December 19, 1990

Moving to shore up the ailing fund that protects bank deposits, the Federal Deposit Insurance Corporation asked Congress today for the authority to charge banks premiums based on their financial health rather than their size. The theory is that a fee structure in which weaker banks pay more than sound ones would discourage risk-taking and speculative investments, as private insurance is thought to do with other industries. Since the bank insurance fund was created in 1934, banks have been charged a flat fee based on the amount of deposits insured by the fund.

After a year of bitter rivalry, the two cable television comedy channels agreed to merge yesterday, creating a single channel with an all-comedy format to be jointly owned by Home Box Office and Viacom. The new channel, to be called Comedy TV, will begin sometime this winter, probably on March 1. It will replace HBO's Comedy Channel and Viacom's Ha! The TV Comedy Network.

The Massachusetts Institute of Technology has agreed to teach Japanese scientists how to replicate a laboratory in which researchers are developing futuristic entertainment and education products, touching off an intense debate over scholarship and high technology. Under the agreement, the Japanese are about to begin an effort to duplicate the creative atmosphere of M.I.T.'s Media Laboratory, which computer experts say is probably the world's only lab in which young scientists are being encouraged to pursue their most creative ideas in merging computers, television and films. Critics say the $10 million contract is a crass sale of expertise in one of the few areas of computer science in which the Japanese say they are lacking: the ability to build a creative environment to generate new ideas. The critics also say the agreement does not require the Japanese to publish all the results of their research, as M.I.T. does. But others defend the agreement, saying it is dangerous even to think of taking a protectionist view toward science. They say the university and the world can only benefit by having a Japanese counterpart to the university's media laboratory. Race for High-Definition TV The research being conducted in the lab offers America what the experts say is its greatest hope in the race with Japan to develop and market high-definition television. Researchers at the lab have also found ways to send movies over telephone lines, instead of over the airwaves or over cable lines, so that instead of going to a video rental store, people will be able to call a number and have a movie transmitted to their television sets. The researchers have also developed a technique they call interactive television, which allows viewers to use a computer to tailor television shows to their liking, focusing on one item in a news show or selecting a camera angle for a sports event. Japanese executives speak of products like these when they say they were motivated to buy American movie studios with a goal of merging the technologies of computers, television and films. Last month the Matsushita Electrical Industrial Company bought MCA, owner of Universal Studios, and last year the Sony Corporation bought Columbia Pictures. Researchers at the media lab say science cannot be restricted by national boundaries. They say that the more media labs, and the more people thinking of such ideas, the better. But critics say the real question is what, besides money, the university and the United States get out of the deal. 2 Japanese Interests The agreement is between M.I.T. and two Japanese interests: Nihon University and the Japanese industrialist Chiyoji Misawa, a leading builder who is interested in futuristic homes in which computers will control various functions, including regulating temperature, turning lights on and off and opening blinds to let in the sun. In the debate in the United States, the opposing positions are represented by Pat Choate, an economist who is concerned by Japan's success in acquiring American products, and Andrew Lippman, the associate director of M.I.T.'s media lab. "Of course it will hurt us," said Dr. Choate. "This kind of knowledge is a major underpinning of our future." But Dr. Lippman said he believed that the world and American science would be better off if more scientists learned the M.I.T. style. "Right now, it's unfortunate that the media lab is unique in the breadth and scope of what it's doing," he said. "More media labs can only be better." Questions on Competitiveness Another critic, Dr. Amar Bose, teaches electrical engineering and computer science at M.I.T. He is also founder and director of the Bose Corporation of Framingham, Mass., which designs and produces high-fidelity equipment. "The Japanese recognize that what they are lacking is in the creative side," he said. "They have been unable to develop that side of their economy and they know their future depends on it. So does ours, by the way. They know exactly what they want and they're prepared to go out and buy it. "If you ask whether this is going to diminish ultimately the U.S. competitive position, the answer is yes." Seigi Hinata, a spokesman at the Japanese Consulate in New York, agreed that the Japanese were developing basic research. "Up to now Japan has excelled in applying results of European and U.S. basic research," Mr. Hinata said. "But now we are beginning to put an emphasis on producing world-class research that will break new ground." While the agreement was actually reached in 1987, it has not been publicized, even within the university. And the Japanese officials involved in the project only recently obtained the building permits needed to start work on the media laboratory in Japan, although a small lab has been in operation so some research techniques could be learned. Details on Contract M.I.T. officials say the university will get nothing tangible, other than the $10 million, and they acknowledge that the agreement does not require the Japanese to publish all their results. "I don't know if M.I.T. gets anything out of it other than money," said Dr. Kenneth A. Smith, vice president for research at the university. But Dr. Smith cautioned that he was not certain that a media lab like M.I.T.'s could be transplanted. Dr. Nicholas Negroponte, founder and director of the media lab, said that under the terms of the agreement he could not release a copy of the contract without permission from the Japanese. But he agreed in a recent interview to discuss the arrangement. Dr. Negroponte said the Japanese would pay M.I.T. the $10 million over five years. The money will go into M.I.T.'s $1.6 billion endowment, but in an informal arrangement, the money will be used to support the media lab. So far, as part of the agreement, three Japanese scientists have spent a year each at M.I.T., learning the culture of the media lab and how to run a lab like it. In addition, Dr. Negroponte said, virtually every one of the 19 professors at the M.I.T. lab has gone to Japan and looked in on what he said was the "small prototype" of the lab that was created while the Japanese waited for permission to build the real thing. Future Help From M.I.T. Two graduates of the M.I.T. media lab were hired this year to help start the Japanese laboratory, which is to be built in Chiba prefecture east of Tokyo. Once the new lab opens, M.I.T. researchers and students will regularly spend time there, the agreement said. M.I.T.'s Media Laboratory is a fairly new venture, having opened in 1985. Timothy Browne, who had worked for the lab and now manages an interactive television project for McCann-Erickson World Wide, an advertising agency, said the media lab is dissimilar to any Japanese lab. "There are a lot of wild kids who are given a lot of responsibility and authority," he said of the researchers. "Stereos are blaring and there is a lot of laughter. Japanese labs are considerably more serious, and the researchers themselves aren't given that kind of responsibility and authority." Dr. Negroponte said it costs $10 million a year to operate the media lab and that $9 million of this was provided by the Federal Government and private companies. The Government pays about 30 percent, he said. About 15 percent of the corporate money is provided by Japanese firms under previous agreements, Dr. Negroponte said. The $10 million that the Japanese agreed to pay under the new contract is enormously important as a source of funds, Dr. Negroponte said. Asked what else is in the arrangement for M.I.T., he replied, "You mean the money isn't enough?" Some experts say they have mixed feelings about the agreement, adding that their reaction would be determined by what the United States got out of the deal. A Two-Way Flow? "It's really a hard call," said Dr. Joseph Nye, the director of the Center for International Affairs at Harvard University. "The critical question is whether there is a two-way flow." But others say that from what they have heard, M.I.T.'s agreement may seriously harm American competitiveness. "The Japanese are moving toward the year 2000 to have a research and development capacity that is equal to or greater than that of the U.S.," Dr. Choate said. "The Japanese intend to dominate us." Making their own version of the media lab "is an integral step," he added. Dr. Choate said that the Japanese arrangement makes him question whether it is wise for industries to invest in M.I.T. "The fact that M.I.T. is peddling off its media lab should be of great concern," he said. Clyde Prestowitz, president of the Economic Strategies Institute, a research organization in Washington, said: "I can't imagine Japan doing a similar kind of deal. It seems to me that we typically undervalue what we have."

