The Selling of U.S. Media: Have Foreign Buys Gone Too Far? : Culture: Critics worry that we’re selling our soul. Can the marketplace preserve national character?

In the novel “Agent of Influence,” a mysterious French newspaperman named Marcel Bresson tries to mount a multibillion-dollar takeover of one of America’s media empires, the powerful News/Worldweek company. As the deal nears completion, the shadowy Bresson is revealed to be a Soviet agent, his real objective to wield Communist influence over American public opinion.

The plot is fiction, the imagining of former National Security Council member David Aaron. But it is grounded in one reality. In the past decade, foreign companies have acquired a significant share of American media, taking control of companies that sell images and ideas for the ultimate marketplace of people’s minds.

The German company Bertelsmann AG, for instance, has Bantam, Doubleday and Dell book publishing in its global media empire. Sony, the Japanese maker of electronic hardware, also produces movies, TV and records through CBS Records and Columbia Pictures. Italian financier Giancarlo Parretti and his Pathe Communications Corp. last week completed the acquisition of the historic film studio MGM/UA Communications Co. And now Japan’s Matsushita Electric Industrial Co. is negotiating to buy MCA, the legendary Hollywood company that produces movies, TV shows and records.

Should Americans worry? Would a Japanese-owned movie studio feel free to make pictures or TV programs critical of Japan? And if a Japanese or German firm can buy American media, would it be all right for a South African or Chinese or Iraqi? Are movie studios, book publishers or newspapers--because they peddle images and ideas--connected somehow to the nation’s security?

Current U.S. policy holds that foreign investment poses little risk. Modern multinational conglomerates today are ruled by the marketplace, the argument goes, not by ideology. Whether Japanese or German or American, media companies must deliver what their audiences want.

But even those who run some of these multinational media companies say it is foolish to think an owner leaves his national and cultural biases at home. At Time Warner, President and co-Chief Executive N. J. Nicholas Jr. talks of the delicate job of making “alliances” with “indigenous” companies overseas so that the inevitable conflicts of national interests do not escalate.

And many countries do not share fully American attitudes about free speech and cultural diversity. In Japan, for instance, American films are regularly censored, and some have never been shown, including “The Bridge on the River Kwai.”

Some economists also are concerned that by buying up significant shares of the American media, even simply movies and records, the Japanese and other foreign nationals will strengthen their hand in the production of electronic hardware technology, from home electronics to computers into the next century.

The worriers advise that restrictions on foreign ownership--already the rule for radio and television stations--should be considered for TV networks, cable companies and even newspapers, which are close by some definitions to having monopolistic control of their markets.

The head of one major American studio is so angry about foreign ownership changing the culture of Hollywood, he said privately, “I can’t trust (MCA Chairman) Lew (Wasserman) any more.”

But for all the scare talk, the fact remains that all corporations want to make a buck--or a yen or a mark. Economists say they can’t do that by ignoring the culture, politics and public opinion of countries where they own media properties.

“Whether it is the media or anything else, the economic fact of life is the global interests dominate over national,” said Allen H. Neuharth, the former chairman and chief architect in the expansion of Gannett Co., the nation’s biggest newspaper and billboard company.

Even if Germany’s Bertelsmann were to buy a U.S. TV network, said Neil Postman, chairman of the communications department at New York University, “I don’t see how it could make much of a difference. . . . They are guided by the principle of gathering the largest audience, and that would be the overriding imperative.”

Four of the seven Hollywood studios will be foreign owned if the MCA deal goes through--including Columbia Pictures (Japan), Fox Studios (Australia) and MGM/UA (Italy). In addition, Walt Disney Co. is selling interests in a partnership to a Japanese consortium to finance its movies.

Roughly three quarters of the record companies in the United States are now foreign owned, among them Capitol (British), Polygram (Dutch), RCA (German) and CBS (Japanese). So are about a third of American book publishers--including Harper & Row (Australian), Macmillan (British), Penguin (British), plus Bantam, Doubleday and Dell (German).

Australia’s News Corp., which owns Fox Studios, is starting a fourth American TV network. It already owns Fox Studios, seven U.S. TV stations, Harper & Row publishing, major magazine holdings and newspapers--to go along with its newspaper, magazine, book and television holdings around the world.

Its chairman, Rupert Murdoch, even renounced his Australian citizenship so that he would conform to U.S. regulations barring foreign nationals from owning TV stations.

Some industry executives argue that media multinational conglomerates actually are helping bring the world together--fulfilling author Marshall McLuhan’s notion that television would create a global village by linking people through shared visual images.

J. Richard Munro, former co-chairman and co-chief executive of Time Warner, says what is being created is not so much a village as “a global version of Times Square, a raucous, noisy arena of competing media and competing messages, the good, the bad and the genuinely offensive all mixed in.”

So far, while ownership in American media companies has shifted into foreign hands, it is still American movies, recordings and culture that are being exported. Generally, movies, music and TV are now believed to make up America’s second-largest trade surplus after aircraft. Statistics are not kept in any standard way, but compiling research by Paul Kagan Associates, a study by Frost & Sullivan, the Motion Picture Assn. of America and the Commerce Department would put the nation’s trade surplus in entertainment at anywhere from $4 billion to $7 billion in 1989.

If Americans are worried about foreign influence over what they see on television and in movie theaters, other nations fear foreign influence even more. Munro’s idea of duplicating the commercial frenzy of Times Square worldwide strikes some countries as a threat that their own cultures could be subsumed by 24-hour commercial images from American and Japanese media giants.

As a result, many nations have imposed limits on the amount of foreign-owned programming that can be shown on local television. Last year the European Economic Community decided that by 1993 at least 51% of the television programming in member nations must be of European origin.

