FCC may keep restrictions on TV rerun rights


WASHINGTON -- In what appears to be a serious setback for television networks, a majority of the five-member Federal Communications Commission now favors continuing to limit the ability of the networks to sell lucrative television reruns.

The development comes after weeks of deadlock on the issue, which has been the subject of an intense lobbying war between Hollywood studios and the networks over the $3 billion market.

The commission is to decide the issue on Thursday but has thus far been divided.

Two commissioners -- the chairman, Alfred C. Sikes, and James H. Quello -- have favored repealing most restrictions. Two others -- Sherrie Marshall and Ervin Duggan -- want to keep many of the rules in place.

The political balance shifted last Thursday, when the one undecided commissioner, Andrew C. Barrett, circulated a proposal within the agency to continue restrictions on the networks.

The proposal was quickly obtained by lobbyists. Hollywood representatives quickly praised the plan as a thoughtful compromise, as did Ms. Marshall and Mr. Duggan.

But network lobbyists denounced it, with one calling it "reregulation at its worst."

Syndication rights are the most profitable part of the television industry. Under rules imposed in 1970, the three leading networks are barred from obtaining such rights.

The rules, adopted after the networks settled an antitrust case with the Justice Department, are intended to prevent the networks from using their access to prime-time viewers to exert a stranglehold over producers and studios.

But the networks, joined by an array of government officials and experts, argue that the rules are outdated because network power has been eroded by the spread of cable television, videocassette recorders and independent stations.

Regardless of what the FCC ultimately decides, television audiences are not expected to see much difference in the programming.

Mr. Barrett's proposal, as described by people on both sides, would allow the networks to produce only 40 percent of their prime-time programming but would give them full syndication rights to that programming.

Television networks can produce all of their prime-time programs now but have syndication rights to none.

The networks would also be allowed to acquire "passive" rights to the remaining 60 percent of their programming schedule, which means they would be able to share in royalties but could not directly control distribution.

In addition, the proposal would continue to bar the networks from the market for first-run syndications, which are programs like "Wheel of Fortune" that are created for the syndication market.

In effect, these provisions would make it difficult for the networks to acquire movie studios, because many of the studios syndicate far more programming than a network could under the proposal.

That is a major issue because much of the push for eliminating the rules comes from people concerned about the acquisition of many U.S. studios by large foreign companies.

Perhaps the most controversial effect of the proposal, if it is adopted, would be on the News Corp.'s Fox Inc., which owns both a large production studio and the fledgling Fox television network.

It was the rise of Fox's new network that forced the FCC to re-examine the rules.

All five of the FCC commissioners have said they wanted to encourage the development of a fourth network.

But Fox, which is operating under a temporary waiver from the rules, will have to shed much of its syndication business if the proposal is adopted.

In another important concession to producers, the proposal would limit to two years the option terms that networks can demand when they buy first-run rights for a program.

Currently all three networks demand that producers of a new series give them the option to renew the program for four years.

By limiting the maximum term to two years, a producer with a hit series would be able to shop the program to competing buyers while the program was still fairly young.

As a result, the move would give producers a lift in bargaining power.

The plan would also keep the restrictions in place for at least five years, but would call for the FCC to review them at that time.

If it is adopted, the plan will be a big defeat for Mr. Sikes.

Both Ms. Marshall and Mr. Duggan quickly endorsed the plan.

Ms. Marshall called it "a reasonable, very thoughtful plan" that offered "significant deregulation with self-enforcing safeguards," a top aide said yesterday.

Mr. Duggan issued a brief statement saying Mr. Barrett had made "a tremendously valuable contribution to this debate."

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