FCC Decision Contested by Studios and Networks

THE compromise vote by the Federal Communications Commission (FCC) on the Financial Interest and Syndication Rules (known as Fin-Syn) restores the right of television networks to handle a portion of their program rerun sales in the United States, and all of them abroad. This has left both the networks and the movie studios unhappy and ready to challenge the decision. The broadcasters, who have long chafed over their inability to share in the sale of the programs they carry, say that the entire set of 1970 restrictions should have been lifted.

The major movie studios, including most of the independent producers, have argued that the Fin-Syn rules should be retained to protect producers from network "abuse." At stake is a US syndication market estimated at about $3 billion and an additional $2 billion abroad.

Networks have long argued that it is not fair to exclude them from the highly profitable syndication field. Because of diminishing audiences and advertising revenues, they badly need the income that now flows to studios and independent syndication companies.

The Motion Picture Association of America (MPAA) says it wants the FCC to reconsider its decision and warns that the studios will challenge the ruling both in the courts and in Congress. Jack Valenti, president of the MPAA, said the revised measure had "invited the networks to once again totally control the market." FCC Chairman Alfred Sikes has favored the complete elimination of the 1970 Fin-Syn restrictions because, he says, conditions that generated them no longer exist.

The studios, and some leading independents, fear the new rules could open the door to network "blackmail," creating a situation where the broadcasters might refuse to carry a show unless they can acquire a financial interest in it. Producers also argue that handing the networks artistic control of programs could restrict the range and originality of series and TV movies.

At the moment, apart from some programs produced "in house," the networks do not control rerun rights, nor can they participate financially in most of the shows they carry. The new regulations permit the networks to hold an interest in 40 percent of their prime-time programs, and allows them to handle their own distribution abroad. Networks will also be permitted to sell all of their non-prime-time shows, but the FCC has imposed a series of "controls" to protect independent producers from network pressu res.

"We have set the networks free, but they are on parole," said FCC commissioner Sherrie T. Marshall.

If a legal challenge to the revised Fin-Syn rules doesn't work, the studios are expected to take their case to Congress, arguing that the FCC decision deals them a devastating blow. Some independent producers admit that they welcome the infusion of network money.

Until now, movie studios financed most of the production costs, recouped about 60-75 percent from the network, and then profited from syndication at home and abroad - while excluding broadcasters entirely.

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