Tale of the tape

When General Motors Corp. executives held a press conference in Detroit on Monday to unveil their defamation case against NBC News, a live feed was piped in to a small and especially interested audience on the 52nd floor of 30 Rockefeller Plaza in New York.

There, in the executive suites at NBC headquarters, a handful of top executives milled around several TV screens and watched GM's top attorney systematically tear apart an NBC prime-time report on exploding gas tanks in GM trucks. Although GM had first complained about the report almost three months earlier, and although high-level NBC News officials had been investigating the report themselves since late January, a sense of disbelief now filled the room atop NBC headquarters.

On the screen, GM general counsel Harold J. Pearce revealed fact after fact that the news executives hadn't known about the methods used by their own producers on the story.

Now, NBC's failure to fully investigate GM's complaints about the report has resulted in the most humiliating episode of crow-eating in the nearly four-decade history of NBC News. In the final moments Tuesday night of Dateline NBC _ the same show that had broadcast the exploding-trucks report in November _ anchors Jane Pauley and Stone Phillips issued a long and somber apology to their viewers and to GM. The two anchors said NBC "does not dispute" that it used toy rocket engines as "igniters" in its staged crashes of GM trucks, that its report significantly understated vehicle speed at the moment of impact, or that its report wrongly stated that a fuel tank ruptured in one of the crashes.

NBC, a unit of General Electric Co., also agreed to reimburse GM the roughly $2-million it had incurred investigating the Dateline report. In exchange, GM agreed to drop the defamation suit it had filed against NBC on Monday.

For GM, the victory over NBC _ accomplished with the help of a California car-buff writer, an Indianapolis firefighter and detectives who had searched 22 junkyards _ represents an extraordinary public-relations triumph. Only a week ago, an Atlanta jury awarded $105.2-million to the family of a young man who died in the fiery crash of a GM pickup with sidesaddle gasoline tanks, and the safety of those pickups remains the focus of an investigation by federal highway safety authorities. But now, the publicity surrounding that verdict, which GM is appealing, and the entire pickup controversy are overshadowed by NBC's admission that it wronged GM.

It's also a turnaround in another way for GM, which has never quite overcome its own humiliation in 1966, when it issued a public apology and a payment of more than $400,000 to Ralph Nader for investigating the consumer activist after he attacked the Chevrolet Corvair. That left GM with its own version of the "Vietnam syndrome," seemingly handicapped despite its enormous power.

But now GM has staged a brilliantly executed rejection of a highly public attack on its corporate reputation.

Fallout of an altogether different sort is expected at NBC. Among other things, even as the GM investigation evolved into a crisis for NBC in mid-January, a Dateline producer failed to inform NBC News president Michael Gartner, who didn't learn of the problem until the very end of January.

The crisis couldn't come at a worse time for NBC News, which has finally seen some turnaround in its fortunes. Although NBC Nightly News trails in third place in news ratings, the morning Today show now is a competitive No. 2 and has moved far beyond the controversial ouster of Pauley as an anchor three years ago. Dateline has marked NBC's first successful news-magazine show after 17 tries, and it has helped the entire news division, with an annual budget of perhaps $300-million, to break even.

The Dateline show in November focused on GM's full-size 1973 to 1987 pickups, which some consumer advocates claim are unusually prone to explode when broadsided because of gas tanks placed outside the truck's frame. In a 15-minute segment titled "Waiting to Explode?" NBC included a minutelong videotape of two crashes of GM trucks that NBC had an outside testing company stage on a country road in Indiana on Oct. 24.

GM officials later examined the show in slow motion and got suspicious. One pickup was hit at 40 mph and did not explode, but a second pickup was hit at a slower speed and did ignite. GM's own tests showed that the pickups should have sustained crashes at higher speeds without catching fire. GM repeatedly asked NBC to allow GM to inspect the pickups, but on Jan. 4 Robert Read, a producer of Dateline, told GM the vehicles were "junked and therefore are no longer available for inspection."

Meanwhile, Pete W. Pesterre, the 32-year-old editor of Los Angeles-based Popular Hot Rodding magazine, was doing some investigating of his own. Pesterre has owned four GM pickups and came through a side-impact crash in one of them unscathed. After he wrote an editorial criticizing the Dateline show, a reader in Indiana called him in early January and told him of a firefighter who was on the scene of the staged crash with his own videotape, and who thought the test had been rigged. Pesterre alerted William J. O'Neill, GM's second-ranking public-relations executive. He, in turn, put Pesterre in touch with William Kemp Jr., a staff attorney for GM.

