Fcc orders end of limits on production by networks : television: the panel says it is no longer necessary to control the creation and resale of programs.

WASHINGTON — In a long-anticipated move that already has fueled recent media mega-mergers, federal regulators on Wednesday ordered the repeal of the remaining rules that restrict the three

major TV networks from producing the shows they air and selling programs on the lucrative syndication market. Pointing to the major networks’ eroding influence over viewership with the

growth of such alternatives as cable, the Federal Communications Commission said it was no longer necessary to curb the networks’ ability to create and then resell shows to individual

television stations. The decision to immediately repeal the so-called financial interest and syndication rules comes about two months earlier than the agency had originally estimated. The

networks have been gearing up for the demise of the rules for more than a year. Capital Cities/ABC Inc., for instance, has several shows on the fall prime-time schedule that it created

through joint production ventures with studios such as DreamWorks SKG. NBC is unveiling a new show called “Caroline In the City” created by CBS Inc. Analysts say the anticipated demise of

the restrictions has been a factor in some of the biggest mergers in media industry history in recent weeks. Studios that have been the biggest suppliers of network fare fear that fewer

slots could be available to them if the networks start favoring their home-grown programs in hopes of building a bank of episodes to sell in syndication, where the big money in television is

made. Two studios, Viacom Inc. and Time Warner Inc. have started television networks of their own in the last year in part to establish outlets for their own shows. Guaranteeing a home for

programming is thought to be one motivating factor for the Walt Disney Co.’s proposed acquisition of Capital Cities/ABC. Although the Westinghouse Electric Corp.’s bid for CBS largely stems

from its interest in expanding its station group, the industrial company also intends to bolster its programming operation. “It’s a little anticlimactic now,” said Raymond Katz, a managing

director at Bear Stearns & Co. who follows the broadcast TV industry. “[Wall] Street and the industry have been expecting this to go away for some time.” But make no mistake about the

impact of the rule, Katz said. “It was a factor, a big factor,” he said, in the Disney and Westinghouse deals. Experts say repeal of the rules will not only give the networks more financial

flexibility in creating and selling programming but could also lead to the creation of new avenues of distributing programs, perhaps over computer networks or other electronic venues. The

rules were adopted in 1970 because the major networks so dominated the mass audience that regulators believed they could exercise inordinate power over programming, essentially locking out

independent producers from the airwaves. Following the emergence of the Fox Television network as well as cable television, the FCC concluded that increased competition made the financial

syndication rules no longer necessary. The FCC said in a statement released Wednesday that the agency was speeding up the repeal of the financial syndication rules from the agency’s original

Nov. 10 target date because opponents of the rules “failed to carry their burden of proof” in showing that continuation of the rules was warranted. The ending of the rules reflects a

general move toward deregulation of television and telecommunications by the federal government. The House and Senate have passed legislation that would increase, to 35%, the maximum market

coverage of television stations owned by one company. Currently, a broadcaster may own no more than 12 television stations reaching no more than 25% of U.S. households. The two measures are

part of sweeping legislation overhauling the nation’s 61 years of communications laws. The bills are expected to be merged this fall. MORE TO READ