The Los Angeles Times from Los Angeles, California • 89

Statistics Point Finger at the Fed as Inflation Culprit House Banking Report Cites Bad Timing of Money Policies BY ROBERT A. ROSENBLATT, Times Staff Writer WASHINGTON If you want a villain to blame for inflation in recent years, don't focus exclusively on the price of oil or the cost of food. Save some criticism for the Federal Reserve Board and its manipulation of the money supply. That's the gist of a provocative staff report by the domestic monetary policy subcommittee of the House Banking Committee. Using an arsenal of statistical weapons, the subcommittee staff concluded that: More than 70 of the rise in the cost of living between 1966 and 1975 was caused by "excessively rapid money growth." A bigger supply of money leads to an improved economy, but only in the short run.

A year or two later, prices spurt in a new burst of inflation. "The good news comes quickly, banking firm. "It's a very small component of the total picture. Monetary policy is only one arm of the government." Fiscal policy the taxing and spending activities of the government also play a key role. Years of big government deficits, with Washington spending billions more than il raised in taxes, contributed to the inflationary pressures.

When the economy was going well, the deficits should have been smaller, or perhaps eliminated completely, Kaufman said. Sen. William Proxmirc chairman of the Senate Banking Committee, also dissents from the view that the Fed deserves almost all the blame for inflation. World-wide price hikes for food and a sudden jump in oil prices contributed signifi- Please Turn to Page 7, Col. 1 the bad news follows behind," said Rep.

Stephen Neal subcommittee chairman. The Federal Reserve should increase money supplies at a steady, moderate pace to contain inflation. The prime ingredient in the inflationary stew is the supply of money, defined as coins, paper currecny and checking deposits, according to the report. That's what consumers use to pay for goods and services. through its buying and selling powers, the Federal Reserve System can shrink or expand the volume of money.

The Federal Reserve expands the money supply by purchasing government notes, 'bilis and bonds held in the portfolios of the nation's commer- sharply, businesses and consumers can't get credit, economic activity slows, and unemployment rises. The report followed the "monetarist" theory, whose most eloquent spokesman is Milton Friedman of the University of Chicago. Friedman, who won the Nobel Prize for economics last year, argues that careful adjustments in the money supply are key tools in achieving economic health. Although Friedman's views have become more influential in government circles, the argument over in-flation is far from settled. The volume of coins, currency and checking deposits is $310 billion in a $1.5 trillion economy, said Henry Kaufman, an economist for Salomon a major New York investment "sell" actions to adjust the flow of funds coursing through the financial network.

"Most Americans do not know how important money policy is to the prices of the goods they buy, the interest rates they pay, their job opportunities, wages and profits," Neal said. Because of bad timing in adjusting the money supply, the report said, the Federal Reserve often makes bad times worse and turns good times into inflationary periods. When too much money is pumped into the system, a burst of inflation hits two years later. When the growth in money is cut back too cial banks. This puts cash into the banking system.

Banks can then make more loans, businesses can expand, consumers can borrow funds to buy more goods. to shrink the money supply, the Federal Reserve sells government securities to the banks. This drains cash from the banking system, leaving less money available to fuel the economy. Closely watching the unemployment rate, the rise and fall of interest rates, and indicators of economic output, the Federal Reserve governors decide on a prescription for a healthy money supply. They order "buy" or Bidding Sends Prices Higher in Newspaper Acquisition Binge Ah 11 BY ROBERT E.

DALLOS Times Staff Writer NEW YORK About three years ago. press critic Ben Bagdikian made a tally of newspaper acquisitions. He determined that since 1968 independent newspapers had been purchased by chains at the rale of 62 a year, or one every five days. 21 hours and 17 minutes. Noting in an article in the Columbia Journalism Review that there were only 734 independent newspapers left in 1972, he predicted tongue in cheek, of course that "at this rate (allowing for leap years) the last independent will disappear at 10:48 p.m.

on June 7th. 11 years hence appropriately, a Thursday, a fat advertising dav. and also appropriately the year 1984." Bagdikian still appears to be right on target: in fact, if the current pace keeps up. the fateful day might come even sooner. In the year just completed, 72 daily newspapers changed hands, up from 52 in 1975.

but slightly less than the 79 papers that changed ownership in 1974. There are 704 independents now out of a total 1.765 newspapers. And while the merger and acquisition trend in the newspaper industry continues briskly, a new twist has arisen of late. Whereas, just a couple of years ago. independent newspapers were being bought by other independents and chains, today there's a shortage of good single properties.

