[Federal Register Volume 60, Number 183 (Thursday, September 21, 1995)]
[Rules and Regulations]
[Pages 48907-48912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23366]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 95-39; FCC 95-382]


Network Financial Interest and Syndication Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission repealed significant portions of its financial 
interest and syndication (``fin/syn'') rules, scheduled the remaining 
rules for expiration, and committed itself to conducting a proceeding 
six months prior to the scheduled expiration date. On April 5, 1995, 
the Commission adopted a Notice of Proposed Rule Making initiating the 
instant review of these rules. It also sought comment in the Notice of 
Proposed Rule Making on whether to accelerate the expiration date for 
the remaining rules in the event it determined that no basis had been 
shown for retaining them. Having 

[[Page 48908]]
considered the record before it, the Commission finds that those 
parties favoring retention of the remaining fin/syn rules have failed 
to meet their burden of proof, and that continuation of the rules 
therefore is not justified. The intended effect of this action is to 
eliminate the fin/syn rules in their entirety without delay.

EFFECTIVE DATES: Sections 73.659, 73.660, 73.661, and 73.663 are 
removed effective September 21, 1995. Section 73.662 is amended 
effective September 21, 1995, and removed effective August 30, 1996.

FOR FURTHER INFORMATION CONTACT:
Robert Kieschnick, (202) 739-0770, or David E. Horowitz, (202) 776-
1653, Mass Media Bureau, Policy and Rules Division.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Report and Order in MM Docket No. 95-39, FCC 95-382, adopted August 29, 
1995, and released September 6, 1995. The complete text of this 
document is available for inspection and copying during normal business 
hours in the FCC Reference Center (room 239), 1919 M Street NW., 
Washington, DC 20554, and may be purchased from the Commission's copy 
contractor, International Transcription Service (202) 857-3800, 2100 M 
Street NW., Washington, DC 20037.

Synopsis of the Report and Order

    1. The fin/syn rules, which were adopted in 1970 to limit network 
control over television programming and thereby foster diversity of 
programming through the development of diverse and antagonistic 
programming sources, restricted the ability of the three established 
networks (ABC, CBS, and NBC) to own and syndicate television 
programming. As stated above, we initiated the instant proceeding 
pursuant to our Second R&O in MM Docket No. 90-162, in which we 
determined that, given competitive conditions in the television 
programming marketplace, the fin/syn rules should be repealed in their 
entirety. While we concluded in the Second R&O that market conditions 
did not justify retention of the fin/syn restrictions, we also 
determined that several critical non-market factors warranted a 
staggered repeal rather than immediate elimination of all of the rules. 
First, we developed a scheme to allow us to observe the operation of a 
partially deregulated market for a period of time to see whether our 
assessment that the networks would not act in ways detrimental to 
diversity and competition following deregulation was valid. Second, a 
gradual phase-out of our restrictions on active syndication in 
particular appeared warranted because we considered that lifting the 
restraints on such syndication posed a more significant risk of damage 
to outlet diversity than that posed by lifting the other restraints, in 
the event our conclusions about the reactions of the marketplace proved 
wrong. Finally, we recognized that immediate elimination of all the 
rules could be disruptive and have unintended and unforeseen negative 
effects.
    2. The rules that we retained, and which we consider here, relate 
to active syndication on the part of the networks, their involvement in 
the first-run non-network market, warehousing of programs, and 
