<PAGE>   1
                                                                   EXHIBIT 10.20


                       MURDOCK COMMUNICATIONS CORPORATION
                             1997 STOCK OPTION PLAN
                     (as amended through September 30, 1998)

This Stock Option Plan, hereinafter referred to as the Plan, is adopted by
Murdock Communications Corporation, an Iowa Corporation.

1.       Purpose. The purpose of this Plan is to strengthen Murdock
         Communications Corporation by providing an incentive to its key
         employees and directors thereby encouraging them to devote their
         abilities and industry to the success of the Company's business
         enterprise. It is intended that this purpose be achieved by extending
         to key employees and directors of the Company an added long-term
         incentive for high levels of performance and unusual efforts through
         the grant of options to purchase shares of the Company's common stock
         under the Murdock Communications Corporation 1997 Stock Option Plan.

2.       Definitions.  For purposes of the Plan:

         (a)       "Agreement" means the written agreement between the Company
                   and an Optionee evidencing the grant of an Option and setting
                   forth the terms and conditions thereof.

         (b)       "Board" means the Board of Directors of the Company.

         (c)       "Cause" means (i) intentional failure to perform reasonably
                   assigned duties, (ii) dishonesty or willful misconduct in the
                   performance of an Optionee's duties, (iii) any act of (A)
                   fraud or intentional misrepresentation, or (B) embezzlement,
                   misappropriation or conversion of assets or opportunities of
                   the Company or (iv) willful violation of any law, rule or
                   regulation in connection with the performance of an
                   Optionee's duties (other than traffic violations or similar
                   offenses).

         (d)       "Change in Capitalization" means any increase or reduction in
                   the number of Shares, or any change (including, but not
                   limited to, a change in value) in the Shares or exchange of
                   Shares for a different number or kind of shares or other
                   securities of the Company, by reason of a reclassification,
                   recapitalization, merger, consolidation, reorganization,
                   stock dividend, stock split or reverse stock split,
                   combination or exchange of shares or other similar events.

         (e)       A "Change in Control" shall be deemed to have occurred upon
                   the approval by the Company's stockholders of (i) a merger or
                   consolidation of the Company with or into another Corporation
                   (other than a merger or consolidation in which the Company is
                   the surviving corporation and which does not result in any
                   capital reorganization or reclassification or other change in
                   the Company's then outstanding shares of common stock);

<PAGE>   2

                   (ii) a sale or disposition of all or substantially all of the
                   Company's assets; or (iii) a plan of liquidation or
                   dissolution of the Company.

         (f)       "Code" means the Internal Revenue Code of 1986, as amended.

         (g)       "Committee" means a committee consisting solely of at least
                   two (2) nonemployee Directors appointed by the Board to
                   administer the Plan and to perform the functions set forth
                   herein.

         (h)       "Company" means Murdock Communications Corporation, an Iowa
                   based corporation.

         (i)       "Director Option" means an Option granted to a Nonemployee
                   Director pursuant to Section 5.

         (j)       "Disability" means a physical or mental infirmity which
                   impairs the Optionee's ability to perform substantially his
                   or her duties for a period of one hundred eighty (180)
                   consecutive days.

         (k)       "Eligible Employee" means any officer or other key employee 
                   of the Company or a Subsidiary designated by the Committee as
                   eligible to receive Options subject to the conditions set
                   forth herein.

         (l)       "Employee Options" means an Option granted to an Eligible 
                   Employee pursuant to Section 6.

         (m)       "Exchange Act" means the Securities Exchange Act of 1934, as
                   amended.

         n)        "Fair Market Value" on any date means the closing price
                   of the Shares on such date on the principal national
                   securities exchange on which such Shares are listed or
                   admitted to trading, or if such Shares are not so listed or
                   admitted to trading, the arithmetic mean of the per Share
                   closing bid price and per Share closing asked price on such
                   date as quoted on the National Association of Securities
                   Dealers Automated Quotation System or such then market in
                   which such prices are regularly quoted, or, if there have
                   been no published bid or asked quotations with respect to
                   Shares on such date, the Fair Market Value shall be the value
                   established by the Board in good faith and in accordance with
                   Section 422 of the Code.

