news.

ELIZABETH BRACKETT: And that's just what Microsoft seems to be doing. In Boston, Microsoft has been promoting their latest web entry called Sidewalk. It's a city specific entertainment guide on the web. Right now sites are up about Boston, New York, San Francisco, Seattle, and the Twin Cities. Microsoft plans to roll the concept out nationally. Lisa Allen is the executive producer for Sidewalk Boston.

LISA ALLEN, "Sidewalk" Web Site" We're creating a different kind of city media. We are not newspapers. We don't cover the news. We don't do politics; we don't cover last night's baseball game. What we are all about is helping people make decisions. We'll tell you what is going on in the Wang or what's showing at the MFA. We'll even tell you where you can go for traditional Norwegian dancing if you want.

ELIZABETH BRACKETT: The Chicago version of Sidewalk is expected to be on the web by January, where it will compete head to head with the Tribune for advertising dollars. Sidewalk General Manager Barry Kurland.

BARRY KURLAND, "Sidewalk" Web Site: The business model is to accept advertising from hundreds of local merchants and we also have national blue chip advertisers. The national advertisers are interested in Sidewalk because it gives them the opportunity to buy across several different markets and offer very vocalized messages to the consumers in these local markets.

ELIZABETH BRACKETT: Microsoft believes its web advantage is the ability personalize the product.

DAN: One of the really keys thing about sidewalk, which is excellent. is the push technology that allows you to customize the site to fit your needs.

ELIZABETH BRACKETT: Microsoft, it seems has the means to deliver its product--and the advertisers that go with it. The Tribune, on the other hand, is an old dog, trying to learn some new electronic tricks as fast as it can. It launched it's own city guide called Metromix as soon as it found out Sidewalk was coming to Chicago.

HOWARD WITT: It's not perfect; we're working on it; we had great pressure to get it up; they were concerned that we wouldn't have anything before Microsoft got here.

ELIZABETH BRACKETT: It's more than the Tribune's classified strategy that's up for discussion at weekly staff meetings. The interactive group is working hard on protecting the paper's retail advertising base as well. For instance, Kurt Fliegel, wants to replicate Chicago's famous shopping area, Michigan Avenue on the web. He's read the analyst reports that predict on-line commerce will grow from its current 2 billion dollars a year to a whopping 57 billion dollars a year in just the next five years. He thinks the Tribune can capture a share of it.

KURT FLIEGEL, Chicago Tribune: Our vision here is to create a virtual environment on the Internet that people can use in a different way than they go physically walking down the street. What we will be using is some technologies like virtual reality photo bubbles.

ELIZABETH BRACKETT: So you will be able to walk into the stores.

KURT FLIEGEL: So you can walk down the street, look around, and see where the stores are, actually walk into the store, and see what is on the showroom and eventually maybe be able to pick up the merchandise and turn it around in a 3-D environment.

ELIZABETH BRACKETT: And how does that sell advertising?

KURT FLIEGEL: It sells advertising because we can ask retailers to pay first some rent to be on the street to be represented there and second we hope that over time we will be driving customers right to their stores and maybe take a percentage of those transactions.

ELIZABETH BRACKETT: But the Tribune worries about Microsoft getting their first, not only with the technology but with the very people working at the Tribune. According to Howard Witt, Microsoft has head- hunted every top interactive manager in the past few month. So far none have left, despite the six figure offers. Kurt Fliegel thinks he knows why.

KURT FLIEGEL: We're in the newspaper business even on the business side to support what we think is a great American institution, which is the ability to present independent news out to the American public. I choose to work here because I really believe in what the Tribune Company does and the difference it makes in the lives of American consumers.

ELIZABETH BRACKETT: The Tribune staff thinks of itself first and foremost as a newspaper, and management hopes this will be their competitive advantage on-line. They're betting millions that their name recognition and longstanding reputation for quality journalism will attract more users then the non-newspaper sites. That's why the contents of the daily newspaper is on their site along with web specials; stories reported specifically by on-line reporters and producers. Marja Mills went on assignment at O'Hare airport. She has more than her reporter's notebook with her. Producer Paul Pustelnik is there to record the interview on videotape and shoot digital pictures.