reporting requirements. Under these rules, the networks have been 
prohibited from actively syndicating prime time entertainment network 
programming or first-run non-network programs to television stations 
within the United States. Any such program for which a network holds a 
passive syndication right must have been syndicated domestically 
through an independent syndicator. Further, networks have been 
prohibited from holding or acquiring a continuing financial interest or 
syndication right in any first-run, non-network program distributed in 
the United States unless the network had solely produced that program. 
The anti-warehousing safeguards we adopted were designed to prevent a 
network from withholding prime time programs from the syndication 
market for an unreasonable period of time. Finally, sem-annual 
reporting requirements were imposed on the networks.
    3. Both the Second R&O and the Notice were explicit that parties 
who oppose the scheduled expiration of the remaining fin/syn 
restrictions would bear the burden of proof in this proceeding. In the 
Notice, we further explained that commenters opposing the expiration of 
the rules would ``need to convince us 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.'' Notice at para. 12. Thus, because we determined that, as of 
1993, market conditions did not justify retention of the fin/syn rules, 
we made clear that those favoring retention of the rules would have to 
present evidence of the networks' behavior and the status of program 
production and distribution markets since that time.
    4. In both the Second R&O and the Notice, we also set forth a list 
of fourteen factors that we deemed relevant to our review of the 
remaining rules. See Second R&O at para. 118; Notice at para. 12.
    5. We find that commenters favoring retention of the remaining fin/
syn rules have failed to carry their burden of demonstrating that, 
based on empirical data and economic analysis of the television program 
production and distribution markets and network activities since 1993, 
the rules are necessary to ensure competitive market conditions or 
source and outlet diversity.
    6. Certain arguments made by these commenters suggest that the 
Commission must prove that repeal of the rules is justified. The 
Association of Independent Television Stations, Inc. (``INTV''), for 
example, argues that there is no rational basis for sunsetting the 
rules, that the FCC has found that the networks have the incentive and 
ability to deprive independent stations of access to syndicated 
programming, and that the Commission must make contrary findings based 
on substantial evidence in order to sunset the rules. We disagree. 
Based on a thorough review of extensive record evidence, the Commission 
concluded in the Second R&O that the development of competitive 
conditions in program production and distribution markets and the 
decline of network dominance warranted the total repeal of the rules. 
This decision was affirmed by the Seventh Circuit. Capital Cities/ABC, 
Inc. v. FCC, 29 F.3d 309 (7th Cir. 1994). Moreover, the Court warned 
the FCC that only a compelling reason could justify retention of the 
rules after their scheduled expiration. Id. at 316. Thus, absent such a 
compelling showing on the part of those seeking to retain the rules, 
there are no grounds for suggesting, as INTV does, that the Commission 
must reexamine its conclusions regarding the lack of need for fin/syn 
regulation.
    7. The Coalition to Preserve the Financial Interest and Syndication 
Rule (``Coalition'') acknowledges in its reply comments that it must 
carry the burden of proof. Nonetheless, its discussion at times 
suggests that the burden of proof has shifted to those favoring 
expiration of the rules, i.e., the networks. Thus, the Coalition 
asserts that the networks have failed to show that certain arguments 
submitted and findings made in proceedings conducted prior to 1993 are 
no longer valid. However, absent a showing based on post-1993 evidence 
that such earlier arguments and findings 

