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Networks May Share in Rerun Profits : Television: FCC is expected to partially loosen the rules on syndication, a lucrative business now dominated by Hollywood.

April 01, 1993|JUBE SHIVER Jr. | TIMES STAFF WRITER

WASHINGTON — The Federal Communications Commission is expected today to partially free the three major television networks to compete in the huge TV syndication business.

Facing a court-imposed deadline to fashion new rules by Monday, the commission is expected to approve a compromise allowing the networks to get some of the rerun profit while continuing to bar them from directly syndicating their shows for a while.

The FCC action is likely despite years of intense lobbying by Hollywood stars and high-powered lawyers who sought to keep the networks out of the lucrative syndication business, which is now dominated by the Hollywood studios.

At issue is who gets to sell lucrative TV reruns. The secondary market for programming, which includes repeats of such successful network shows as "Cheers" on local stations, has grown into a $4-billion-a-year business.

But longstanding federal rules have kept the networks from directly selling into the secondary market programs in which they themselves have a financial interest. The networks have struggled for years to change those regulations.

The FCC makes the rules, but any change will require approval from U.S. District Judge Robert Kelleher in Los Angeles, who presided over a decade-old consent decree in which the networks agreed to stay out of syndication. The Justice Department has joined the networks in asking Kelleher to invalidate the earlier agreement.

"The consent decree still exists until the judge acts on it," said Joe Sims, a Washington lawyer who represents the three major broadcast networks in the case. Sims added that it is unlikely that Kelleher will maintain the decree "given that the Justice Department and all three networks all oppose it."

The compromise over financial syndication rules was apparently struck earlier this week when interim FCC Chairman James Quello agreed to consider maintaining direct-syndication restrictions on the networks in exchange for FCC Commissioner Andrew C. Barrett's willingness to relax restrictions on the networks having any financial interest in syndicated programs, according to industry lawyers and commission aides.

Barrett, a lawyer who was appointed to the five-member commission by President Bush in 1989, was part of the three-member FCC majority that in 1991 voted only to ease some aspects of the syndication restrictions. Quello, a Democrat and former broadcaster who joined the FCC in 1974, sought complete repeal of the rules.

Still, the issue remained so contentious and the compromise seemed so tenuous before Thursday's meeting that some commissioners were grumbling and aides were promising that their bosses would make individual statements about financial syndication after today's decision.

"We are talking and less combative and Jim (Quello) is sharing information . . . but our differences haven't totally been resolved," Barrett said.

The FCC first adopted the financial syndication rules more than 20 years ago to prevent the networks from using their power to dictate financial terms to producers of TV programs. The FCC voted two years ago to ease some aspects of the rules, but a federal appeals court in November harshly criticized the modifications and ordered the FCC to revise the rules by April 5.

With the proliferation of such new TV markets as cable and home video, the networks have argued that the economics of the TV business have changed so much that they should no longer be barred from the syndication business.

However, they have never been able to overcome powerful Hollywood lobbying that in the past enlisted everyone from actor Alan Alda to Ronald Reagan to buttonhole FCC commissioners.

President Clinton too has close ties to Hollywood and is a friend of Linda Bloodworth-Thomason, producer of the TV show "Evening Shade." Nevertheless, Hollywood is bracing to lose out this time on financial syndication in the wake of Clinton's campaign pledge to clean up influence peddling in Washington.

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