MARJA MILLS: One thing we wanted to get a sense of was how likely different, potentially dangerous situations are to crop up.

ELIZABETH BRACKETT: When the story goes on-line it will have text, video and still pictures. But the Tribune's focus on news may not be winning that many web users. According to the newspapers own survey, visitors to the Tribune web site click first for sports-- the Chicago Bulls site--next for classified ads--and then and only then for news. So in the high tech market space, what's the future of the printed newspaper?

HOWARD WITT: It's not going to be the death of the newspapers, just as the Internet is not the salvation for all humankind. I mean, the Internet is just like--it's another communications device. It could--if newspapers don't figure out how to hold on to the territory they have and expand it--it could make newspapers into something far different than what they are now.

ELIZABETH BRACKETT: Jeffrey Rayport believes the newspaper may eventually lose many of its traditional sections. Sports, weather, stock quotes, classified advertising will only appear on the web.

JEFFREY RAYPORT: What that means is that the subsidy that advertising provides to newspaper and the traffic building that some of that utility data provides in terms of attracting readers who don't care what's on the front page but they've go to know what their stocks did today, and therefore they buy the newspaper tomorrow morning at the newsstand, those artificial subsidies that came from bundling commercial editorial information will go away. Hence there will be newspapers. They will be thinner, they'll have a lot less advertising, and you'll pay 10 bucks a copy. Some of us will want to do that; most of us won't.

ELIZABETH FARNSWORTH: Meanwhile, the Tribune and almost all other major newspapers continue to struggle for footholds on-line. Their hope is to create a new economic model, which will build on their traditional strengths in print while adapting to the new electronic market space. FOCUS - POLITICAL WRAP

PHIL PONCE: Now to our weekly political wrap-up and to Margaret Warner.

MARGARET WARNER: And our political analysis comes from NewsHour regular and syndicated columnist Mark Shields. Paul Gigot is off tonight. Joining Mark tonight is Kate O'Beirne, Washington editor of the National Review. Mark, let's talk first about the Asian currency crisis. The President spent most of his week out at this APEC summit in Vancouver trying to deal with this Asian financial crisis. Is there a domestic political component to this?

MARK SHIELDS, Syndicated Columnist: I think there's a big one. First of all, let's remind ourselves what used to happen at these summits. The United States would go in and get lectured, beaten about the head and shoulders because we had these huge deficits. Japan would sit there and sermonize to us, and, you know, other countries say, what's wrong with you people. That's no longer the case obviously. The United States is in a unique position right now. We are not only militarily the strongest and unchallenged leader of the world. We're economically the strongest unchallenged economic leader of the world. And everyone looks to us. And they're looking to us, and there is a component, I think, domestically in two respects, Margaret. First of all, there's a certain resistance resentment on the part of some Americans against the Asian miracle. We've been lectured too about how wonderful Asia was because they paid workers 2 cents an hour. There was no government interference. The market policies worked, and all of a sudden they came a cropper. So there isn't a real rush to bail out on a lot of people politically. And the other factor is there is a moving populism, not simply Democratic but Republican. John Kasich, chairman of the House Budget Committee, putative candidate for president in the year 2000, is running against the International Monetary Fund as corporate welfare, that this is a bailout of the well off. And so I think there is--I think the politics there--whatever the president decided to do, or does decide to do, is not going to be easy to sell politically.

MARGARET WARNER: Do you agree?

