FCC Proposes Rule to Offer Exclusivity Rights on TV

In a policy reversal that is likely to shake the cable television industry, the Federal Communications Commission on Wednesday offered local broadcasters exclusive rights to syndicated programs as a way of combatting the rising tide of television duplication.

If the ruling goes into effect a year from now as proposed, a local television station could buy exclusive rights to broadcast a popular program such as “Magnum P.I.” or “M*A*S*H”--now available in reruns several times a day on different channels in many markets--and block competing cable stations from scheduling that show.

FCC members asserted that their 3-0 decision, hailed by jubilant broadcasters, should end the “reign of reruns” that have plagued the medium, encourage more varied programming and put local broadcasters back on an even regulatory footing with cable and network operators who already enjoy exclusivity.

But disgruntled cable industry representatives threatened to challenge the ruling in court, and predicted blacked-out TV screens, bankrupt operators and embittered viewers.

“The FCC today pulled the plug on the favorite TV programs of millions of people,” declared James P. Mooney, president of the National Cable Television Assn. “Wealthy broadcasters will be able to warehouse programs, while less wealthy broadcasters will see their program costs skyrocket.”

The FCC’s ruling restores broadcasters’ exclusivity rights stripped away in 1980 by the commission. At the beginning of this decade, the FCC did not view the cable industry as a major competitor to traditional broadcasting companies and exclusivity rights were seen as unimportant.

But in the eight years since that decision, cable advertising revenues have soared from $45 million to $8.9 billion and cable programming--now accessible to 80% of all television households--has cut sharply into the audiences of local and network broadcasters.

This trend, the FCC said, has hurt local broadcasters and produced a glut of repetitive programming that floods local markets via cable.

Programming Duplicated

“The rule of reruns is what reigns today,” FCC Chairman Dennis R. Patrick said. The commission estimates that as much as 25% to 50% of all cable programming duplicates programming that is available elsewhere.

As the market is structured today, Patrick said, “local broadcasters do not have a fair opportunity to compete (with cable systems) and that in the end hurts consumers.”

The FCC’s restoration of broadcasters’ exclusivity rights “shifts the choices as to where programming goes into the market. You don’t have a bias anymore,” said Ken Gordon, an FCC economist who helped develop the plan. “Now you’ve got everyone on an equal footing.”

Local exclusivity, the FCC projects, at the same time will stimulate new, alternative programming by cable systems that no longer will be able to duplicate local broadcasts and, ultimately, will offer viewers a greater selection.

Reason to Rejoice

“Both television viewers and broadcasters, who provide free programming, should rejoice at today’s ruling,” Benjamin McKeel, chairman of the National Assn. of Broadcasters television board, said at a press conference.

But some cable industry officials countered with their own economic theories. They argued that broadcasters’ exclusivity will inevitably produce blacked-out programming for viewers who tune in to cable, as well as millions of dollars in added costs to the cable companies that eventually will be passed along to the consumer.

The FCC’s ruling portends “the most sweeping changes ever for U.S. television viewers,” with “virtually every cable home in the country” in danger of losing cable programming, because local operators won’t be able to afford to pick up long-distance signals, argued Jeff Treeman, senior vice president of United Video, which carries Chicago’s WGN and other widely aired “super-stations.”

‘Not Begun to Fight’

But Treeman promised at a press conference: “We have not yet begun to fight.” He said his company will challenge the FCC ruling in the courts and has already solicited about 100,000 form letters to Congress from viewers who want to “save our super-stations.”

However, a vice president at Turner Broadcasting Systems, the industry giant that runs Atlanta super-station WTBS, said in a telephone interview: “This could have been a great deal worse from our corporate perspective.

“We wouldn’t have recommended an approach quite so Draconian but we will be relatively unaffected by this decision,” executive Bert Carp said.

Indeed, while smaller cable systems may be hurt, Turner and other super-station systems may in fact profit from the ruling because they will now be able to bid for exclusive national rights to programming.

The FCC ruling allows a one-year compliance period and lets stand existing programming contracts until then. The FCC said the syndicated exclusivity will not apply to small cable stations with under 1,000 subscribers, which account for about 5% of all subscribers nationwide.