Affils could oppose net stakes

Jun 10, 2002  •  Post A Comment

If lawmakers follow through on threats to limit the ability of networks to get financial interest in their programming, ABC, CBS, NBC and Fox may not be able to count on having the affiliates in their corner for the battle.
For as regulators set the stage for possible reregulation, affiliates are reconsidering their support for the networks on the financial interest and syndication issue.
“There are many days we regret the decision to support rescission of the financial interest and syndication rules,” said Alan Frank, chairman of the Network Affiliated Stations Alliance.
Under the old financial interest and syndication rules, the Federal Communications Commission severely limited the ability of broadcast networks to produce in-house, syndicate or take financial interests in their programming.
With the support of the affiliates, the networks won a long, hard campaign to ax the regulations almost a decade ago. Affiliates said their support at the time was based on the premise that deregulation would serve their interests, because stronger networks would be in a better position to compete with cable for programming.
Now however, key affiliates are concerned that the deregulation may have actually served to undermine the traditional network/affiliate relationship.
“It perverts the system,” said Mr. Frank, who is also president and CEO of Post-Newsweek Stations.
According to affiliates, before deregulation, the sole focus of the networks was on how well a program did during its network run. Post-deregulation, affiliates are concerned that a network has incentive to stick with underperforming shows in which they have a financial stake simply to build up enough episodes for syndication.
ABC’s `big, big give’
Their poster child: ABC’s “Once and Again, ” a program the network pulled the plug on earlier this year.
As far as many affiliates were concerned, “Once and Again” was kept on the network far longer than warranted by its ratings because the network had a financial interest in it. “It died long before it was taken off the network,” said an affiliate source.
“It was a big, big give on the part of the affiliates,” said Mr. Frank, of the affiliates’ support for the network deregulation. “The affiliates got no points for that.”
Affiliates said they are also concerned that deregulation cleared the way for a tidal wave of consolidation among networks and Hollywood studios, putting a major damper on competition in the syndication marketplace. “There’s a lot of evidence now that bigger is not necessarily better,” Mr. Frank said.
Preston Padden, Walt Disney Co. executive VP, worldwide government relations, defended deregulation, saying the regulations were obsolete.
“The financial interest rule was put into effect when there was a three-network funnel,” Mr. Padden said. “There are now 18,000 networks, and on a good day, even the most successful enjoys only a miniscule market share. There is no factual basis for government intervention in such a wildly competitive marketplace.”
Lawmakers show concern
Network ownership of programming is an issue now because a coalition of leading lawmakers-Sen. Ernest Hollings, D-S.C., Sen. Mike DeWine, R-Ohio, and Sen. Herbert Kohl, D-Wis.-have recently made clear their concern over network power.
In a May 22 letter, they asked FCC Chairman Michael Powell to launch a wide-ranging investigation into the impact consolidation has had on the programming marketplace.
At deadline Mr. Powell had yet to respond to the lawmakers.
But watchdog groups led by the Consumers Union urged Mr. Powell to heed the lawmakers’ call.
“Before the commission acts to alter or eliminate any media ownership rules, it should engage in a thorough analysis of the anti-competitive and other dangerous effects of contraction in the number of media owners and share that information publicly,” the groups said.