President Bush suggested for the first time today that budget constraints would prevent him from proposing a cut in the capital gains tax next year. "I haven't given up my philosophical commitment to the idea that capital gains would stimulate growth," the President said at a news conference with regional reporters. "But we're faced with this practical problem as to what we can do, not just on capital gains but on other stimulants that cost money."

Some "reformulated" gasolines may be a mixed blessing. While several changes made by oil companies do make new cars run cleaner, they make 1983 through 1985 models run dirtier, according to a comprehensive study sponsored by 14 oil companies and the Big Three domestic auto makers. It is "a riddle," one researcher said. The main difference in the cars' emissions appears to be whether the vehicle has a carburetor or a fuel injector; carburetors used to predominate, but fuel injection is almost universal in new cars.

A prominent New York divorce lawyer has abruptly left his Manhattan law firm, amid allegations by the firm that he bilked numerous celebrated matrimonial lawyers of millions of dollars in various investment schemes. On Friday the lawyer, Alvin Ashley, a partner at Colton, Hartnick, Yamin & Sheresky and president of the New York chapter of the American Academy of Matrimonial Lawyers, was asked to resign, the firm said, for what it called "a pattern of questionable financial transactions that appear to lack substance."

Stirring a new round of criticism from college administrators and civil rights activists, the Education Department today left intact a key provision of a plan banning scholarships designated exclusively for minority students. The move was something of a surpise, coming on the day the department had been expected to abandon its objections to racially based scholarships.