[[Page 48909]]
are valid now, the networks are not required to disprove them.
    8. Proponents of retention of the rules also argue that repeal of 
the rules will yield no benefits. The Coalition, for example, states 
that the purpose of the instant proceeding is to test the Commission's 
1993 predictions regarding the beneficial effects of repealing the 
rules, and argues that, since 1993, our relaxation of the rules has not 
resulted in predicted public welfare benefits. Similarly, King World 
Productions, Inc. (``King World''), which focuses its comments on 
first-run syndicated programming, argues that allowing the networks to 
syndicate first-run programming would produce no public benefit and a 
probability of harm to source diversity.
    9. The purpose of this proceeding, however, is not to determine 
whether any particular benefits have been realized as a result of the 
partial elimination of our fin/syn rules. Rather, we provided for the 
instant review of our remaining rules because we wanted to be certain 
that their removal would not cause harm. Among our concerns was the 
possibility that we may have erred in predicting that the networks 
would not be able to abuse their position if we removed all 
restrictions on syndication. However, we have already concluded, and 
the Seventh Circuit has agreed, that the syndication rules are no 
longer justified by the conditions of the program distribution market, 
and we are concerned here only with preventing any harm that could 
result if we were wrong. We anticipate that the repeal of our fin/syn 
rules will have benefits over time, but our focus here is on whether or 
not there is evidence that repeal will threaten diversity in the 
program production and distribution markets.
    10. Generally speaking, many of the pro-fin/syn arguments presented 
in this proceeding are unconvincing because they rely on conclusions 
reached by the Commission or others prior to 1993, or on analysis of 
network behavior before that time. Proponents of retaining the rules 
also rely in part on arguments that were rejected in the Second R&O. 
Our Notice stated that commenters opposing the scheduled expiration of 
our rules would need to present information about and analysis of 
network activities and the operation of program markets since 1993. 
Thus, arguments based on earlier analyses or data are irrelevant to the 
instant review (unless the data are used as a comparative benchmark), 
as are arguments rejected in our Second R&O.
    11. We turn now to an examination of the arguments made in this 
proceeding that provide data and/or economic analysis relevant to the 
period from 1993 to the present. In the discussion set forth below, we 
consider these arguments as they relate to the fourteen factors set 
forth in the Second R&O and the Notice.
    12. The extent to which a network-owned program is syndicated 
primarily to that network's affiliates. The only relevant data on this 
issue were submitted by those favoring elimination of the remaining 
fin/syn rules. Thus, for example, the National Broadcasting Company, 
Inc. (``NBC'') provides figures for its single in-house production that 
has been in active first-run syndication by a third-party syndicator 
since 1993, a series entitled ``News 4 Kids.'' As of May 1995, this 
program was being carried on 210 stations, of which only 49--or 23%--
are either owned by or affiliated with NBC. In contrast, the proponents 
of retention of the rules did not provide evidence showing that 
network-owned programs are syndicated primarily to network-owned or -
affiliated stations. King World states in its comments that NBC 
launched a weekly series entitled ``Memories Then and Now'' which, in 
its initial season, was carried on 44 stations, 31 of which were either 
owned by or affiliated with NBC. According to King World, this program 
illustrates how the networks exploit their affiliates to exercise power 
over the distribution system. However, the figures King World cites are 
for February 1992, a period of time that is not relevant to this 
proceeding except insofar as it is used to place post-1993 network 
behavior into context. Moreover, even if we consider these figures as 
relevant here, we note that NBC points out that ``Memories Then and 
Now'' was syndicated by an independent distributor, and that King World 
does not claim that NBC had any influence over the syndicator's sales 
practices. According to NBC, the fact that the program was a failure in 
syndication shows that NBC does not have the power over the 
distribution system that King World claims. If it had such power, NBC 
states, it would have been able to force sufficient clearances to make 
the show a success. ABC also points out that the clearance of a program 
by only 31 NBC affiliates does not show that the networks have used 
their affiliates to exercise undue control over the distribution 
system. Finally, we observe that no evidence was presented showing that 
Fox Broadcasting Company (``Fox''), which is permitted under our rules 
to engage in active syndication, has favored its affiliates in 
syndicating Fox programming. We find that evaluation of fin/syn repeal 
under this factor fails to support a conclusion that the networks favor 
affiliates in syndicating their programs.
    13. The percentage of network programming in which a network has 
obtained a financial interest or syndication right. According to the 
Coalition, the established networks have taken financial interests, 
through either co-productions or in-house productions, ``in 
approximately 40 percent of new shows picked up since the Commission 
eliminated the financial interest rule in 1993.'' Coalition Comments at 
17. The Coalition asserts that this figure is evidence of the exercise 
of the established networks' market power in the purchase of 
programming. However, the Coalition does not explain how it arrived at 
this figure. Moreover, as both Capital Cities/ABC, Inc. (``ABC'') and 
NBC point out, the Coalition's figure, even if valid, merely shows that 
the established networks have not had a financial interest in the 
majority of new shows picked up since the Commission eliminated the 
financial interest rule, a circumstance that is inconsistent with the 
contention that the networks have exercised undue market power. In sum, 
no evidence has been presented that demonstrates that the established 
networks have exercised undue market power in acquiring a financial 
interest in prime time entertainment programming.
    14. Further, no party has presented any evidence indicating that 
the established networks have allowed their financial interests in or 
syndication rights to programming aired during prime time to influence 
their decisions to either retain or cancel that programming. Under our 
current rules, the established networks may have both a financial 
interest in and syndication rights to programming produced in-house. 
NBC states that every network in-house program that premiered in the 
fall of 1994 was canceled by its respective network by the end of the 
broadcast season, and asserts that this fact refutes any suggestion 
that the networks accord favored treatment to their in-house 
productions. We find that proponents of retaining the remaining fin/syn 
restrictions have not demonstrated network favoritism toward 
programming in which they have a financial interest, or to which they 
have syndication rights, in any way that would adversely affect 
diversity within the program production market.
    15. The relative change in the number of independent producers 
creating and selling television shows to the networks. In its reply 
comments, the Coalition suggests that data from a study 

