FCC Upholds Earlier Decision to Let Networks Own Reruns

A divided Federal Communications Commission voted 3 to 2 Thursday not to change its controversial decision allowing TV networks limited entry into the lucrative rerun business for the first time in 20 years.

The move, which had been widely expected, paves the way for the Hollywood studios and broadcast networks to take their decades-old fight to the judicial system, where a federal appeals court in Chicago will hear the matter.

Thursday’s vote reaffirms the FCC’s May decision permitting the networks to own up to 40% of their prime-time shows as of June 15, meaning that the networks could also participate in the $4.8-billion rerun marketplace. Analysts say the market could more than double to $10.6 billion by 1995.

Predictably, both sides criticized the FCC’s refusal to reconsider the so-called financial interest and syndication rules, which have been the object of an expensive and sometimes unseemly lobbying campaign.

The studios contend that allowing the networks to own syndication rights gives them too much power over what Americans will see on television; the financially strapped networks have argued that rerun profits would generate desperately needed sources of new revenue.

In the next few weeks, the new FCC “fin/syn” rules will be published in the Federal Register. The networks and studios will then have 30 days to file petitions with the U.S. 7th Circuit Court of Appeals. That court is not expected to hear the matter until next year.

In the meantime, the Justice Department is expected to ask the U.S. District Court in Los Angeles, which oversees consent decrees between the networks and studios, to modify existing agreements to mirror the FCC’s new rules.