Studios Get Their Hollywood Ending on TV Rerun Issue

Hollywood’s major movie studios and independent producers demonstrated their behind-the-scenes political clout Wednesday by quickly scuttling a White House proposal to ease restrictions on ownership and syndication of television programs, government and industry officials said.

One day after the Economic Report of the President formally called for a controversial rule change opposed by the movie studios, lobbyists for the industry pressured senior White House officials to deny publicly that they supported the report’s conclusions.

Industry and government officials said the quick reversal by the White House reflects the influence of Jack Valenti, longtime president of the Motion Picture Assn. of America. Valenti is widely considered to be one of the most powerful lobbyists in Washington.

They said the turnabout also showed that the movie studios continue to enjoy greater political clout than do the television networks, which have lobbied hard against Valenti in favor of the change in program syndication regulations.

By Wednesday afternoon, lobbyists for the movie studios had convinced the White House to issue a statement to reporters who inquired, denying that the Administration supported the regulatory change proposed in the economic report the day before.

The regulatory issue sparked an internal political battle at the White House this week as a result of a one-paragraph passage buried deep in the White House’s annual economic report.

In the report, Michael J. Boskin, the chief economic adviser to President Bush, endorsed repeal of controversial regulations involving an issue that potentially is worth billions of dollars to both the movie studios and the television networks.

The “financial interest and syndication rules” limit the financial interest that television networks can have in programs they broadcast and prohibit them from sharing in the massive revenues from reruns sold to domestic independent stations and overseas.

The networks have sought the repeal of the rules for years, but movie producers and studios that now own the programs have successfully fended them off.

The passage in the report immediately caught the attention of the networks and the movie studios because it represented the first time that the Administration had taken a public position on the controversy. In fact, network officials quickly called reporters who cover the movie industry to point out that the White House was now on their side.

Boskin’s support for repealing the regulations came just as the Federal Communications Commission appears poised to issue a final ruling on the matter. The FCC is scheduled to decide on March 14 whether to scrap the rules.

The FCC came close to repealing the regulations in the early 1980s. It reportedly reversed course at the last minute when then-President Ronald Reagan, a former Hollywood actor with long and close ties to the movie industry, intervened in support of the rules.

Boskin, a longtime supporter of deregulation, apparently backs the proposed rule change on economic grounds. Industry sources said that network lobbyists had met with Boskin, Office of Management and Budget Director Richard G. Darman and other top policy-makers in the Administration over the past year in an effort to gain their support on the issue.

In the report, Boskin wrote that “government restrictions on ownership, carriage, or syndication of programming inhibit competition, reduce efficiency and are generally an ineffective means of addressing any problems of market power that may exist in these markets.”

Industry and government sources said Boskin could not have inserted the passage into the economic report without the approval of other senior White House officials. Indeed, Roger Porter, the chief domestic policy adviser in the White House, also is said to be a strong advocate of repealing the syndication regulations.

Still, sources said senior political officials in the White House had sought to keep the Administration out of the controversy, especially in the face of the strong political clout wielded by the movie studios. Republican Gov. Pete Wilson, for example, was a major supporter of the movie studios’ position while he was in the U.S. Senate; network lobbyists concede that they lack that kind of heavyweight political backing in Republican circles.

Wilson’s successor, Sen. John F. Seymour (R-Calif.), is said to support the movie studios’ position. Seymour could not be reached for comment Wednesday.

White House willingness to backtrack seemed to represent a defeat for Boskin. Deputy White House Press Secretary Stephen Hart said: “The syndication rules are a matter before the FCC. That’s where it should be decided, and we have no comment on it.”

In a prepared statement, Hart said the statement in the economic report “presents and explains the Administration’s economic policy principles,” which include a “strong aversion to costly and unnecessary regulation and to policies that protect particular competitors at the expense of competition.”