         (o)       "Incentive Stock Option" means an Option satisfying the
                   requirements of Section 422 of the Code and designated by the
                   Committee as an Incentive Stock Option.

         (p)       "Nonqualified Stock Option" means an Option which is not an
                   Incentive Stock Option.

         (q)       "Nonemployee Director" means a director of the Company who is
                   not an employee of the Company or any Subsidiary.




                                       2
<PAGE>   3

         (r)       "Option" means an Employee Option, a Director Option, or 
                   either or both of them.

         (s)       "Optionee" means a person to whom an Option has been granted 
                   under the Plan.

         (t)       "Parent" means any corporation which is a parent corporation
                   (within the meaning of Section 424(e) of the Code) with
                   respect to the Company.

         (u)       "Plan" means the Murdock Communications Corporation 1997 
                   Stock Option Plan.

         (v)       "Shares" means the common stock, no par value per share, of 
                   the Company.

         (w)       "Subsidiary" means any corporation which is a subsidiary
                   corporation (within the meaning of Section 424(f) of the
                   Code) with respect to the Company.

         (x)       "Successor Corporation" means a corporation, or a parent or
                   subsidiary thereof within the meaning of Section 424(a) of
                   the Code, which issues or assumes a stock option in a
                   transaction to which Section 424(a) of the Code applies.

         (y)       "Ten-Percent Stockholder" means an Eligible Employee, who, at
                   the time an Incentive Stock Option is to be granted to him or
                   her, owns (within the meaning of Section 422(b) (6) of the
                   Code) stock possessing more than ten percent (10%) of the
                   total combined voting power of all classes of stock of the
                   Company, or of a Parent or a Subsidiary.

3.       Administration.

         (a)       The Plan shall be administered by the Committee which shall 
                   hold meetings at such times as may be necessary for the
                   proper administration of the Plan. The Committee shall keep
                   minutes of its meetings. A quorum shall consist of not less
                   than two members of the Committee and a majority of a quorum
                   may authorize any action. Any decision or determination
                   reduced to writing and signed by a majority of all of the
                   members shall be as fully effective as if made by a majority
                   vote at a meeting duly called and held. No member of the
                   Committee shall be liable for any action, failure to act,
                   determination or interpretation made in good faith with
                   respect to this Plan or any transaction hereunder, except for
                   liability arising from his or her own willful misfeasance,
                   gross negligence or reckless disregard of his or her duties.
                   The Company hereby agrees to indemnify each member of the
                   Committee for all costs and expenses and, to the extent
                   permitted by applicable law, any liability incurred in
                   connection with defending against, responding to, negotiation
                   for the settlement of or otherwise dealing with any claim,
                   cause of action 


                                       3
<PAGE>   4

                   or dispute of any kind arising in connection with any actions
                   in administering this Plan or in authorizing or denying
                   authorization to any transaction hereunder.

         (b)       Subject to the express terms and conditions set forth herein,
                   the Committee shall have the power from time to time to
                   determine those Eligible Employees to whom Employee Options
                   shall be granted under the Plan and the number of Incentive
                   Stock Options and/or Nonqualified Stock Options to be granted
                   to each Eligible Employee and to prescribe the terms and
                   conditions (which need not be identical) of each Employee
                   Option, including the purchase price per Share subject to
                   each Employee Option, and make any amendment or modification
                   to any agreement consistent with the terms of the Plan;

         (c)       Subject to the express terms and conditions set forth herein,
                   the Committee shall have the power from time to time:

