Hollywood studios have persuaded the Clinton Administration to review a controversial decision allowing TV networks into the lucrative rerun syndication business, industry sources said Wednesday.
Such a review could lead to a stunning last-minute victory for Hollywood, which is trying desperately to keep its lock on the $4.3-billion TV syndication business, a major source of studio profits.
It would also vividly illustrate the political clout of Hollywood, which gave millions of dollars in contributions and celebrity endorsements to Bill Clinton's presidential campaign. The Administration's ties to Hollywood have sparked growing criticism and are even becoming a source of embarrassment in some Hollywood quarters.
Sources said the Clinton Administration has agreed to have the Justice Department review its position on the so-called financial interest and syndication rules, or "fin/syn." Such a review could lead to the department in effect negating a decision earlier this year by the Federal Communications Commission.
After nearly a 20-year regulatory battle, the FCC in April voted to allow the networks to own rerun rights to prime-time shows they air, a move bitterly opposed by Hollywood.
Under the new FCC regulations, the networks would be granted the right to profit from reruns of hits such as "Roseanne." A hit TV series can generate more than $100 million in rerun profit.
The only remaining hurdle for the networks is Justice Department consent decrees that bar network participation in rerun syndication. The decrees were entered years ago as part of an antitrust settlement against the networks. They are now overseen by U.S. District Court Judge Robert Kelleher in Los Angeles.
Under the Bush Administration, the Justice Department urged that the decrees be lifted.
But in recent weeks, studio and network executives have been told by senior Administration officials that a review of the decision to lift the consent decrees will be undertaken by the new assistant attorney general for antitrust.
Persuading the Clinton Administration to review the Justice Department position was Hollywood's trump card. Shortly after Clinton's inauguration, Jack Valenti, president of the Motion Picture Assn. of America, reportedly met with Administration officials.
Valenti, while denying knowledge that a review is underway, said he nonetheless welcomed one. "I think it's right, proper and appropriate that a new Administration ought to look at all previous positions. When Ronald Reagan came in, his departments reviewed everything Jimmy Carter had done," he said.
A spokeswoman for the Justice Department's antitrust division, which oversees the consent decree, would not confirm that a review was underway. Such a review would have to be approved at the highest levels of the department. Clinton's choice for assistant attorney general for antitrust, Anne K. Bingaman, remains a partner at a Washington law firm until her nomination is confirmed by the Senate.
A review does not necessarily mean the Justice Department will reverse its position and could be a compromise tactic to placate Hollywood interests.
In addition, Judge Kelleher, who is expected to act on the consent decrees within a year, may disregard the Justice Department's position.
Nonetheless, Hollywood's ability to turn around what seemed like a clear-cut defeat into the possibility of a back-door victory has clearly unnerved the networks, which appeared to be virtually assured a piece of TV program rerun riches.
Times staff writer Jube Shriver Jr. contributed to this story.