KATE O'BEIRNE, National Review: Well, I do. The--IMF is pretty widespread. That's not a new phenomena on the side of Republican conservatives. They have long charged that the IMF subsidizes people for bad business decisions. I mean, the market should punish bad investments and reward success, and the IMF, of course, steps in far too often and bails out people for those bad decisions. Secondly, they impose very often wrong measures. First, they tighten down and force countries getting their help tighten down. So and typically to the IMF, which of course the Republicans did fail to fully fund this time around it's pretty widespread. The bigger problem on the Republican side, it seems to me, and here Bill Clinton's been pretty good, talkingup free trade, which he did again in Vancouver, which I think is critically important; some younger members not nearly being as committed as more senior Republicans or certainly Ronald Reagan's days, to an aggressive free trade agenda. They have--there's some work to do on their side of the aisle too. They--overwhelmingly--2/3 of them supported the fast track authority, but younger members are less persuaded.

MARK SHIELDS: I think this is a political consideration at home, though, because the followership of the Republican Party is a lot less free trade than is the leadership, and you'll see surveys--including Frabezio- McLaughin's running up to 2/3--Republican pollsters--up to 2/3 of Republican voters having grave reservations about untrammeled free trade. And that, at the same time, I think, it puts the Republicans somewhat in the position the Democrats were on bussing a generation ago, where the leadership of the party was committed to school bussing across county lines, and school lines, and the followership of the party said, hey, no, no, that doesn't appeal to us; that doesn't make sense.

MARGARET WARNER: Well, Kate, some White House officials were out in Vancouver telling reporters that they thought the Asian currency crisis would help them persuade Congress that they needed fast track authority to open up these markets more. Do you think that's true?

KATE O'BEIRNE: I think those who opposed fast track are not going to be persuaded by what's going on in Asia. We're just fortunate ourselves, the U.S. economy, that we're not very dependent upon exports to Asia. If anything now, capital's leaving Asia and coming to the United States. The public I think will be unsure as to how what's going on in the Asian markets is going to affect us, but they seem, based on how the market's doing, to maintain their confidence in our own economy, which I think is well placed. I don't think this is going to help them with their--unfortunately--isn't going to help them with their agenda they need to get that fast track authority.

MARK SHIELDS: It's going to run up the trade deficit I think in the short run, Asia's troubles. It's going to increase, make exports cheaper for them--for us to buy theirs, and at the same time, it's going to make it tougher for us to sell their--to them, and tougher for American manufacturers to sell in this country.

MARGARET WARNER: So what does that do politically?

MARK SHIELDS: So politically I think the trade deficit widens and could go to $150 billion--the estimate is for 1998, and with 2/3 of that coming from the Asian countries. I think there's a greater resistance at the same time. I think obviously it's a boom for American consumers for lower prices, but I think it could be a bust or at least a burden for American manufacturers.

KATE O'BEIRNE: Our export economy is not very dependent upon exporting to Asia. I think, if anything, it should heighten need to be able to negotiate more with Latin and South America, because they're much more important trading partners to us, than is Asia.

MARGARET WARNER: All right. Let's turn to Iraq. Now, Mark, last week, you said that you thought the administration had really handled the situation pretty well, and that it looked like it was going pretty well. The inspectors were being allowed back into Iraq. Now, given what's happened and not happened at the UN and in Iraq, do you still feel that way?

MARK SHIELDS: I don't think that this is the shining moment in American leadership of the world. I think Bill Clinton, the President of the United States, was given very, very limited parameters for the way in which he could work, and I don't think there's any question that the coalition has been losing its enthusiasm for sanctions, losing its enthusiasm for quarantine of Saddam, and I don't think there's anything the President, quite frankly, could have done on that.

MARGARET WARNER: You mean, he had to take the deal that the Russians offered--

MARK SHIELDS: I think he had to take the deal--getting back in. I think there's no question that the failure of Saddam to allow the inspectors did enable us to hold the Security Council, but I don't think the long- term prospects of containing him--Margaret, the biggest problem with Saddam, it strikes me, as pointed out this week, was not the threat to the United States that he represents. I mean, he is not going to drop anthrax in Des Moines. It's to his neighboring countries. And they--is where there seems to be minimal alarm, and I don't know how the United States can organize an Arab coalition or a Pan Arabic coalition or general Persian Gulf coalition against Saddam when that apprehension doesn't translate into a desire for collective action.

