<i> Times Staff Writer</i>

A Kansas lawmaker called Wednesday for a federal ban on future buyouts of television networks by defense contractors, beginning with a congressional order that General Electric, the nation’s second-largest defense contractor, sell off NBC.

Rep. Jim Slattery (D-Kan.) joined 10 other members of the House Energy and Commerce telecommunications subcommittee in grilling all three network news chiefs on the potential for conflict of interest in the event of a corporate takeover.

But Slattery became the first legislator to take the highly publicized hearings out of the realm of benign questioning and into the arena of a clear legislative threat to the new owners and managers of all three networks.

Pointing out that General Electric did $6.8 billion worth of business with the Pentagon last year, Slattery asked how NBC could objectively report on such matters as the Strategic Defense Initiative without bearing at least the appearance of a potential conflict of interest.


“Why do we have a situation where our No. 1 network is owned by our No. 2 defense contractor?” Slattery asked.

Rep. Dennis Eckart (D-Ohio) offered his support to Slattery, carrying the proposed ban a step further by suggesting that foreign corporations, such as Sony or NHK (Nippon Hoso Kyokai, the Japan National Broadcasting Corp.), also be prohibited from buying a network.

During the second of three days of hearings into the impact of mergers and acquisitions on network news, Slattery questioned CBS News President Howard Stringer and ABC News President Roone Arledge about defense-contractor takeovers, but he homed in on NBC News President Lawrence Grossman.

Grossman defended General Electric’s track record as a broadcaster, even before the company paid $6.28 billion in December, 1985, to buy NBC’s parent company, RCA Corp.

General Electric owned broadcast properties, such as KCNC-TV in Denver, he said, and underwrote several news documentaries produced by PBS. At no time did General Electric interfere with the news operations at its stations or the PBS programs, said Grossman, who was president of PBS before coming to NBC News in May, 1984.

“It is clear that a news division must be insulated,” he said, but added: “You have to look at our performance” to ascertain that news decisions are not influenced by corporate owners. He pointed out that NBC’s previous owner, RCA Corp., had also done defense contracting in the past, but scrupulously stayed out of the network news division.

“What if General Dynamics (the nation’s No. 1 defense contractor) wanted to buy NBC?” Slattery asked.

“That would concern me,” Grossman replied. The difference, he said, was that virtually all of General Dynamics’ business is defense while only about 25% of General Electric’s annual commerce is with the Pentagon.


Nevertheless, Grossman warned against any prohibition on companies owning major media, whether they be newspapers, radio stations or TV networks, saying it would set a bad precedent.

At General Electric headquarters in Fairfield, Conn., corporate spokesman Jack Batty responded to Slattery’s divestiture proposal by noting that the company “has been in broadcasting for 65 years, going back to WGY in Schnectady, N.Y., in 1922, one of the first (radio) stations (in the country). Many of GE’s stations were in places where we had major plant locations. The news operations of those stations always has had a defense contractor as a parent. GE’s percentage of defense business is roughly the same as RCA’s had been.”

ABC faced a similar takeover bid 18 years ago by the ITT conglomerate, ABC News Chief Arledge said, and a similar fear of corporate influence ran through the network news division then. Capital Cities Communications successfully took over ABC last year, but it is another multimedia company with a strong reputation for journalistic integrity.

If any new owner tried influencing or dictating how and what a network could report, “you would see the entire news division resign en masse, " Arledge predicted.


The conflict-of-interest question has been raised and laid to rest by many broadcast professionals before, but Slattery remained unpersuaded. He said that “even the appearance (of conflict of interest) is not good.

“I want news divisions asking tough questions,” he continued. “A major network could be a salesman instead of a watchdog for a defense contractor.”

CBS News President Howard Stringer also came to Grossman’s defense at one point, telling Slattery: “There wasn’t intrusion (in NBC News) on the part of RCA or GE and, if there is, we’ll report it (on CBS).”

Stringer’s own uncomfortable moment in Wednesday’s proceedings came during Eckart’s questioning about salaries at CBS. Despite $30 million in budget cutting that included trimming more than 200 jobs in March, “60 Minutes” correspondent Diane Sawyer renegotiated a contract that pays her $1.8 million a year, Eckart said.


“Rare talent is always rare,” Stringer said, justifying the stellar salaries paid to “60 Minutes” correspondents and other network news stars such as “CBS Evening News” anchor Dan Rather. “Unique talent is so unique that it defines our news division.”

None of the trio saw their sudden cost-consciousness as an attempt to turn the traditional loss-leading news divisions into money makers, but each news chief differed on how influential the quest for profits is.

Nobody in CBS News ever sees actual sales figures from news programming, Stringer said. And though “60 Minutes” has been consistently profitable, Stringer said he does not view CBS News as a potential profit producer for the network.

ABC’s Arledge expressed a different philosophy.


“We do not preclude the news division from being a profit center,” he said. For the last several years, he said, ABC News has turned a profit and he would not purposely reverse that trend. He is budget-minded in his news judgment, but only to an extent, he said.

Grossman took the middle road, pointing out that it is the profits from NBC Entertainment “that fuel the news division.” NBC News is frugal, he said, but it neither strives to compete with the entertainment division as a money maker nor bows to other NBC divisions in its news judgment.

Nevertheless, he said, “You can only do what you can afford to do.”