Defenders of media investment by the Japanese, such as Samuel M. Rosenblatt, director of the Association for International Investment, contend that any cultural differences will be ironed out over time.

“One has to be cognizant that they are making progress,” he said. “It does take time, and we have to keep the pressure on them.”

In this view, Japan is like the United States in the 1950s--still largely isolationist and unaccustomed to functioning as a world economic power--and Japanese culture will open up, in time, just as American culture did.

This argument is “either touchingly optimistic or arrogant,” said James Fallows, author of “More Like Us, An American Plan for American Recovery.” “There are certain national patterns that are not smoothed out by capital flow . . . and it is risky to assume that it will take place.”

Fallows contends that different cultures can be so distinctly at odds that there are inherent conflicts in media ownership. “The founding premises of the two societies are different,” Fallows argued. “One is ethnic democracy, the other is ethnic purity.”

Chalmers Johnson, a frequent critic of Japan, goes so far as to argue that the Japanese have a different kind of capitalism from the United States.

“They say these are borderless economies,” he said, “but privately the Japanese will be expressing contempt that it isn’t much of a country that allows such cultural artifacts as CBS Records, Columbia Pictures and MCA Corp. to go to such lowbrow, hard-core hustling hardware firms as Sony and Matsushita, which have hardly been known for building anything of a cultural nature, even in Japan.”

Since the Japanese have different attitudes toward free speech and business, Johnson argued, there is “no reason to think censorship would not occur”--at least to the degree that people will censor themselves to avoid displeasing their Japanese bosses.

Are these concerns grounded in fact? Evidence is mixed.

Japan does have a long history of censoring American films. The censorship organization Eirin must approve all films, or the Japan Assn. of Movie Promoters won’t show them.

A celebrated recent case involved “The Last Emperor,” winner of the Best Picture Academy Award in 1988. Japanese censors edited and removed the narration from newsreel footage of the Japanese sacking of Nanking in 1937 contained in the film so it would not offend audiences.

But it is too soon, say most analysts, to judge whether this cultural background has influenced Columbia Pictures under Sony.

The impact on business operations may not always be positive either.

At Bertelsmann’s book operations, however, interviews with both current and former employees suggest the company’s nationality has had a dramatic effect.

Having built its empire in European book clubs, Bertelsmann took a hands-off approach toward the publishing operations, but installed one of its European executives over the Doubleday and Literary Guild book clubs. It then tried to apply European marketing techniques to them, reducing the discount incentive for joining, requiring members to buy at least four books a year, and insisting that to quit members had to write resignation letters ahead of time.

When the results backfired and revenues dropped, employees said, Bertelsmann’s management seemed angry and unable to understand Americans.

“Nationality was hugely relevant to the way they dealt with people” said Robert Riger, the American president who was brought in later by Bertelsmann and lasted eight months. “They literally talked about disciplining the consumer and complained that U.S. consumers were not regimented enough. . . . The more fluid the rules the less they felt comfortable.”

In meetings, senior staff from Europe would slip into speaking German, apparently absent-mindedly, but still leaving their American executives unable to follow.

The lower-than-projected book club revenues then led to significant cost cutting on the publishing side, several employees said, which undercut the key strategy of building the literary reputation of the houses and led to the eventual ouster of Nancy Evans, president of Bantam Doubleday Dell.

Stuart Applebaum, senior vice president for public affairs for the publishing group, offered a different account. Aside from wanting “to see as profitable an enterprise as we can have . . . (Bertelsmann) has had zero impact on how (the publishing houses) conduct that portion of our work that is received by the North American reading public.”

Elsewhere results are less conclusive. At CBS Records, Sony has tried to promote the career of Seiko Matsuda, the queen of “idoru kashu” or idol singers--young women whose financial success is based as much on merchandising their image to children as it is on music.

So far the effort has failed, and, one former CBS Records employee said, the reason is that creative people felt that “talentwise, she was a dud” and so they had no enthusiasm for the project. But it is clear management wants to make her an American star.

Even those who run multinational media companies say that transcending culture and nationhood is only an ideal.

For instance, Michael P. Schulhof, president of Sony USA, said: “Companies that want to be global have to put roots down. . . . When it comes to decisions about what movies to make, or records . . . it is important that the owners take the posture of hands off.”

But even if this multicultural approach makes sense economically, Schulhof conceded that most Japanese companies in the United States do not follow it. The majority of Japanese firms operate their American subsidiaries with Japanese managers.

International economist Michael Borrus said his concern about Japanese investment in media companies has nothing to do with whether cultural bias might infiltrate the minds of unsuspecting Americans during next summer’s dose of comedy-action-adventure-buddy pictures. Instead, he worries about Japanese domination of consumer electronic hardware.

“What is also going on is a set of very powerful producers of hardware buying the software bases for their future products,” said Borrus, co-director of the University of California Berkeley’s Roundtable on the International Economy. A half dozen large Japanese companies already dominate hardware technology and are gaining in computers. “To the extent that they also dominate the software side, then you have a real question . . . . Then I get concerned whether the United States economy is going to take part in that growth and that economy.”

Current law empowers the President to stop a foreign concern from acquiring an American company if he makes a detailed finding that the acquisition will threaten U.S. national security and that other laws provide no adequate protection.

There are some restrictions over owning media companies. By international law, for instance, television airways are public property, and broadcasters either require a government license or are government run.

There is also talk in Congress about extending the current bans on foreign ownership of TV and radio stations to cable companies.

But most experts argue that the best protection against the potential dangers of foreign ownership is not barring it but ensuring that there is substantial competition, with some American companies included. How one would ensure American involvement is unclear, but one suggestion was that the existing law granting the President a national security veto over any foreign merger might offer such protection if the White House were willing to exercise it.

Times researcher Abebe Gessesse contributed to this story.