Slugging It Out at the Networks : THREE BLIND MICE: How the Networks Lost Their Way, <i> By Ken Auletta (Random House: $25; 624 pp.)</i> : OUT OF THIN AIR: The Invention and History of TV Network News, <i> By Reuven Frank</i> (<i> Simon & Schuster: $24.95; 480 pp.)</i>

Larry Tisch had guile. The billionaire investor with the unvarnished manner and cash-register soul slyly seized control of CBS in 1986 in such a masterful display of guile that he was able to declare that he wasn’t really taking over at all--until it was too late.

Once in, Tisch managed to fool some of the people some of the time by vowing that he had no intention of selling off CBS’ parts--even as he secretly sought deals to sell most of them. He smilingly let the CBS News employees hail him as their savior, even while he ordered the division’s near-total retrenchment, including massive firings.

And, Larry Tisch was cheap. So cheap that his hotels used paper napkins to save money, so cheap that when he had guests over to his home to screen movies, he made them sit in hard plastic chairs, so cheap that he wouldn’t let the head of his records division (which had just done a record $160 million in profits) order a bagel at the Beverly Hills Hotel, because it cost too much.

The traumatic story of how CBS fell into the hands of new owners--a tale repeated when ABC was bought by Cap Cities and NBC by General Electric--was amply reported at the time, but “Three Blind Mice,” Ken Auletta’s exhaustive study of the transition, adds a new twist: Tisch was astonished by the reaction that his policies inspired.

Auletta, who had uncommon access to the new powers in network television during his six-year-long preparation of this book, reports that Tisch would turn beet-red in anger when the CBS board dared to wonder whether they should have let Tisch take over the company on the cheap after having spurned much richer offers from more overt suitors, such as oilman investor Marvin Davis. And Tisch was similarly astonished when CBS News publicly rebelled over his deep, drastic cuts and bureau closings--some publicly calling him a liar, others privately naming him “the Evil Dwarf”; Andy Rooney writing that CBS “stands for nothing now”; Dan Rather signing his name to a critical New York Times op-ed article that warned that Tisch might take the news division “from Murrow to mediocrity.”

“I feel hurt,” Tisch told Auletta over breakfast as the events unfolded.

And Larry Tisch wasn’t the only one astonished by the storm the new owners had fomented. Auletta writes that NBC president Bob Wright was deeply stunned, and also hurt, by the reaction to his policies. “It was as if we had some sort of agenda to harm network television, something that God should not allow,” a confounded Wright told Auletta. Wright saw himself as “a regular guy,” Auletta says, “an attentive father who broke early from the office to attend the school or sporting events of his two sons and daughter . . . (and) he had a sense of humor.”

Of course, the enmity had nothing to do with Wright’s qualifications as a “regular guy,” and everything to do with the fact that Wright arrived at NBC and almost immediately set about the task of separating NBC employees from their jobs, hundreds of them at a time. He spoke aloud of his opinion of NBC News as “a dinosaur,” an organization whose members seemed to believe themselves part of some priesthood immune to the hard imperatives of profit and loss. He wrote memos that were horribly out of tune to the community ear, such as the one suggesting that employees,including those at NBC News, should fork over dough to the G.E. political action committee or else seriously “question their own dedication to the company and their expectations.”

More fundamentally, the enmity between the owners and old hands was rooted in their dramatically different concepts of the network’s institutional mission. To Wright, and the managers of G.E., like Tisch at CBS and, to a lesser degree, Capitol Cities, the networks were like slightly more glamorous versions of the moribund U.S. auto companies: bloated, smug and arrogant, rooted in the past and unable (or unwilling) to wake up to the challenges of the present and the future, which were urgently pressing.

To those in the news divisions and to many old hands throughout the companies, however, the three networks were our common church. They were where we gathered to mourn a slain President, to ponder nightly footage of the long ordeal in Vietnam, to see moon landings and Super Bowls and miniseries. Network television gave a diverse culture a commonality of experience unmatched before or since. Jack Welch, the tough-guy G.E. chairman, would fume when he heard such network-culture notions as “the public trust,” pointing out that G.E. had a division that manufactured jet engines, wasn’t that a public trust? People’s lives were at stake!

Welch and the others just didn’t get it. A crazed worker in a jet factory could cause a plane to go down, true, but only a Walter Cronkite could return from a tour of Vietnam and, declaring the war unwinnable, convince a President that the tide of public opinion had irreversibly turned.