                   (1)  to construe and interpret the Plan and the Options
                        granted thereunder and to establish, amend and revoke
                        rules and regulations for the administration of the
                        Plan, including, but not limited to, correcting any
                        defect or supplying any omission, or reconciling any
                        inconsistency in the Plan or in any Agreement, in the
                        manner and to the extent it shall deem necessary or
                        advisable to make the Plan fully effective, and all
                        decisions and determinations by the Committee in the
                        exercise of this power shall be final, binding and
                        conclusive upon the Company, its Subsidiaries, the
                        Optionees and all other persons having any interest
                        therein;

                   (2)  to determine the duration and purposes for leaves of
                        absence which may be granted to an Optionee on an
                        individual basis without constituting a termination of
                        employment or service for purposes of the Plan;

                   (3)  to exercise its discretion with respect to the powers
                        and rights granted to it as set forth in the Plan;

                   (4)  generally, to exercise such powers and to perform such 
                        acts as are deemed necessary or advisable to promote the
                        best interests of the Company with respect to the Plan.

4        Stock Subject to Program.

         (a)       The maximum number of Shares that may be made the subject of
                   Options granted under the Plan is 1,727,471 Shares (or the
                   number and kind of shares of stock or other securities to
                   which such Shares are adjusted upon a Change in
                   Capitalization pursuant to Section 8) and the Company shall
                   reserve for the purposes of the Plan, out of its authorized
                   but unissued 


                                       4
<PAGE>   5

                   Shares or out of Shares held in the Company's treasury, or
                   partly out of each, such number of Shares as shall be
                   determined by the Board.

         (b)       Whenever any outstanding Option or portion thereof expires, 
                   is canceled or is otherwise terminated for any reason (other
                   than upon the surrender of the Option pursuant to Section
                   7(e) hereof), the Shares allocable to the canceled or
                   otherwise terminated Option or portion thereof may again be
                   the subject of Options granted hereunder.

         (c)       Stock certificates representing Shares purchased under the
                   Plan shall be conspicuously endorsed with the following
                   legend:

                   "The shares of stock represented by this certificate are
                   subject to certain restrictions on transfer contained in the
                   corporation's Stock Option Plan, a copy of which is on file
                   at, and will be furnished without charge to the record holder
                   of this certificate upon written request to, the
                   corporation's principal place of business or registered
                   office."

5.       Option Grants for Nonemployee Directors.

         (a)       Grant. Subject to the provisions of the Plan and to Section 4
                   (a) above, the Committee shall have full and final authority
                   to select those Nonemployee Directors who will receive
                   Director Options, the terms and conditions of which shall be
                   set forth in an Agreement. The purchase price therefor of
                   each Director Option shall be as provided in this Section 5
                   and such Director Options shall be exercisable, in whole or
                   in part, in four equal installments as follows: (i) with
                   respect to the first installment, immediately upon execution
                   and delivery of the Director Option (the "Grant"), (ii) with
                   respect to the second installment, on December 31, of the
                   year of the Grant, (iii) with respect to the third
                   installment, on December 31 of the year next succeeding the
                   year of the Grant, and (iv) with respect to the last
                   installment, on December 31 of the year two years after the
                   date of the Grant. Such Director Options shall be evidenced
                   by an Agreement containing such other terms and conditions
                   not inconsistent with the provisions of this Plan as
                   determined by the Board.

         (b)       Purchase Price. The purchase price for Shares under each
                   Director Option shall be at least equal to 100% of the Fair
                   Market Value of a Share on the date the Director Option is
                   granted.

         (c)       Duration. Director Options shall be for a term of ten (10)
                   years.

6.       Option Grants for Eligible Employees.

         (a)       Grant. Subject to the provisions of the Plan and to Section
                   4(a) above, the Committee shall have full and final authority
                   to select those Eligible Employees who will receive Employee
                   Options, the terms and conditions of which shall be set forth
                   in an Agreement; provided; however, that no 


                                       5
<PAGE>   6

                   Eligible Employee shall receive any Incentive Stock Options
                   unless he is an employee of the Company, a Parent or a
                   Subsidiary at the time the Incentive Stock Option is granted.

