Fox Cries Foul Over NBC Bid to Have It Penalized : Television: Network says move is merely an attempt to avoid competition. NBC says its rival enjoys unfair advantages.

The Fox television network vowed Wednesday to fight what it called a shameless bid by rival NBC to get federal officials to penalize Fox on the grounds that its ownership structure is illegal.

In a 21-page petition filed Wednesday, NBC asked the Federal Communications Commission to declare the Fox TV network foreign-owned and thus in violation of a federal statute that generally limits foreigners to no more than a 25% interest in U.S. broadcast stations.

“This is simply a naked and shameless effort by NBC to hinder and delay the competition they don’t want from Fox,” said Preston Padden, Fox’s president of network distribution. “We believe that our ownership structure is in complete compliance with the Communications Act.”

The NBC petition is the second major challenge to Fox’s ownership structure.

Earlier this year, the NAACP also petitioned the FCC to impose sanctions on Fox, claiming the network misstated its true corporate structure and that its acquisition of U.S. TV stations denied broadcast ownership opportunities to African Americans and other minorities.

The NAACP petition raised much the same question presented by NBC: Who owns the six big-city TV stations purchased in 1985 to form the core of the fledgling Fox network--Rupert Murdoch, a naturalized U.S. citizen, or News Corp., the Australian company Murdoch runs?

NBC contends that Fox enjoys an unfair advantage because its initially smaller size won it exemptions from many FCC rules that apply to the other three major television networks. Its petition urges the agency to either force Murdoch to reduce Fox’s foreign ownership or relax existing ownership limits for all TV networks.

“We’re saying that Fox has enormous competitive advantages based on the existing regulatory scheme,” said Richard Cotton, NBC’s general counsel.

However the petition is decided, Fox’s Padden said the “real danger is that NBC will succeed in causing delay in processing Fox (TV license) applications and create further uncertainty. . . . We can’t stand a situation where sellers are afraid to conclude deals with us.”

The NBC challenge comes as Time Warner and Paramount have announced plans to start their own TV networks and as Congress, the FCC and the Clinton Administration have been encouraging more telecommunications competition.

The foreign-ownership law stands as one of the few remaining restrictions on communications ownership in an increasingly global communications age.

Legal experts say the provision was imposed more than half a century ago out of concern that foreigners might use American communications properties to spread propaganda in the United States. But today that attitude has changed among some key officials.

“One of our overriding principles has been that having a fourth (TV) network is in the public interest,” FCC Commissioner James H. Quello said. “We are trying to promote a multichannel, multifaceted world. In order to punish Fox, I think you bear a heavy burden of proof.”

Any FCC action could have a huge impact on network television in general and on Fox particularly. Fox paid a breathtaking $1.6 billion earlier this year for four-year broadcast rights to National Football League games and has since been waging a furious battle to sign up new affiliate TV stations to make the deal pay off.

The aggressive campaign by Fox, which was launched in 1986 and developed such hit shows as “The Simpsons,” “Melrose Place” “The X-Files” and “Beverly Hills 90210,” has forced NBC, ABC and CBS to renegotiate higher payments to their affiliates in order to keep them from defecting to Fox, industry officials say.