MARGARET WARNER: So if Saddam Hussein continues to deny the weapons inspectors' access to all these sites they'd like to get into that he calls his palaces, what's the President to do?

KATE O'BEIRNE: Well, he's thereby shown that he can flaunt a UN resolution, get away with it, which is a terrible precedent to set. President Clinton's mistake was he put as his highest priority unanimous backing from the Security Council. Well, of course, then he can only act to the degree of the most reluctant member of the Security Council's willing to act. If he shows the willingness to act unilaterally, which George Bush communicated back in 1991, we shouldn't forget--I mean, he had the resolve to react unilaterally. Saddam's neighbors, of course, have stuck right in his neighborhood. They're going to want to appease whoever they think between ourselves and the U.S. and Saddam. It's going to be the ultimate victor. At the moment in the short-term at least it appears to them Saddam won this round, in which case their instincts--because they're stuck right next door to them--is to appeal--appease Saddam. If they thought our leadership was reliable and resolute, there's every reason to believe people would rally to the courts. You know, if Secretary Cohen keeps going on TV and fighting us all to death, showing us bags of sugar, or a drop of liquid that could wipe out the entire world, if we're serious about, if they're serious about the fact that Saddam Hussein is developing these weapons of mass destruction and the ability to deliver them, the has to be removed. There's no alternative. And if U.S. leadership has to step up and rally these reluctant allies to our cause, so be it.

MARK SHIELDS: I think that, Margaret, nobody would argue that China, France, Russia are enthusiastic about sanctions, our policy of containment towards Saddam. Even Great Britain, the staunchest of allies to the United States, was cautionary in its approach to this problem. I think there's been a little too much talk, not from Kate but from others, about Munich and that this is a sellout and all the rest. And I have to say I don't know anybody who seriously thinks the United States is going to invade Iraq, occupy Iraq, and, you know, so what are--we're limited to further--without full coalition support, and 500,000 troop and several ship--we're limited to bombing again, and we did it for 43 days before. I don't know if it's going to have an impact this time. There's no question. He is--he has a united country behind him at this point.

MARGARET WARNER: But, Kate, do you think the administration is making any headway? You mentioned that Sec. Cohen's gone on TV, other Pentagon officials saying this guy, Saddam, is creating a lot of dangerous chemical and biological weapons, or at least we think so. Obviously, they're trying to make the case for something. You think they're doing it effectively, or not?

KATE O'BEIRNE: I think evidence is the American public would rally, as they often do, to a President who's facing down and a bad actor, who's seen as opposing our interests. The President doesn't seem to know whether or not he wants to make that next step, you know. We're all now concerned. I think the public broadly supports the notion that he poses a serious potentially fatal threat. What's the next step? That seems to be what the administration is unable to answer.

MARGARET WARNER: All right. Well, thank you both very much. DIALOGUE - REQUIEM

PHIL PONCE: Finally tonight, a Gergen dialogue. David Gergen, editor-at-large of U.S. News & World Report, engages two Vietnam-era photojournalists. Horst Faas is the Pulitzer Prize-winning former AP chief photographer in Southeast Asia. He's now AP's senior editor in London. Tim Page covered Indochina for AP, UPI, and Perry Match. They are the co-editors of Requiem: By the Photographers Who Died in Vietnam and Indochina.

DAVID GERGEN: Gentlemen, thank you for coming. Thank you for coming. Thank you for this remarkable book. Can you tell our audience what this book is all about?

HORST FAAS, Co-Editor, Requiem: Well, it's, first of all, a book of remembrance. We tried to set a memorial to 135 photographers that died on all sides of the war in Indochina between 1945 and 1975. In this book we tried to remember their work, the work they left us to read and to see. And this book is brining back to us a time that was so extremely important to the United States and to the world.