As a result, chains are starting to swallow up entire chains. Of those 72 newspapers that changed hands this last year. 61 involved chains. "There is a finite population of newspapers in this country," says Benjamin M. Compaine.

a professor at Community College of Philadelphia who wrote a book on the newspaper industry in 1973 which he is currently updating. "It is too expensive to start up a newspaper today so anyone who wants one has to buy from an existing pool. And there's fierce competition GAMES OF CONCENTRATION Mark An- screen while playing electronic video game, thony, 4, Los Angeles, carefully watches Demand exceeds supply, stores report. Times photos by Marilyn K. Yce Tennis, Everyone? Hottest Game on TV Not for Watching but Playing BY MARGARET A.

KILGORE. Times Staff Writer 13 daily and six Sunday newspapers in 1 1 cities across the country. According to newspaper analyst J. Kcndrick Noble associate director of research at Paine, Webber. Jackson Curtis, there was heavy buying of Spcidel stock in his firm's Michigan offices.

Spcidel stock quicklv rose from 18 to 22. "A good deal of money that has been received from the Booth sale was reinvested in Spcidel." he recalled "The buyers of Spcidel were using the proceeds from the sale of their Booth stock and they knew they had made money in a situation in which one newspaper chain owned a piece of another. They asked if there were any situations like that and the Gannctt-Speidel case was it. Institutions came to a similar conclusion." Gannett, in late December, announced it was acquiring Spcidel. The actual merger won't take place until spring, pending approval of shareholders of both companies.

"I-or Gannett, the merger Uvith Spcidel represents a coup of sorts." says Ellen Borland Sachar, who follows newspaper stocks for Mitchell. Hutchins Inc. "With its excellent operating record and its exclusive involvement in the newspaper business. Spcidel was one of the most attractive merger candidates among the publicly held newspaper groups, which Gannett should acquire for a total of S175.7 million or 17.6 times our estimate of Speidel's 1976 earnings. "Compared with the 30 and 40 multiples of earnings Gannett has been4' paying recently in cash for certain individual properties, the Spcidel deal represents a bargain indeed." Allen A.

Neuharth, Gannett 's president and chief executive officer, says that the Speidel acquisition and several others his chain made during 1968 will increase its ownership to 73 from 55 entities. And he indicates that there is plenty more to be heard from Gannett in the merger field. Please Turn to Page 2, Col. 5 The box score: Candlestick Park. a.

definite yes for the San Francisco Giants and Forty Niners games. Oakland-Alameda Stadium, yes for the Raiders and the A's. The Los Angeles Coliseum, doubtful for the Ram games or any soccer or motocross events. Anaheim Stadium, a maybe for the Angels but here too there are strong doubts. Dodger Stadium, very doubtful for the Dodger games which start April 7.

San Diego Stadium, doubtful for both the Padres and Chargers. The L.A. Forum stole a march on everybody and started selling wine a month ago but this had little to do with the new law. The Forum has for some time had an all-purpose Alcohol Beverage Control Board license which entitles it to sell any kind of alcoholic beverage. For some reason, however, it stuck to liquor.

Now, the Forum is offering Guild's Cribari wines and in turn Cribari is sponsoring the Kings and Laker games on radio and television. The ABC says that any arena that serves meals, as opposed to just hotdogs and peanuts, could qualify for an all-purpose license. Most stadiums have areas where some liquor is served now. cither in VIP clubs or in restaurants. The new law would permit wine sales throughout the stadiums.

At the first event technically qualified under the new law, today's Su-perbowLat the Rose Bowl, fans will have to make do with beer. "There really wasn't enough time to apply for an ABC license." says Marshall Wilkings. president of Olympic Concession which services the Rose Bowl. "Besides, I don't think the (Pasadena) city fathers are in the mood to Please Turn to Page 3, Col. 1 Hos ancjc Irs (umrs Uiitlool Hiisincss Finance PART VI SUNDAY, JANUARY 9, 1977 for what is left in that pool right now." And it is primarily this competition that is driving prices for newspapers sky high.

In the biggest transaction of last year indeed, it was the largest in terms of dollars in the history of the industry newspaper mogul Samuel I. Newhouse outbid Times Mirror Co. During 1976, 72 daily newspapers were sold up from 52 in 1 975 and others and paid approximately S300 million in cash for the Booth newspapers. Booth's assets include Parade Magazine as well as eight dailies in Michigan. When Newhouse made his takeover bid.

he already owned more than 15rc of Booth stock. To observers of the newspaper scene, the Ncwhouse-Booth situation had a counterpart one very much similar in its major characteristics. They immediately speculated that there would be a similar takeover attempt of Spcidel Newspapers by Gannett Co. Gannett, a large newspaper chain, alrcadv owned a chunk of i a Reno-based publisher of BY CARL CANNON Times Staff Writer while most stadium operators say they are expecting screw cap bottles akin to the small containers served on airlines. Ivie says his firm is working on a three-spigot (white, red, rose') container that hawkers could lug up the aisles "much as coffee is dispensed to the seats in some stadiums." And concessionaires, realizing that peanuts and hotdogs are not proper complements to the grape, are laying plans for more compatible fare such as cheese and crackers.