         (b)       Purchase Price. The purchase price or the manner in which the
                   purchase price is to be determined for Shares under each
                   Employee Option shall be determined by the Committee and set
                   forth in the Agreement, provided that the purchase price per
                   Share under each Incentive Stock Option shall not be less
                   than 100% of the Fair Market Value of a Share on the date the
                   Employee Option is granted (110% in the case of an Incentive
                   Stock Option granted to a Ten-Percent Stockholder).

         (c)       Duration. Employee Options granted hereunder shall be for 
                   such term as the Committee shall determine, provided that no
                   Employee Option shall be exercisable after the expiration of
                   ten (10) years from the date it is granted (five (5) years in
                   the case of an Incentive Stock Option granted to a
                   Ten-Percent Stockholder). The Committee may, subsequent to
                   the granting of any Employee Option, extend the term thereof
                   but in no event shall the term as so extended exceed the
                   maximum term provided for in the preceding sentence.

         (d)       Modification or Substitution. The Committee may, in its
                   discretion, modify outstanding Employee Options or accept the
                   surrender of outstanding Employee Options (to the extent not
                   exercised) and grant new Options in substitution for them.
                   Notwithstanding the foregoing, no modification of an Employee
                   Option shall adversely alter or impair any rights or
                   obligations under the Employee Option without the Optionee's
                   consent.

7.       Terms and Conditions Applicable to All Options

         (a)       Non-transferability. No Option granted hereunder shall be
                   transferable by Optionee to whom granted otherwise than by
                   will or the laws of descent and distribution, and an Option
                   may be exercised during the lifetime of such Optionee only by
                   the Optionee or his or her guardian or legal representative.
                   The terms of such Option shall be final, binding and
                   conclusive upon the beneficiaries, executors, administrators,
                   heirs and successors of the Optionee.

         (b)       Vesting and Method of Exercise.

                   (1)  Subject to Section 7(e) hereof, each Option shall
                        become exercisable in the manner, including installments
                        (which need not be equal), and at such times as may be
                        designated by the Committee and set forth in the
                        Agreement. To the extent not exercised, installments
                        shall accumulate and be exercisable, in whole or in
                        part, at any time after becoming exercisable, but not


                                        6
<PAGE>   7

                        later than the date the Option expires; provided,
                        however, that the Agreement may provide for the
                        forfeiture of vested and non-vested Options upon the
                        occurrence of specified events. The Committee may
                        accelerate the exercisability of any Option or portion
                        thereof at any time.

                   (2)  The exercise of an Option shall be made only by a
                        written notice delivered in person or by mail to the
                        Secretary of the Company at the Company's principal
                        executive office, specifying the number of Shares to be
                        purchased and accompanied by payment therefor and
                        otherwise in accordance with the Agreement pursuant to
                        which the Option was granted. The purchase price for any
                        Shares purchased pursuant to the exercise of an Option
                        shall be paid in full upon such exercise, by any one or
                        a combination of the following: (i) cash or (ii)
                        transferring Shares to the Company upon such terms and
                        conditions as determined by the Committee. The written
                        notice pursuant to this Section 7(b)(2) may also provide
                        instructions from the Optionee to the Company that upon
                        receipt of the purchase price in cash from the
                        Optionee's broker or dealer, designated as such on the
                        written notice, in payment for any Shares purchased
                        pursuant to the exercise of an Option, the Company shall
                        issue such Shares directly to the designated broker or
                        dealer. Any Shares transferred to the Company as payment
                        of the purchase price under an Option shall be valued at
                        their Fair Market Value on the day preceding the date of
                        exercise of such Option. If requested by the Committee,
                        the Optionee shall deliver the Agreement evidencing the
                        Option to the Secretary of the Company who shall endorse
                        thereon a notation of such exercise and retum such
                        Agreement to the Optionee. No fractional Shares (or cash
                        in lieu thereof) shall be issued upon exercise of an
                        Option and the number of Shares that may be purchased
                        upon exercise shall be rounded to the nearest number of
                        whole Shares.