Pesterre continued his phone calls, and eventually tracked down Brownsburg, Ind., fire Chief Glen R. Bailey Jr. on Friday, Jan. 15. "He told me how the crash test was equipped with an incendiary device," Pesterre recalls. "I said, "Would you mind speaking with some friends of mine at GM?' I gave him Bill Kemp's name." Kemp immediately got in touch with Chief Bailey _ and over the weekend flew to Indianapolis.

GM's Indianapolis law firm _ Locke, Reynolds, Boyd & Weisell _ hired two investigators, one a retired police officer, to search for the trucks that were crashed. The investigators had a list of 22 junkyards to check. On their visit to the last of the 22, the York Salvage Yard in Danville, Ind., they found the trucks.

"We were elated," says Lloyd H. Milliken Jr., a Locke Reynolds attorney. Milliken wrote a personal check to buy the trucks, as well as the two Chevy Citations that had been crashed into them, for $400. After the vehicles were shipped to GM's Indianapolis metal stamping plant, a spent model rocket engine was found in the bed of one of the pickups.

Now, GM officials wanted to examine the trucks' fuel tanks, but they were missing. On Jan. 20, GM went to court and got a temporary restraining order barring Bruce Enz, president of the consulting firm NBC had hired to conduct the staged crashes, from disposing of the fuel tanks. Several days later, GM got word from Enz, through his attorney, that he had given the fuel tanks to a neighbor, and that they were sitting in a junk heap on the neighbor's property, where GM got access to them.

Later, GM tried to question Enz. But he rebuffed that effort, claiming through an attorney that he was a news gatherer for NBC and thus had First Amendment protection from interrogation. While he conducted the crash test for NBC, also at the site was an NBC News crew that included Dateline reporter Michele Gillen.

Whenever the local Brownsburg Fire Department is on assignment, as it was to assist with NBC's crash tests of the GM trucks, its firefighters turn on a video camera mounted in the firetruck. The tapes are useful in investigations, for training firefighters _ or, in this case, for suing NBC. "GM asked for the tapes," says Chief Bailey, "and we said, "Sure. It's public record.'

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The videotape shot from the firetruck showed that what NBC made to look like a blazing fire was nothing more than a 15-second flame. Firefighters' voices, including that of Chief Bailey, could be heard on the tape, laughing at how small the blaze was. "So much for that theory," said one firefighter.

There was a second independent videotape as well, this one shot at the scene by an off-duty sheriff's deputy. GM's Kemp, coordinating the investigation, called in technical experts from GM's Hughes Aircraft Co. subsidiary. They used sophisticated digital-enhancement techniques to analyze all the tapes, including NBC's, frame-by-frame.

GM investigators also interviewed the previous owners of the two trucks. One owner told GM he had lost his gas cap and had resorted to bending a non-standard gas cap to fit the truck. That gas cap, GM says, blew off the truck on impact, releasing gasoline that caught fire during NBC's test.

On Monday, Feb. 1, Pearce, GM's executive vice president and general counsel, flew to Arizona and presented his case to GM's board of directors. "They were shocked," he says.

Last weekend the GM team worked feverishly to add layers of proof to its already-strong case. Gillen, the Dateline reporter, had stated during the broadcast that the test had punctured a hole in one truck's gas tank. On Saturday, though, GM sent the tank to an X-ray laboratory and had a metallurgist certify that the tank was unpunctured and sound.

Pearce then made GM's case in Monday's two-hour news conference, which was telecast to GM offices, factories and dealers throughout the country. "When you are fighting a case, you have the forum of court," he says. "But taken on by the media, I don't know of any other forum available than the public."

With the relentlessness of the seasoned trial attorney that he is, Pearce meticulously built his arguments. Using a pointer, he ticked off exhibit after exhibit: photographs, then videotapes and then the physical remains of one of the rockets that NBC had taped to the trucks. Pearce declared: "We sure don't build them that way" _ meaning trucks with rockets attached. At the end of the press conference, GM flashed the phone number of NBC News across the screen.

In New York, Pearce's presentation stunned the NBC executives watching on TV. How had they so underestimated the attack?

