FCC to Study Rule Barring Networks From Owning Shows

The Federal Communications Commission, responding to congressional pressure for action on a key media industry issue, launched a formal proceeding to consider changes in the “financial interest and syndication” rules that keep television networks from owning the programs they air.

The FCC move comes even as major studios and other program producers, who favor keeping the rules, have been locked in negotiations with the networks, who favor dismantling them, about a compromise that might have pointed the way for some new regulation later in the year.

Debate about the rules has intensified as the expiration of a separate consent decree that largely keeps the ABC, CBS and NBC TV networks from producing their own shows approaches expiration this November.

By opening a formal examination of the rules, the commission and its chairman, Alfred Sikes, put heavy pressure on the sides to come up with compromise quickly or face the prospect that regulators would simply devise their own approach.

The action comes less than a week after Sen. Daniel K. Inouye (D-Hawaii), chairman of the Senate communications subcommittee, asked Sikes to have the FCC take up the issue if the parties do not reach a negotiated settlement by June 1.

In announcing the proceeding, the five-member commission barred interested parties from filing comments until June 13, to give the companies “one final short opportunity” to negotiate a settlement. It asked the negotiators to report on June 4.

The FCC simultaneously terminated a 1983 proceeding under which an earlier group of commissioners had come to the brink of dismantling the rules, then suspended action after Congress--in the face of heavy film industry lobbying--threatened to hold up crucial appropriations if they did so. The suspension clears the record of comments in the old proceeding, compelling both sides to address the issues anew when the commission receives comments on the fresh proceeding on June 14.

A coalition of some 200 production companies that seek to preserve the rules said in a statement that it would do its “utmost” to reach an accord, but also said it would ask the FCC to address a broad range of “anti-competitive practices” by the networks if a compromise isn’t reached.

Privately, one individual involved with the coalition said the FCC’s move might diminish the networks’ incentive to negotiate, since the FCC would presumably do something to ease rather than tighten the existing rules if a compromise isn’t reached.

NBC, in a statement, said it understood that the commission, by scratching the old proceeding, was “sending the networks a signal” that it wanted a fresh approach to the problem. “The net effect is to tell both parties to approach the negotiating process with renewed seriousness. It is a message we take fully to heart,” the statement said.

Commissioner Sherrie Marshall stated in a written dissent to the action that she disagreed with the majority position foreclosing early comment on the action. Ervin Duggan, appointed to the commission earlier this year, objected in a separate dissent to both the restriction and to the opening of a proceeding while negotiations are under way.

The commission hasn’t yet ruled on a request by Fox Inc. that its growing TV operation be exempted from the financial interest and syndication rules while revisions are being considered.