[Federal Register Volume 60, Number 75 (Wednesday, April 19, 1995)]
[Proposed Rules]
[Pages 19562-19563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9632]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73

[MM Docket No. 95-39; FCC 95-144]


Broadcast Services; Financial Interest and Syndication Rules

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This Notice of Proposed Rule Making is needed to initiate the 
planned review of the FCC's financial interest and syndication rules 
prior to their scheduled expiration date on November 10, 1995. The 
burden of proof in this proceeding is on those parties arguing for 
continuation of the rules; if these parties fail to carry this burden, 
the rules will be allowed to expire. The Commission also seeks comment 
on whether, in the event these parties do not meet their burden of 
proof, it should accelerate the expiration date of the rules.

DATES: Comments are due by May 30, 1995, and reply comments are due by 
June 14, 1995.

ADDRESSES: Federal Communications Commission, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:
Charles Logan, (202) 776-1653.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rule Making in MM Docket No. 95-39, FCC 95-144, 
adopted and released on April 5, 1995. The complete text of this NPRM 
is available for inspection and copying during normal business hours in 
the FCC Reference Center (room 239), 1919 M Street NW., Washington, DC, 
and also may be purchased from the Commission's copy contractor, 
International Transcription Service, Inc., 2100 M Street NW., suite 
140, Washington, DC 20037, (202) 857-3800.

Synopsis of Notice of Proposed Rule Making

    1. The Commission's financial interest and syndication (``fin/
syn'') rules, originally adopted in 1970, placed significant 
restrictions on the ability of the established networks (ABC, CBS, and 
NBC) to own television programming and engage in the practice of 
syndication. In the Second Report and Order in MM Docket No. 90-162, 58 
FR 28927 (May 18, 1993) (``Second R&O''), recon. granted in part, 
Memorandum Opinion and Order, 58 FR 65132 (Dec. 13, 1993), the 
Commission eliminated certain aspects of the fin/syn rules immediately, 
including restrictions on network acquisition of financial interests 
and passive syndication rights in network programming. The Commission 
also established a timetable for the expiration of the remaining rules, 
which include restrictions on network involvement in the active 
syndication and first-run markets, as well as anti-warehousing 
safeguards. Under this timetable, these remaining rules are now set to 
expire on November 10, 1995. The Commission's decision in the Second 
R&O was upheld on appeal by the United States Court of Appeals for the 
Seventh Circuit (``Seventh Circuit''). Capital Cities/ABC, Inc. v. FCC, 
29 F.3d 309 (7th Cir. 1994).
    2. The Commission also determined in the Second R&O that, prior to 
the scheduled expiration of the remaining fin/syn rules, it would 
conduct a review of network activities in the financial interest and 
syndication areas, and that this review would be initiated no later 
than six months prior to the rules' scheduled expiration date, i.e., no 
later than May 10, 1995. This Notice of Proposed Rule Making (``NPRM'') 
initiates this planned review. It provides an opportunity for comment 
on the accuracy of the Commission's conclusion in the Second R&O that 
the remaining fin/syn restrictions should be eliminated. The NPRM 
states that comments submitted by parties who oppose the scheduled 
expiration of these restrictions will need to prove that, based on the 
current status of the program production and distribution markets and 
the activities of the networks since 1993, the Commission should 
continue regulation in this area. Parties arguing for retention of fin/
syn restrictions should support their positions with empirical data and 
economic analysis.
    3. The Commission lists the following factors as being relevant to 
its review of the rules: (1) The extent to which a network-owned 
program is syndicated primarily to that network's affiliates; (2) 
patterns that reveal daily in the introduction of network programs (in 
which the networks had financial interests or syndication rights) into 
the syndication market; (3) the percentage of network programming in 
which a network has obtained a financial interest or syndication right; 
(4) the relative change in the number of independent producers creating 
and selling television shows to the networks; (5) each network's share 
of the first-run syndicated programming domestic market; (6) 
concentration of ownership in the program production industry; (7) 
audience shares of first-run syndicated programming carried by non-
network affiliated stations during prime time; (8) the overall business 
practices of emerging networks, such as Fox, in the network television 
and syndication business; (9) network negotiating patterns, 
particularly the manner in which networks obtain financial interests 
and syndication rights and the extent to which successful negotiations 
over back-end rights influence network buying decisions; (10) network 
syndication practices, to the extent they are permitted; (11) the 
relationship and business arrangements between networks and third-party 
syndicators of off-network programming; (12) mergers [[Page 19563]] or 
acquisitions involving networks, studios, cable systems and other 
program providers since the Commission's 1993 fin/syn decision took 
effect; (13) the growth of additional networks, including the 
development of Fox and its position vis-a-vis the major three networks; 
and (14) the growth in the number and types of alternative outlets for 
sale of programming (e.g., the development of the Direct Broadcast 
Satellite service; cable penetration; wireless cable development). In 
addition to examining information submitted regarding the above 
factors, the Commission states that it will also take notice of the 
record developed in its pending proceeding regarding the Prime Time 
Access Rule to the extent it is relevant to its review of the fin/syn 
rules.
    4. The NPRM provides that the burden in this proceeding will be on 
fin/syn proponents to demonstrate, as stated by the Seventh Circuit, 
``an excellent, a compelling reason'' why the restrictions should be 
continued. Capital Cities/ABC, Inc., 29 F.3d at 316. As the Commission 
stated in the Second R&O, it is prepared to presume that complete 
removal of all remaining restrictions will be appropriate, and is 
therefore placing the burden of proof on those that urge retaining fin/
syn restrictions. If proponents of retaining the rules fail to 
demonstrate to the Commission that the rules should be left in place, 
or if the Commission does not take affirmative action to the contrary, 
the rules will automatically expire.
    5. The Commission also seeks comment on whether, in the event 
parties arguing for the continuation of the fin/syn rules fail to carry 
their burden of proof, it should amend its rules to allow the remaining 
rules to expire before the presently scheduled expiration date of 
November 10, 1995. The Commission further seeks comment on whether 
doing so would unduly disrupt any business arrangements or practices 
that have been established in reliance on the presently scheduled 
expiration date.