DAVID GERGEN: Tim, what prompted the book?

TIM PAGE, Co-Editor, Requiem: The initial concept came from trying to do a more generalized memorial thought in terms of building a shrine or something to all the various friends we'd lost, as well as people we'd never met from the other side, and from other times which we hadn't witnessed, back in the French times, in the 50's. In the process of doing this I was in Hanoi and got stymied on the memorial front. But they gave me a breakthrough into their archives, and I was able to come home from that rather disappointing trip with 128 images, which they'd donated to the cause.

DAVID GERGEN: You were able to go find the archives for a lot of the photographers who had died there.

TIM PAGE: It was like sort of having--putting an auspicious jigsaw puzzle together.

DAVID GERGEN: So these are then the best photographs as a memorial to the 135 photographers from all parts of the world who died then in Vietnam. Let's look at a couple of photographs from Larry Burrows, if we might start there. This--tell us about what we're seeing here, and this was a very important series that came out in 1965 in Life Magazine.

HORST FAAS: This, I think, comes from a most important photo layout that was published during the war. It's all in black and white. Larry Burrows spent several months with a helicopter unit to wait for action. He accompanied a young machine gunner, Corporal Farley, and suddenly during this action several helicopters were shot down. Farley had to run across an open field under fire, along with Larry Burrows, to rescue a seriously wounded co-pilot. They dragged this co-pilot into his helicopter and under fire, they left the landing zone, and here is a scene where Farley suddenly discovers that the man at his feet is dying. There are several pictures in-between. The most important picture in journalistic terms and in human terms is the last picture of the series. It shows Farley at the end of this horrible day in his quarters sitting on one of lockers and breaking down in tears. Larry was a man who wouldn't be satisfied in just getting a few bang-bang action photos. Larry followed up on people. He stayed with them before things happened, and he stayed with them after they happened. And that's what made his reporting so meaningful. This series brought home for the first time what one American goes through in his service in Vietnam.

DAVID GERGEN: Sean Flynn, another photographer like Larry Burrows who died, he was a buddy of yours. You roomed together, I guess, for three years, and--

TIM PAGE: Both there and in Paris.

DAVID GERGEN: And this photograph.

TIM PAGE: The troops in the picture were a Chinese ethnic minority group--Hmongs--who were used-- exclusively almost by the special forces as mercenaries, and they'd been put in to take back a South Vietnamese outpost, which had been overrun by North Vietnamese troops. And as they rolled up the hill to retake the outpost, they came under very intense fire, and all around there, all the Western officers were taken out, at which point Sean picked up the charge, arrowflex in one hand, an M-16 in the other and won the attack over the top of the hill, and in this picture Sean's--one of Sean's pictures, right at the end of the whole action, the South Vietnamese troop is cutting the webbing off of one of his fallen comrades.

DAVID GERGEN: Sean Flynn, well known as the son of Errol Flynn, the actor, he disappeared a few years later on a motorcycle.

TIM PAGE: On a motorcycle.

DAVID GERGEN: In Cambodia. There were a number of North Vietnamese pictures. As you've said, Tim, you found this archive, some remarkable pictures that came from the North Vietnamese photographers as well. I guess they were--and they actually served in combat, a number of them.

TIM PAGE: One has to remember that their principal occupation during the war wasn't to provide photographs, images, text, to a system of newspapers and wire services that could publish the stuff. It was taken as a means of propaganda to prove to the people that they were winning. So the pictures weren't so much for information as propaganda. And at the time they weren't actually--didn't see any light of day.

