3 Networks Meet Studios, Spurn Production Accord

With their advertising revenues increasingly tight, the nation’s three major television networks stepped up their efforts Thursday to cash in on another aspect of the business--program production.

Networks are now under tight government restrictions that limit how much programming they can produce and finance themselves. Most television programs are produced and owned by independent production companies.

For the last 18 months, executives of the networks and the studios have been meeting in hopes of finding a compromise that would give the networks more flexibility, but still protect the studios.

The networks were considering a proposal that would have limited them to producing five hours of prime time programming a week until 1995. In addition, the proposal would have allowed the networks to own 50% in production joint ventures, something they are currently prohibited from doing.

Reject Compromise

On Thursday, however, the networks abruptly rejected a proposed compromise. The move, which surprised studio executives, aroused fears among studio executives that the networks were moving to control the marketplace when some of the governmental restrictions expire in four years.

In letter to Robert A. Daly, chairman and chief executive officer of Warner Bros., ABC broadcast division president Michael P. Mallardi said the three networks had decided “that now is not an appropriate time to agree to additional governmental restrictions on how the networks can conduct their business in the 1990s and beyond.”

The networks operate under certain production and syndication limits established under the Federal Communications Commission’s financial interest and syndication rules. Under these limits, further spelled out in a 1974 consent decree with the Justice Department, the networks are now allowed to produce only 3 1/2 hours a week of prime time programming.

Gradual Increase

That gradually increases to five hours by 1990. Thereafter, the networks would be allowed to produce an unlimited amount of prime time programming--as much as 22 1/2 hours a week.

Jack Valenti, president of the Motion Picture Assn. of America, said that he and Daly met with representatives from the three networks on Oct. 6 in Los Angeles, and that the networks seemed to favor the proposal. “They brought to the table essentially the same document that they are turning down,” he said by telephone from the Beverly Hills Hotel.

ABC’s Mallardi said in his letter that in “light of the most difficult economic environment the networks have ever faced,” they need “flexibility” to cope with declining network audiences and advertising revenues, and increasing competition from studios like Fox Broadcasting, which is working to create a fourth network.