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TV Industry Lobbies FCC for Right to Control Prime Time Programs

December 14, 1990

WASHINGTON (AP) _ A who’s who of Hollywood and network TV executives descended upon the Federal Communications Commission on Friday to do battle over ownership and syndication rights to prime-time programs.

More than 30 witnesses, including the heads of ABC, NBC, CBS, Fox Broadcasting and top-level studio executives, rubbed elbows in a rare public hearing before the five-member FCC to debate changing the commission’s financial interest and syndication rule.

Commission Chairman Alfred Sikes, ringed by a half-dozen TV cameras, said it was the largest-ever Washington gathering of TV executives.

The rule, adopted in 1970, prohibits TV networks from holding a financial interest in prime-time programs they obtain from outside sources or selling them in the U.S. rerun marketplace.

The networks want out from under fin-syn, as it’s known, and since 1983 have been locked in acrimonious negotiations with producers over changing the rule. Commissioner James Quello said fin-syn has generated the most intense lobbying of his 16 years at the FCC.

Fox Inc. Chairman Barry Diller, whose network has a one-year exemption to fin-syn, said the issue no longer was producer access to mass audiences but ″a battle about money - about greed.″

The FCC tentatively decided in 1983 to revamp the rule but backed off under pressure from Congress and then-President Reagan. The commission will decide the issue next year.

Thursday, one witness after another told the commissioners why the rule was - or was not - vital to both the TV industry and the American viewing public.

ABC, NBC and CBS claim the rule is outdated in an era in which they no longer are the only outlets for programs and when they must compete against foreign companies that are not bound by fin-syn.

Network executives complained that advertising sales were down and their audiences were at historic lows because of cable TV, VCRs and other competitors.

″The existing regulatory structure, created both by the commission and by the Congress, provides an enormous advantage to the Hollywood and cable interests,″ Laurence Tisch, president of CBS Inc., told the hearing. ″The future of free broadcasting in America is seriously threatened, not just for the networks, but for our 600 affiliated stations. ... Repealing these rules is important because it will allow us to compete for the best programming.″

Producers, however, claimed that while the industry has changed dramatically since fin-syn was imposed 20 years ago, the three networks still have bottleneck control of major, high-quality programming. Without fin-syn, they said, the networks could once again extract many concessions from producers in return for putting a program on the air.

″Perhaps whereas they were once 900-pound gorillas, today they weigh in at only 850 pounds,″ said Richard Frank, president of Walt Disney Studios.

But John Agoglia, president of NBC Enterprises, and Robert Iger, president of ABC Entertainment, said it was the producers, not networks, that have the most bargaining power and that the networks needed to foster as many program suppliers as possible.

″No network executive has the leverage to force a producer, with or without a studio, to enter into a transaction,″ Iger said.

″Over 70 percent of our series come from major studios,″ said Jeff Sagansky, president of CBS Entertainment. He said CBS would lose ″tens of millions of dollars″ this year on ″Dallas″ because its producers threatened to go to Fox unless CBS accepted the aging series along with ″Knot’s Landing″ and ″Falcon Crest.″

The fin-syn rule was designed to stem network power, encourage independent production of TV shows and keep the networks from denying reruns to non- network TV stations. Since 1970, the network’s share of audiences has dropped from about 95 percent to less than 60 percent as cable viewing has grown.

″The advertising marketplace is the worst it’s been in two decades,″ said Robert Wright, president of NBC. ″The three network percentage of prime time viewing″ fell to 58 percent in November, a historic low.

The Justice Department has sided with the networks, but a wide array of groups are on the other side.

″The rule has fueled the growth of independent stations and - contrary to network contentions - has also promoted a substantial increase in the number of program producers,″ Warner Bros. Chairman Robert Daly said. ″The networks’ want repeal so that they may use their tremendous leverage to take valuable financial interests and syndication rights.″

Producers say they could accepted limited network ownership of their programs, but that syndication and other rights must be negotiated separately, after a show is placed on the network schedule.

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