         (c)       Rights of Optionees. No Optionee shall be deemed for any
                   purpose to be the owner of any Shares subject to any Option
                   unless and until (i) the Option shall have been exercised
                   pursuant to the terms thereof, (ii) the Company shall have
                   issued and delivered the Shares to the Optionee and (iii) the
                   Optionee's name shall have been entered as a stockholder of
                   record on the books of the Company. Thereupon, the Optionee
                   shall have full voting, dividend and other ownership rights
                   with respect to such Shares.

         (d)       Termination of Employment or Service. Unless otherwise
                   provided in the Agreement evidencing the Option, an Option
                   shall terminate upon or following an Optionee's termination
                   of employment with the Company and its Subsidiaries or
                   service as a director of the Company and its Subsidiaries as
                   follows:



                                       7
<PAGE>   8

                   (1)  if an Optionee's employment or service as a director
                        terminates for any reason other than death, Disability
                        or Cause, the Optionee may at any time within three (3)
                        months after his or her termination of employment or
                        service as a director, exercise an Option to the extent,
                        and only to the extent, that the Option or portion
                        thereof was exercisable on the date of termination;

                   (2)  in the event the Optionee's employment or service as a
                        director terminates as a result of Disability, the
                        Optionee may at any time within one (1) year after such
                        termination exercise such Option to the extent, and only
                        to the extent, the Option or portion thereof was
                        exercisable at the date of such termination;

                   (3)  if an Optionee's employment or service as a director
                        terminates for Cause, the Option shall terminate
                        immediately and no rights thereunder may be exercised;

                   (4)  if an Optionee dies while a director or an employee of
                        the Company or any Subsidiary or within three months
                        after termination as described in clause (1) of this
                        Section 7(d) or within one (1) year after termination as
                        a result of Disability as described in clause (2) of
                        this Section 7(d), the Option may be exercised at any
                        time within one (1) year after the Optionee's death by
                        the person or persons to whom such rights under the
                        Option shall pass by will or by the laws of descent and
                        distribution; provided, however, that an Option may be
                        exercised to the extent, and only to the extent, that
                        the Option or portion thereof was exercisable on the
                        date of death or earlier termination.

                   Notwithstanding the foregoing, (i) in no event may any Option
                   be exercised by anyone after the expiration of the term of
                   the Option and (ii) a termination of service as a director
                   shall not be deemed to occur so long as the director
                   continues to serve the Company as either a director or
                   director emeritus.

         (e)       Effect of Change in Control. Notwithstanding anything
                   contained in the Plan or an Agreement to the contrary, in the
                   event of a Change in Control, all Options outstanding on the
                   date of such Change in Control shall become immediately and
                   fully exercisable.

8.       Adjustment Upon Changes in Capitalization.

         (a)       Subject to Section 9, in the event of a Change in
                   Capitalization, the maximum number and class of Shares or
                   other stock or securities with respect to which Options may
                   be granted under the Plan, the number and class of Shares or
                   other stock or securities which are subject to outstanding



                                       8

<PAGE>   9

                   Options granted under the Plan, and the purchase price
                   therefor, if applicable shall be appropriately and equitable
                   adjusted.

         (b)       Any such adjustment in the Shares or other stock or
                   securities subject to outstanding Incentive Stock Options
                   (including any adjustments in the purchase price) shall be
                   made in such manner as not to constitute a modification as
                   defined by Section 424(h)(3) of the Code and only to the
                   extent otherwise permitted by Sections 422 and 424 of the
                   Code.

         (c)       If, by reason of a change in Capitalization, an Optionee
                   shall be entitled to exercise an Option with respect to new,
                   additional or different shares of stock or securities, such
                   new, additional or different shares shall thereupon by
                   subject to all of the conditions which were applicable to the
                   Shares subject to the Option, as the case may be, prior to
                   such Change in Capitalization.

