Sununu Defends White House Stand on TV Rerun Rules

The White House, seeking to deflect reports of Hollywood’s political clout with the Bush Administration, on Friday publicly backed comments in its Economic Report of the President that called for easing rules that govern the lucrative TV rerun market.

In what some saw as a rebuke to powerful Hollywood lobbyist Jack Valenti, White House Chief of Staff John Sununu indicated that the Administration does indeed favor relaxing the “financial interest and syndication rules,” which prohibit the networks from sharing in the $3-billion-a-year rerun business.

In what industry sources described as a startlingly candid letter to Rep. Michael Oxley (R-Ohio), Sununu wrote that President Bush “has made clear his opposition to the government picking winners and losers--to regulatory or other policies that favor or protect particular competitors at the expense of competition.”

Network lobbyists seized upon the letter as evidence that the White House backed repeal of the fin/syn rules, even though the White House generally refrains from dictating regulatory policy at the department or agency level.

Earlier this week, a story in The Times reported that the White House, succumbing to aggressive Hollywood lobbying, had disavowed a passage in the Economic Report that called for loosening the fin/syn rules. The report was prepared by Michael Boskin, chief economic adviser to President Bush.

Boskin, a longtime supporter of deregulation, 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.”

Valenti reacted to that policy statement as if Hollywood had come under a Scud missile attack. He quickly lobbied the White House to distance itself from the statement.

According to several sources, lobbyists Greg Fuller and Kenneth Duberstein--both former high-ranking White House officials--visited Sununu on behalf of Valenti and sought some clarification or rebuttal of Boskin’s remarks.

The lobbyists evidently left feeling there was some sympathy for their cause, because Valenti afterward said he had “been assured by senior White House officials” that the Economic Report “does not represent an intervention by the White House on this issue.”

Sununu was said to be outraged that Valenti had taken what was supposed to appear publicly as an official stand of neutrality and turned it into a claim that the White House had reversed itself.

But perhaps more important, it made Valenti appear to have a direct line into the White House and influence over regulatory policy, sources said.

In many ways, observers noted, the political dance that occurred in Washington this past week had nothing to with the fin/syn issue, which is expected to be decided by the Federal Communications Commission next month. And throughout all the commotion, the networks and studios seemed to overlook the most important statements made to date about fin/syn.

FCC Chairman Alfred C. Sikes told reporters Thursday that he would “not be surprised” if the final FCC vote on fin/syn turned out to be 3-2 in favor of the studios.