COMPANY TOWN

Hollywood cheers FCC's new net neutrality rules

FCC's new net neutrality rules are a victory for Hollywood's creative community

The Federal Communications Commission's adoption of tough new Internet rules is expected to preserve the digital frontier that has galvanized Hollywood's creative community.

The rise of Internet streaming services — including Netflix, Amazon.com and YouTube channels — has been a boon to writers, actors, musicians and other content producers. These outlets have sparked a surge in entertainment jobs that has helped drive employment in Hollywood to the highest level in a decade.

Some in the entertainment industry feared that cable companies would create a two-tiered system that favored companies with deep pockets that could pay for faster delivery of their content. They were worried that such a system would choke innovation as smaller players couldn't afford to ride in the fast lanes.

But the new rules adopted by the FCC prohibit such discrimination.

"This is clearly a victory for everyone — not just Hollywood, but everyone who uses the Internet," said Chris Keyser, president of the Writers Guild of America, West. "It is a critical moment in the ongoing fight for free expression and robust competition."

The entertainment industry's creative ranks — the WGA, program producers and digital entrepreneurs — have long lobbied for the so-called net neutrality rules. They want the freedom to create and distribute their programs directly to consumers rather than selling a show to a big TV network.

Netflix and Amazon.com also applauded the FCC's 3-2 vote, which was supported by the commission's three Democrats.

The FCC rules represent "an important step toward ensuring greater consumer choice," Netflix said in a statement. "These actions kick off a new era that puts the consumer, not litigious corporate giants, at the center of competition policy."

Relief from Thursday's vote extended to the music side of the spectrum.

Independent music producers said the FCC vote should alleviate the "considerable disadvantage [for independent producers] due to the inequities of a music marketplace structured on a hierarchical system of gatekeepers," according to a statement by the American Assn. of Independent Music.

But major media companies — including 21st Century Fox, NBCUniversal, CBS Corp., Time Warner and Viacom — were silent on the FCC's decision.

Established Hollywood interests already have been grappling with tectonic shifts in consumer behavior. Thanks to the Internet, more viewers are watching movies and TV shows on streaming services, and some are cutting the cable cord altogether. This has led to declining audiences at cinemas and for television networks, even though consumption is on the rise.

For example, about 70% of the audience for NBC's "The Tonight Show With Jimmy Fallon" watches online rather than at 11:35 p.m. on NBC, when the program airs. TV networks have been frustrated in their efforts to make money from that audience, in large part because digital viewership has been difficult to measure.

"Here you have one of the hottest shows on television where 70% of the views are in an area that we don't get credit for," NBCUniversal Chief Executive Steve Burke told analysts this week.

Media companies also depend on the $47 billion they receive each year from pay-TV companies to distribute their channels. But at the same time, networks like NBC, CBS, Fox and ABC recognize that new revenue streams have been created by licensing their shows to Internet streaming services like Netflix and Amazon.

The Motion Picture Assn. of America, which represents the major Hollywood movie studios, worked behind the scenes.

"Our narrow focus throughout the network neutrality debate has been to ensure that the rules do not thwart efforts to prevent copyright infringement, or otherwise chill production and distribution of innovative content," the MPAA said.

Celebration over Thursday's vote was particularly loud among the next generation of content producers who turned to the Internet to reach a large and growing audience.

"The audience on the Web craves constant updates and it wants quality," said Christopher J. Smith, who created a faux documentary series called "My Dad's Tapes."

"There's no reason that anyone that creates content should be filtered by a fast track or a slow track," Smith said. "The Internet, when it's the open platform it was designed to be, allows for a sense of equality — and for folks like me, ownership — that is not the norm in Hollywood."

Latino, African American and Asian American writers and producers also embraced net neutrality because they saw Internet channels as a platform for diverse voices.

"We were unhappy in how we were underrepresented and stereotyped on the traditional media networks," said Jessica J. Gonzalez, general counsel of the National Hispanic Media Coalition, which began lobbying five years ago for net neutrality. "We saw the Internet as a tremendous tool to share our stories and help organize our community for social justice."

Jay Bushman said he also turned to the Internet several years ago because it was less restrictive than dealing with the entrenched TV networks. He produces and writes for "The Lizzie Bennet Diaries," a show on YouTube that is essentially a version of Jane Austen's "Pride and Prejudice."

"I didn't need anybody's permission," he said. "You can make stuff, put it online and go directly to an audience."

The vote doesn't mean that the battle is over, as some expected. AT&T has said it will challenge the new rules in court. Other broadband companies, including Comcast and Verizon, also expressed disappointment with the FCC's new rules.

Times staff writers Richard Verrier and Ryan Faughnder contributed to this report.

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