Program stakes in danger

Jun 3, 2002  •  Post A Comment

When it comes to network ownership of programming, the pendulum may be swinging back the other way.
Almost a decade after the abolition of the government’s financial interest and syndication rules that prohibited broadcast networks from having ownership stakes in their own shows, there is a movement afoot in Washington to return to ownership restrictions.
Sen. Ernest Hollings, D-S.C., and other key lawmakers are threatening to promote legislation that could limit the ability of broadcast TV networks to demand financial interest in the programming they carry-and beef up a regulation that currently obliges cable operators to sell their programming to competitors.
At deadline, Senate sources said the lawmakers-Sens. Hollings, Mike DeWine, R-Ohio, and Herbert Kohl, D-Wis.-had yet to map out an explicit course of action.
But the legislators have made clear they want to slam the brakes on media industry consolidation-and curb the power of the industry’s largest players in the television programming business.
“We’re obviously looking at a whole range of options,” said one well-placed Senate source.
“It’s a very important shot across the bow,” added Andrew Schwartzman, president of the activist Media Access Project.
TV networks and the cable industry are expected to fight on grounds that restrictions would constitute unwarranted assaults on their businesses.
“If Congress wants to destroy free over-the-air television and make it imperative for entertainment companies to charge consumers directly for their programming, then they’ll take away the right of the network to own a piece of the programming that costs so much to produce,” said one network source.
Added Marc Smith, a spokesman for the National Cable & Telecommunications Association, “The past decade has seen the creation of more than 200 new and diverse cable networks, leading to a cornucopia of choices for cable consumers. During the same period, the percentage of programming networks in which cable operators have any attributable interest has fallen from more than 50 percent to less than 25 percent.”
The way the lawmakers see it, however, is that deregulation has cleared the way for a handful of companies to dominate the TV programming business, quashing the ability of independent voices to speak.
Under the old financial interest and syndication rules, the Federal Communications Commission used to severely limit the ability of broadcast networks to produce in-house, syndicate or take financial interests in their programming.
But since the FCC axed those regulations, all the major TV networks except NBC are partnered with Hollywood studios/syndicators. In addition, it has become commonplace for producers to cede financial rights to get on a broadcast network’s fall schedule.
“Independent sources of video production have virtually dried up,” said Gene Kimmelman, director of the Consumers Union Washington office.
Also of concern to the lawmakers, according to sources, is that without FCC intervention, the rule that currently requires cable operators to sell some of their programming to competitors will expire in October.
Among the possible fixes under consideration, sources said, would be expanding the rule, which now applies solely to cable’s satellite-delivered programming, to include cable’s terrestrially delivered networks. In addition, some industry critics urge that the access obligations, which currently apply solely to cable-owned programming, be expanded to include all cable and satellite programming.
The lawmakers flagged their interest in a recent letter demanding that the FCC launch a wide-ranging investigation into the impact that consolidation has had on the programming marketplace.
“Diversity of voices and opinions [is] vital to competition as well as [to] the discourse of our democracy,” the lawmakers said in a May 22 letter to FCC Chairman Michael Powell. “Given the substantial ongoing consolidation in the media industry and recent court decisions striking down rules that restrain this trend, we are extremely concerned that this competition and discourse is at risk.”
In their letter, the lawmakers specifically asked that the FCC analyze the power of broadcast networks, major cable operators and satellite operators over the programming marketplace, including determining whether the distributors favor shows in which they have interests.
They also asked for an agency analysis on whether cable’s program access obligations, originally established by the Cable TV Act of 1992, should be expanded “to protect diversity of programming available to consumers.”
“We feel this is an issue that urgently needs attention,” the lawmakers said, directing the agency to complete the study before year-end or before the agency acts to revise any of its remaining media ownership rules, whichever happens sooner.
“Congress may certainly act before you have a chance to complete your study,” the lawmakers added. “However, your examination, if completed quickly, could help determine whether Congress or the commission needs to take action to ensure that program distributors do not prevent consumers from accessing unaffiliated programming and services.”