Studios, Networks Battle Again Over TV Rights : Programming: Regulators hear testimony in dispute over financial interest in prime-time productions. A decision is due in March.

A galaxy of Hollywood studio and television executives made personal appeals today to federal regulators trying to mediate a bitter squabble over who should be able to own network TV programs.

Representatives of the ABC, NBC and CBS TV networks urged the Federal Communications Commission to lift rules that prohibit networks from holding a financial interest in prime-time programs they obtain from outside sources or selling them in the U.S. TV rerun marketplace.

“The future of free broadcasting in America is seriously threatened, not just for the networks, but for our 600 affiliated stations that provide news, public service and local programming in communities across the nation,” said Laurence Tisch, president of CBS Inc. “Repealing these rules is important because it will allow us to compete for the best programming.”

However, executives from major Hollywood studios and production companies urged retention of the rules, saying that while the industry has changed dramatically in the past 20 years the three major television networks still dominate.

“Perhaps whereas they were once 900-pound gorillas, today they weigh in at only 850 pounds,” said Richard Frank, president of the Walt Disney Studios.

The financial interest and syndication rule was adopted in 1970. It was designed to stem network power, encourage independent production of TV shows and keep the networks from denying reruns to non-network TV stations.

The networks and studios have been locked in acrimonious negotiations over changing the rules since 1983. The networks claim the rules are outdated in an era in which ABC, CBS and NBC are not the only outlets for programs and when they must compete against foreign interests.

But Hollywood studios and independent producers say the networks are still the only outlet for major, high-quality programs and that the rule is essential to producers.

“The advertising marketplace is the worst it’s been in two decades,” said Robert Wright, president of NBC. “The three-network percentage of prime time viewing” fell to 58% in November, which Wright said was the lowest in history as cable television continues to erode network viewing.

The Justice Department has sided with the networks, but a wide array of groups are on the other side.

“The rule has fueled the growth of independent stations and--contrary to network contentions--has also promoted a substantial increase in the number of program producers,” Warner Bros. Chairman Robert Daly said. “The networks’ want repeal so that they may use their tremendous leverage to take valuable financial interests and syndication rights.”

Daly, a onetime president of CBS Entertainment, said that if the FCC does relax the rules, it should adopt minimum safeguards.

Stephen Cannell, whose company produces such shows as “Hunter” and “Wiseguy,” said he feared that without safeguards the networks would discriminate in favor of their own programs.

“If I refuse to grant ownership of or an interest in my television series, then they will be programmed and scheduled in a less desirable fashion than the shows in which the networks have an interest,” Cannell said.

The FCC tentatively decided in 1983 to eliminate the financial interest rule and narrow the syndication rule to prohibit only network participation in domestic syndication of prime-time series. But it delayed a final decision under pressure from Congress and then-President Ronald Reagan and urged the interested parties to find a solution themselves.

In March, the FCC said, it will decide the issue again.