9.       Effect of Certain Transactions.

         Subject to Section 7(e), in the event of (i) the liquidation or
         dissolution of the Company or (ii) a merger or consolidation of the
         Company (a "Transaction"), the Plan and the Options issued hereunder
         shall continue in effect in accordance with their respective terms and
         each Optionee shall be entitled to receive in respect of each Share
         subject to any outstanding Options, as the case may be, upon exercise
         of any Option, the same number and kind of stock, securities, cash,
         property, or other consideration that each holder of a Share was
         entitled to receive in the Transaction in respect of a Share. In the
         event that, after a Transaction, there occurs any change of a type
         described in Section 2(d) hereof with respect to the shares of the
         surviving or resulting corporation, then adjustments similar to, and
         subject to the same conditions as, those in Section 8 hereof shall be
         made by the Committee.

10.      Termination and Amendment of the Program.

         (a)       The Plan shall terminate on the day preceding the tenth
                   anniversary of the date of its adoption by the Board and no
                   Option may be granted thereafter. The Board may sooner
                   terminate or amend the Plan at any time and from time to
                   time; provided, however, that to the extent necessary under
                   Section 16(b) of the Exchange Act and the rules and
                   regulations promulgated thereunder or other applicable law,
                   no amendment shall be effective unless approved by the
                   stockholders of the Company in accordance with applicable law
                   and regulations at an annual or a special meeting held within
                   twelve (12) months after the date of adoption of such
                   amendment.

         (b)       Except as provided in Sections 8 and 9 hereof, rights and
                   obligations under any Options granted before any amendment or
                   termination of the Plan shall not be adversely altered or
                   impaired by such amendment or 



                                       9
<PAGE>   10
                   termination, except with the consent of the Optionee, nor
                   shall any amendment or termination deprive any Optionee of
                   any Shares which he may have acquired through or as a result
                   of the Plan.

11.      Non-Exclusivity of the Plan. The Adoption of the Plan by the Board
         shall not be construed as amending, modifying or rescinding any
         previously approved incentive arrangement or as creating any
         limitations on the power of the Board to adopt such other incentive
         arrangements as it may deem desirable, including, without limitation,
         the granting of stock options otherwise than under the Plan, and such
         arrangements may be either applicable generally or only in specific
         cases.

12.      Limitation of Liability. As illustrative of the limitations of
         liability of the Company, but not intended to be exhaustive thereof,
         nothing in the Plan shall be construed to:

         (a)       give any person any right to be granted an Option other than
                   at the sole discretion of the Committee;

         (b)       give any person any rights whatsoever with respect to Shares
                   except as specifically provided in the Plan;

         (c)       limit in any way the right of the Company to terminate the
                   employment of any person at any time; or

         (d)       be evidence of any agreement or understanding, expressed or
                   implied, that the Company will employ any person at any
                   particular rate of compensation or for any particular period
                   of time.

13.      Regulations and Other Approvals; Governing Law.

         (a)       This Plan and the rights of all persons claiming hereunder
                   shall be construed and determined in accordance with the laws
                   of the State of Iowa.

         (b)       The obligation of the Company to sell or deliver Shares with
                   respect to Options granted under the Plan shall be subject to
                   all applicable laws, rules and regulations, including all
                   applicable federal and state securities laws, and the
                   obtaining of all such approvals by governmental agencies as
                   may be deemed necessary or appropriate by the Committee.

         (c)       The Plan is intended to comply with Rule 16b-3 promulgated
                   under the Exchange Act and the Committee shall interpret and
                   administer the provisions of the Plan or any Agreement in a
                   manner consistent therewith. Any provisions inconsistent with
                   such Rule shall by inoperative and shall not affect the
                   validity of the Plan.



                                       10
<PAGE>   11

         (d)       The Board may make such changes as may be necessary or
                   appropriate to comply with the rules and regulations of any
                   government authority, or to obtain for Eligible Employees
                   granted Incentive Stock Options the tax benefits under the
                   applicable provisions of the Code and regulations promulgated
                   thereunder.

14       Effective Date. The effective date of the Plan shall be the date of its
         adoption by the Board.









                                       11