HORST FAAS: This picture was the most amazing discovery I made in Ho Chi Minh City, formerly Saigon. It's taken in 1963 in a little town called Thanh Doi, at this time just before the coup against Ngo Dinh Diem, town after town and outpost after outpost fell to the Vietcong. I looked up my papers after I saw this photo and I found out that I actually went in with South Vietnamese troops to re-conquer this outpost. I didn't I carry a weapon. I carried a camera, and here a colleague on the other side photographed with flashlight--and that's remarkable--photographed with a flashlight--how they're dragging a rocket launcher, a rocket launcher to this outpost. Tran Binh Khuol had already been fighting and photographing with the Viet men during the French War and went up North to get retrained; he came right back South to continue fighting. It must be said that the photographer was awarded a medal for carrying a rocket launcher straight up to the objective. So he didn't have only a camera; it was a--

DAVID GERGEN: Of course, this was a war that not only dragged in the soldiers but many, many civilians. This picture by Henri Huet captures it more than almost any one I've seen.

HORST FAAS: Yes. Henri was a very compassionate photographer. He joined the AP in '65, and he lived until 1971. Henri was a man who went to war like other people go to work, five days a week, and he would always stay out with the troops. He would sleep with them. He would eat with them. He would share their dangers. Henri had a wonderful eye for faces, for expressions, not only soldiers but civilians. And the civilians were at least 50 percent of pictorial output during the war.

DAVID GERGEN: Henri went down in a chopper with Larry Burrows.

HORST FAAS: Henry, along with Larry Burrows, tried in 1971 to get into a major South Vietnamese offensive operation in Laos, climbed aboard a helicopter, altogether, five journalists; the helicopter lost its way, and was shot down over Laos. And his remains are still there, where they crashed.

DAVID GERGEN: This next photograph won the Pulitzer Prize.

TIM PAGE: In '66.

DAVID GERGEN: It's of a Vietnamese mother with her children.

TIM PAGE: The family is escaping incoming fire, trying to get to the friendly side of the river they're in, or the water they're in.

DAVID GERGEN: It's a haunting photograph. This was by a Japanese fire.

TIM PAGE: Kyoichi Sawada, who was--we're listing in the book four Japanese who were--Sawada disappeared in Cambodia in 1970. He was captured and executed where he was ambushed--at the place. His work--his body of work was mostly for UPI. And he was my second bureau chief when I was there, and he was a very quiet, very considerate man, who'd never--I mean, he was a very unruffled person, and he was almost perfectly Zen in his attitudes to the whole thing--an absolute perfectionist.

DAVID GERGEN: Dickey Chapelle--tell us about Dickey Chapelle.

HORST FAAS: Dickey Chapelle was an old-timer in Vietnam. She had reported from several wars. She was the first woman into Iwo Jima and first woman into Okinawa, and in Vietnam, she was first. This picture was taken in 1962 before most of us arrived. It's a horrible scene of a very simple execution. I remember the face of the officer. I ran into him in late '62 and '63, when I covered the war, mostly Vietnamese troops. Dickey--like so many journalists--stepped on a mine and died instantly.

DAVID GERGEN: Was she the only woman in the group?

HORST FAAS: There was a woman on the Vietnamese side.

DAVID GERGEN: This must have been a walk down a line that is filled with so many memories for both of you. The kind of memorial service that we see here was very unusual, wasn't it?

TIM PAGE: The Americans took up this weird habit, this weird way of running a memorial service with the boots of the slain man, plus their--one of their weapons stuck in the ground--and the helmet's always on the rifle butts. And it was--it was almost--became de rigueur after every battle to do this kind of ceremony.

DAVID GERGEN: Well, as you say at one point in your book these are men and women from all over the world who came with their cameras and the language they spoke--the only common language they spoke was that of photography. Remarkable photography it is.

HORST FAAS: Camera and the pen. Many of them were also good writers.

DAVID GERGEN: Horst Faas and Tim Page, thank you both very much. RECAP

PHIL PONCE: Again, the major stories of this Friday, Americans' incomes kept growing last month, as did their rate of spending. Both were up 1/2 of 1 percent for October. And all of the McCaughey septuplets were breathing on their own as the last baby was taken off his ventilator. We'll see you online and again here Monday evening. I'm Phil Ponce. Have a nice weekend. Thank you and good night.