Leading at 'Somehow wine just doesn't go with beer, hotdogs, peanuts' the moment seems to be something called a "cheese stick," described as being "about the width of your index finger, but square." These convolutions are mystifying to operators of Houston's Astrodome and the Louisiana Superdome, who can't understand why California, the center of the U.S. wine industry, has taken so long to come to a decision they made long ago. Both have offered wine for a couple of years and the operators of both say it has been an unqualified success. Still, at the moment, more California sports stadiums will be without wine than with it in the coming year. INSIDE OUTLOOK "Father" of Datsun sales and 240Z to retire.

How valuable is a patent? Letters to the Financial Editor. Sidelights. SOME ARENAS DECIDE TO PASS Wine in Sports: Social Football Ralph H. Baer likes to joke that he invented electronic video games by the light of a candle working nights and weekends alone in his laboratory. "Actually, it wasn't that way at all." said the 55-year-old television engineer at Sanders Associates South Nashua, N.H.

"I ran a large division at Sanders back in the early '60s. We were developing and manufacturing parts for television sets then and we knew there were 62 million sets out there. It became increasingly clear to us that we ought to be developing something else to do with a television set besides just watching it." Baer and his staff started trying various methods of putting games on a TV screen by remote control. "We had one room set aside at Sanders with TV sets in it," he explained. "We kept it locked and I had the key.

There were several of us with access to the room and we played games by the hour. No one was sure what we were doing and we didn't dare let anyone in on it for fear of someone stealing our ideas." Finally. Baer and his associates came up with what they thought was a marketable product, "but we weren't quite sure what to do with it. Eventually, we decided to go the licensing route, but it was quite a while before we could persuade any biggies (big companies) to come talk to us. When a couple of corporations finally did send their people to see the games they were enthusiastic but nothing happened." Baer said negotiations went on for months with several companies until one of Baer's team quit to join Magnavox New York.

"He convinced Magnavox to take a chance on the games, and the video game called "Odyssey" was the result." A spokesman for Magnavox said the company bought the patent rights and launched the integrated circuit video game in 1972, but to less-than-startling results. "The first units were unwieldy, with complicated circuits and about 12 different games involved. And we couldn't produce them cheaply enough to offer them for home television use at a popular price. We were alone in the field until 1974 when Atari got into the market after they had started with electronic games played in arcades and bars. Now there are 35 or 40 electronic firms making the games." Retailers report that the video games were one of the hottest-selling items in the Christmas market.

An estimated 3 million games were sold, producing S200 million in revenues. In 1975, barely 400.000 were sold, only S3 milliom worth. Potentially, there is an almost limitless market out there among America's inveterate gadget and game buyers. The Electronics Industries Assn. reports that Please Turn to Page 2, Col.

1 It's not the nose of the ball but the nose of the burgundy; not whether the puck is iced but whether the cha-blis is properly chilled that could concern some sports fans this year. As of Jan. 1 it is legal to serve wine as well as beer in California arenas with a capacity of 40.000 or more for professional sporting events. It may be legal but no one is seriously suggesting that the bleacher crowd is suddenly going to turn from beer to wine; nor does it even assure that they will be given the choice. Although the new law was signed by Gov.

Brown last August, it is still being chewed over by stadium directors and concessionaires. Not all are personally in favor of adding wine to their offerings and some who are are not sure they can get the approval from the various city, county (and in one case religious)bodics they are responsible to. Others are not quite sure of what the law permits or whether they qualify. There is even a geographical split' between north and south, with Bay Area stadium bosses generally favoring the move and those in the Southland showing marked reluctance. The differences between pro and con range widely.

Those in favor cite everything from keeping up with the times to easier crowd control. The arguments of those opposed range from preserving the image of baseball to their possible liability under the public responsibility law. Wineries, uncertain of how much the new legislation will add to their sales but taking no chances on being caught short, have been scrambling to come up with the proper package to make stadium wine service efficient and profitable. "The guy who comes up with the best package will take most of the stadium business," say Robert Ivie, president of Guild Winery and a prime mover behind the new law. But FT3F fM; I fSA Of ff Tk i i.n inniiir, I lirMin nmmmttlmmK mlian i L.i, a niriiin -MmMtmim THE GAME'S THE THING Electronic TV ment.

Some three million games are ex-games are latest craze in home entertain- pected to be sold for $200 million this year..