As it happened, GM had sent a letter in January detailing some of its findings to Read, the Dateline producer. But he responded without informing Gartner, the NBC News president. Not until shortly beforbe GM sent a second letter, dated Feb. 2 and copied to Gartner and NBC president Robert Wright, did an awareness of the problem reach the network's highest levels. Late in the week of Feb. 1, GM executive vice president William E. Hoglund called John F. Welch Jr., chairman and chief executive officer of NBC parent General Electric, and informed him that GM was planning to file suit against NBC.

As NBC News management realized that GM was intent on pursuing the case, NBC attorneys and officials huddled over the weekend. The meetings culminated in a long session Sunday that finally broke up at 2:30 a.m. Monday. There, NBC's top public-relations executive, Betty Hudson, two other public-relations advisers and NBC general counsel Richard Cotton plotted their press strategy and reworked a draft of a letter that Gartner would write to GM. Participating in the Sunday session by telephone were Gartner and Stuart Sucherman of the strategic-planning firm of Jack Hilton Inc., a frequent consultant to Welch.

The letter Gartner sent to GM was hardly apologetic. It asserted three separate times that the NBC story was entirely accurate. "NBC does not believe that any statements made .

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. were either false or misleading," the letter said. "The Dateline report . . . was and remains completely factual and accurate."

NBC clung to this conclusion for two reasons it would later abandon. The network had been told by its outside testing firm that using the tiny rocket engines as igniters was entirely acceptable procedure _ and that a careful examination of the videotape showed the igniters weren't responsible for starting the fire anyway. Looking at it piece by piece, NBC executives convinced themselves everything had been done properly.

But that position changed dramatically as NBC officials watched the GM press conference unfold on Monday. Afterward, they hired First Amendment attorney Floyd Abrams, as well as Robert Sack of the law firm of Gibson, Dunn & Crutcher, to conduct an internal review of what went wrong. Sack regularly counsels the Wall Street Journal.)

They went over their options, including one idea to rerun the entire crash piece on Tuesday, with an explanation of the toy rockets. By Tuesday morning, however, faced with GM's suit, mounting criticism from the journalistic establishment and nervous NBC affiliate stations worried that GM dealerships in their communities would pull advertising, NBC News's Gartner suggested seeking a settlement.

The talks began with NBC calling GM on Tuesday morning, with a battery of NBC officials taking part in extended conference calls with their GM antagonists. The NBC team included Gartner, NBC president Wright, general counsel Cotton and three other NBC attorneys, as well as outside attorneys Abrams and Sack. The agreement between NBC and GM wasn't hammered out until 10:30 p.m. _ even as Dateline was on the air.

Contacted Wednesday at an annual management conference of NBC executives in Crotonville, N.Y., Gartner explained his unapologetic letter to GM on Monday by saying, "I didn't know as much when I did that. The thing built over a period of days. I continued to learn more, and everything troubled me more, and then finally at the press conference, I learned still more."

As for the public apology, he says, "If you make a mistake, you've got to stand up to it." He added that he is "still proud" of the 15-minute piece on the GM trucks, except for the crash demonstration, which has left him "embarrassed and mad."

Gartner insists there was no pressure from GE to settle the suit. He says he will move with "deliberate speed" on an internal review of what went wrong. "I don't ever want to be in this kind of situation again," he says, adding, "I don't yet know whether it was a process problem or a people problem, and what I will do as a result is just speculation."

NBC's error, he says now, wasn't just in failing to disclose the use of rocket engines, but in commissioning the test demonstration to begin with. "It was totally unnecessary in the larger scheme" of the reporting on the trucks, he says. "It brought no new facts to this situation, but it brought into doubt the credibility of our operation.

"We're not in the business of doing unscientific tests in relation to news programs," he adds.

The actions of three of the show's employees _ Read, senior producer David Rummel and executive producer Jeff Diamond _ are under particularly intense scrutiny. All three have long TV news-magazine backgrounds: Read and Diamond worked at ABC's 20/20, and Read had also worked at the tabloid show Inside Edition; this was his first piece for Dateline. Rummel had been with CBS' 60 Minutes.

NBC also is looking into reports from show staffers, contradicted by other employees, that the original script for the crash piece referred to the toy rockets, but that it was later edited out.

Out in the Indiana countryside where the crash tests took place, locals are surprised at the sudden attention their neighborhood is receiving. Even here, though, the biggest shock was NBC's unalloyed apology. As Andrew Burnett, a local fire official who witnessed the crashes, put it: "When was the last time you saw a major network saying they have screwed up to that extent?"