That was power, and the commitment at the networks (underscored by the threatening presence of government regulation) not to abuse it was the seat of the public trust.

To hold that kind of power in an environment that was almost utterly indulgent of its employees (a circumstance made possible by monopolistic guarantee of ever fatter profits) made resistance to the directives of the new owners inevitable. They were like an occupying army whose language and customs are resisted by the indigenous population. Imagine being a news producer whose entire career has been at a network, first-class travel, fine restaurants, Hollywood-level pay, an audience of millions-- and the purifying belief that you were doing it all for the national good, the public trust. Attitudes thus forged are firmly held.

A vivid insight into that culture is presented in another current network book, “Out of Thin Air,” the memoir of Reuven Frank, a former NBC News president who was one of the pioneers of network news. It is a wry and sharp-eyed remembrance, far the best of the network memoirs, not least because it states so matter-of-factly that combined sense of mission and entitlement that once defined the networks. Frank tells the story of a landmark 1962 documentary he produced called “The Tunnel,” about the escape of 59 East Germans into West Berlin through an underground tunnel. NBC spent thousands of dollars for supplies for the surreptitious diggers, in exchange for the right to film the digging and the escape. It was all very romantic stuff, the danger, the stark symbolism of freedom and oppression, and, of course, the expense-account meetings at Maxim’s in Paris and the Savoy Grill in London to discuss production problems.

The documentary, Frank recalls, had some problems getting on the air, not because of ratings worries, but because the State Department thought it would complicate the Berlin situation. It is impossible, now, to imagine that any American network would even dream of such a project (for one thing, they have no bureaus in Germany any more), much less that any would give it 909 minutes in prime time.

Throughout the book, Frank drops insights into the life that network folks were so reluctant to release, and it seems like something from another world--the nightly newscast going on the air for much of 1957 without a sponsor, for example, or the way Frank handled a request for a strict budget reduction, promising to trim his budget to the bone and saying that when unscheduled news events occurred, “We would merely go over budget to cover them.”

The inescapable question that comes from a reading of Auletta’s book is, was it a good thing, or bad, that the networks were taken over by owners who didn’t understand Reuven Frank’s world, men who were attuned first and last to the bottom line?

Auletta is reluctant to find villains, and is especially reluctant to point blame at the new owners. He strongly makes the case that the decline and fall of the network monolith was the inevitable result of changing force in government and in the communications industry--an exploding universe of new channels that lured viewers away from the common church.

All right, put the question another way: Given that the changes were inevitable, nobody’s “fault,” was it good or bad that when network television came to its cataclysmic moment of crisis, it was managed not by broadcasters acculturated in the business but by share-price managers who were so manifestly confounded by the “soul” of their new business?

In the human sense, at least, it is hard to imagine that the most inept of the old managers could have done a worse job of managing change than the executives of G. E., Capitol Cities and Larry Tisch did.

And in the business sense? Did the new owners “fix” the bloated, dying businesses they bought into? Auletta makes the case, and it is plainly so, that after five years, the new owners’ most notable success has been in changing the cultures and cutting costs, two sides of the same management coin. Those same, corrosive forces of decline-- new competitors, viewer and advertiser flight--are as present as ever.

By the end of 1990, all three networks were in the grip of a terrible slump; CBS lost $30 million, and Tisch feared that his network would lose $200 million in 1991; ABC looked like it might also lose money this year, and even top-rated NBC projected it would miss its earnings target by nearly 40%. Looking to the future, the new owners tell Auletta that they see the day when the networks lose sports to cable, and as for news, G. E.’s Welch said, it “isn’t the strategic center of what happens here.” A sale of any of the three networks seemed at least possible, if not likely.

“What I am sure about is the networks have been taken over by the efficient, rather than the creative,” one advertising executive is quoted by Auletta as saying. “To generate more value, they’ve got to be more creative, and that’s not their talent. . . . America is dying of efficiency.”

Auletta, an able and serious journalist, has managed to place himself and the reader at the center of one of the most dramatic corporate culture clashes in modern business history. He concerns himself less with what’s at stake in that conflict than with the rush of presenting an inside view. We now have a vivid accounting of what went on in the hearts and minds of those men who took over the American television networks in the latter half of the 1980s, and changed them forever. The value of that knowledge will be subject to mixed opinion; those are very tiny hearts, and those minds are mostly filled with numbers.