Administrative Matters

    6. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's Rules, interested parties may file comments 
on or before May 30, 1995, and reply comments on or before June 14, 
1995. All relevant and timely comments will be considered by the 
Commission before final action is taken in this proceeding. To file 
formally in this proceeding, parties must file an original and four 
copies of all comments, reply comments and supporting comments. If 
parties want each Commissioner to receive a personal copy of their 
comments, an original plus nine copies must be filed. Comments and 
reply comments should be sent to the Office of the Secretary, Federal 
Communications Commission, 1919 M Street NW., Washington, DC 20554. 
Comments and reply comments will be available for public inspection 
during regular business hours in the FCC Reference Center (room 239) of 
the Federal Communications Commission, 1919 M Street NW., Washington, 
DC 20554.
    7. This is a non-restricted notice and comment rulemaking 
proceeding. Accordingly, ex parte presentations will be permitted, 
except during the Sunshine Agenda period, provided they are disclosed 
as set forth in the Commission's Rules. See 47 CFR 1.1202, 1.1203, 
1.1206(a).

Initial Regulatory Flexibility Act Statement

    8. As required by Section 603 of the Regulatory Flexibility Act, 
the Commission has prepared an Initial Regulatory Flexibility Analysis 
(``IRFA'')--set forth in Appendix A attached to the full text of the 
NPRM and set forth in paragraphs 10-15 below--of the expected impact on 
small entities of the proposal suggested in the NPRM. Written public 
comments are requested on the IRFA. These comments must be filed in 
accordance with the same filing deadlines as comments on the rest of 
the NPRM, but they must have a separate and distinct heading 
designating them as responses to the Regulatory Flexibility Analysis. 
The Secretary shall send a copy of this NPRM, including the IRFA, to 
the Chief Counsel for Advocacy of Small Business Administration in 
accordance with paragraph 603(a) of the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq.
    9. Reason for Action and Objectives: This NPRM is initiated to 
conduct a review of the Commission's financial interest and syndication 
(``fin/syn'') rules as part of the timetable the Commission has 
previously established in scheduling the elimination of the rules. It 
also seeks comment on whether to accelerate the scheduled expiration 
date of the fin/syn rules in the event parties opposed to their 
elimination fail to persuade the Commission that the rules should be 
continued.
    10. Legal Basis: Authority for the action proposed in this 
proceeding is contained in Section 4(i), 4(j), 301, 303(i), 303(r), 
313, and 314 of the Communications Act of 1934, as amended, 47 U.S.C. 
154(i), 154(j), 301, 303(i), 303(r), 313, and 314.
    11. Reporting, Record Keeping, and Other Compliance Requirements: 
None.
    12. Federal Rules which Overlap, Duplicate, or Conflict with the 
Proposed Rule: None.
    13. Description, Potential Impact and Number of Small Entities 
Affected: The entities that could potentially be affected by this 
proceeding include television program producers and syndicators, 
television networks and their affiliate stations, and non-network 
television stations. It is anticipated that any rule changes arising 
out of this proceeding would have a minimal impact on the small 
entities that could be affected.
    14. Any Significant Alternatives Minimizing the Impact on Small 
Entities and Consistent with the Stated Objectives: None.

List of Subjects in 47 CFR Part 73

    Television broadcasting.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 95-9632 Filed 4-18-95; 8:45 am]
BILLING CODE 6712-01-M