The Economy The Fed cut the discount rate to 6 1/2 percent from 7 percent, sending a loud signal that reversing what it now acknowledges is a recession has become its top concern. [ Page A1. ] President Bush suggested for the first time that budget constraints would prevent him from proposing a cut in the capital gains tax next year. [ A1. ] The F.D.I.C. said it would recommend to Congress that the premiums banks pay be based on their financial health rather than their size. [ D1. ] A hearing officer assailed Neil Bush for what he called "conflicts of interest" and "unsafe or unsound practices" when he was a Silverado director and recommended discipline. [ D1. ] Consumer prices rose a modest 0.3 percent in November, less than half the torrid oil-driven pace set in the three months after Iraq's invasion, the Labor Department said. [ D4. ] Companies Citicorp annonced that because of rising problems with bad loans it would cut its dividend sharply and lay off 4,400. It said it would also post a loss of up to $400 million. [ A1. ] Some "reformulated" gasolines may be a mixed blessing. While several changes made by oil companies do make new cars run cleaner, they make older models run dirtier, a study says. [ D1. ] The two cable TV comedy channels agreed to merge, creating a single channel to be jointly owned by HBO and Viacom. [ D1. ] A.T.&T. said it would seek to lower daytime long-distance rates by 1.1 percent and cut some international rates slightly. [ D2. ] Twenty-three states asked a court to force Sandoz to stop selling a blood-testing system to every clozapine buyer. [ D3. ] Relatively few airline employees were found to be using drugs in the first six months of wide testing, statistics show. [ A22. ] Health insurers may test applicants for the AIDS virus and reject those infected, New York's highest court ruled. [ B1. ] International The U.S. suffered the worst monthly trade deficit in 2 1/2 years in October, an $11.6 billion imbalance. [ D4. ] Moody's gave Mexico a Ba2 rating, the first time the country has had a rating since the debt crisis began in 1982. [ D15. ] M.I.T. has agreed to teach Japanese scientists how to replicate a laboratory where researchers develop media products. [ A1. ] Business Technology The Boeing 777 will be shaped by consensus. In a basic shift in the way it brings out a plane, the company asked eight airlines to help it draft a design. [ D1. ] Markets Stocks rose sharply in heavy trading, seconds after the Fed cut the discount rate. The Dow gained 33.41, to 2,626.73. [ D8. ] Treasury note and bond prices posted strong gains and interest rates fell on the Fed rate move. [ D15. ] The dollar fell moderately against most currencies after a flurry of late-afternoon trading. [ D16. ] Oil prices shot up late in the day as some traders made last-minute purchases. Crude rose 81 cents, to $27.86. [ D16. ] Today's Columns "Human time is the fundamental scarce resource," two economists suggest in a survey. Peter Passell: Economic Scene. [ D2. ] Ammirati & Puris was awarded Nikon's estimated $15 million account for the general advertising of its cameras and photographic equipment. Kim Foltz: Advertising. [ D5. ] Home Shopping Network's profits are under pressure from price-cutting and are drifting downward. Market Place. [ D8. ]

Medical care in parts of the United States is being disrupted as the Pentagon rushes a vast medical support system from home to the Persian Gulf to deal with possible wartime casualties. Civilian hospitals and clinics and Department of Veterans Affairs medical centers across the country are juggling shifts, hiring temporary workers, paying overtime and postponing elective surgery. The steps are being taken to bridge the gaps created by the deployment of more than 20,000 military doctors, nurses and other personnel to hospital ships and medical centers in the gulf and to support hospitals in Europe and the United States.

An administrative law judge today assailed Neil Bush for what he called "conflicts of interest" and "unsafe or unsound practices" when he was a director of a failed savings and loan and recommended that the President's son be disciplined. The recommendation, however, was for the mildest disciplinary action that could be imposed. It was nonetheless strongly fought by Mr. Bush, who denied wrongdoing. Mr. Bush could have drawn a recommendation that he be barred permanently from the industry.

The regional Bell telephone companies are moving aggressively into foreign countries, eager to enter profitable businesses from which they are barred in the United States and to gain access to markets that have room for growth. Earlier this month the Government of Mexico announced its intention to sell a controlling interest in Telefonos de Mexico to a consortium that includes the Southwestern Bell Corporation for $1.76 billion. In September, the Bell Atlantic Corporation and Ameritech teamed up to buy New Zealand's telephone company for $2.4 billion.

When the feeling hit, Marin Alsop would call up Leonard Bernstein to chat about what Beethoven might have been thinking when he wrote a particular piece of music. "He gave me so much in my life," the 34-year-old conductor said of her mentor, who died on Oct. 14. "I've never lost a parent, but this is about the closest."