[[Page 48910]]
submitted by Economists Incorporated in comments filed in MM Docket No. 
94-123, the Prime Time Access Rule (``PTAR'') proceeding, demonstrate 
that ``source diversity has declined dramatically since the financial 
interest rule was repealed.'' Coalition Reply Comments at 25. 
Specifically, the Coalition relies on Appendix E of the study to show 
that there has been a reduction in the number of suppliers of prime 
time entertainment series since the 1993-94 season. This appendix lists 
the packagers of programming included in the prime time schedules of 
ABC, NBC, and CBS Inc. (``CBS'') from the 1969-70 season to the 1994-95 
season and the percentage of prime time network programming supplied by 
these packagers. Figures for the 1995-96 season are projected based on 
one week of the announced fall line-up on the three networks. 
Economists Incorporated defines ``packager'' for purposes of this 
calculation as the entity that assumed contractual responsibility to a 
network for production or delivery of a series.
    16. While we agree with the Coalition that the Economists 
Incorporated study indicates a decline in the number of packagers of 
programming included in the prime time schedules of ABC, NBC, and CBS 
from 29 in 1993-94 to 17 in the fall of 1995, we do not agree that 
these figures necessarily demonstrate a reduction in source diversity 
due to either the relaxation of our fin/syn rules or anticompetitive 
behavior on the part of the three networks. We note that Appendix E 
also shows that the number of packagers declined from 31 to 26 from 
1990-91 to 1991-92, which was prior to the relaxation of our rules. We 
believe that this decline, which cannot be attributed to elimination of 
the financial interest rule, is instead attributable to the inherent 
riskiness of prime time programming, which may also explain the change 
in the number of packagers on which the Coalition comments. In 
addition, we observe that the identity of the packagers listed in 
Appendix E varies from year to year. This suggest that the list for any 
given year does not represent all program suppliers selling to the 
networks, nor can the variations in the lists be used to support a 
finding that suppliers are being excluded from the market. We also 
observe that Warner Brothers, which is developing a new broadcast 
television network to compete with ABC, CBS, and NBC, is providing 
23.33% of the prime time entertainment schedule of the three major 
networks for the fall of 1995. This figure tends to discount any claim 
that ABC, CBS, and NBC are trying to restrict the supply of programming 
provided by competitors. In short, the information cited by the 
Coalition does not demonstrate that relaxation of our fin/syn rules has 
led to any reduction in the number of independent producers actively 
competing to create and sell television shows to the networks. Finally, 
to the extent that there has been any decline in the number of 
suppliers of prime time programming, it may be due at least in part, as 
CBS claims, to the major studios supplying an increased percentage of 
prime time programming.
    17. Concentration of ownership in the program production industry. 
In connection with this factor, commenters favoring retention of the 
fin/syn rules focused on levels of network ownership of prime time 
entertainment programming. The Coalition asserts that the networks' 
share of copyrights in such programming has increased from 29% to 35% 
since repeal of the financial interest rule but does not provide 
documentation for these figures. INTV contends that the percentage of 
prime time entertainment series produced in-house by the networks 
increased from less than 1% in 1984-85 to 7.6% in the 1993-94 season. 
(We note that Economists Incorporated, upon which INTV relies, has 
revised its figures of 7.6% for 1993-94 to 6.3%.) However, neither the 
Coalition nor INTV establishes a clear trend toward increased network 
ownership of such programming that is attributable to the relaxation of 
our fin/syn rules or that constitutes a cause for concern from a public 
interest standpoint. Moreover, looking at the percentages of hours of 
prime time entertainment series accounted for by in-house network 
production since 1993, we observe that these percentages have 
fluctuated from year to year. Accordingly to NBC, in-house productions 
accounted for 20.2% of the established networks' prime time 
entertainment series hours in 1992-93, 19.0% of these hours in 1993-94, 
25.8% of these hours in 1994-95, and 22.2% of these hours in the Fall 
1995 schedule. (We note that the wide difference between the figures 
cited by INTV and those cited by NBC is due to the fact that INTV's 
figures refer to the percentage of the number of prime time 
entertainment series produced in-house, whereas NBC's figures document 
the number of hours of such programming.) Thus, we cannot say, based on 
the showings made in this proceeding, that the networks have acted to 
preclude the prime time programs of other producers from reaching the 
market, or that program production has been concentrated in the hands 
of the networks as a result of the relaxation of the fin/syn rules to 
the detriment of the viewing public. Indeed, the fact that 
independently owned ``packagers'' provided 80.97% of the prime time 
programming hours included in the schedules of ABC, CBS, and NBC during 
the 1993-94 season, provided 74.2% of these hours during the 1994-95 
season, and are scheduled to provide 77.7% of these hours in the 
upcoming 1995-96 season clearly demonstrates that the three established 
networks are not precluding independent product from their schedules 
and thereby concentrating ownership of prime time programming in their 
hands.
    18. Audience shares of first-run syndicated programming carried by 
non-network affiliated stations during prime time. According to INTV, 
expiration of the fin/syn rules will limit the ability of independent 
stations to acquire first-run prime time syndicated programs. INTV 
states that first-run programming accounts for only 39% of the prime 
time programming of independent stations, and that this programming 
``rarely achieves'' ratings comparable to the ratings of programming 
shown on the networks. However, the Economists Incorporated data cited 
by INTV reflect only programming aired in the top 50 markets in 
November 1994, and do not include ratings information. Thus, the data 
cited do not support INTV's claims. ABC notes that first-run 
productions such as ``Star Trek/Deep Space Nine,'' ``Kung Fu,'' and 
``The Legendary Journeys of Hercules'' have been syndicated 
successfully in prime time without reliance on the networks' 
affiliates. In sum, it has not been shown that competitive first-run 
prime time programming is unavailable to independent stations, nor has 
it been demonstrated that the repeal of our remaining fin/syn 
restrictions would diminish the amount of first-run programming 
available to independent stations or otherwise be detrimental to the 
diversity of programs and program sources.
    19. The overall business practices of emerging networks, such as 
Fox, in the network television and syndication business. Although it 
does not directly discuss its business practices, Fox provides 
information in its reply comments about its production of prime time 
programming. Fox states that it currently produces only 3\1/2\ of its 
own 15 hours of prime time network programming, and that it produces a 
substantial amount of programming for other networks, including 
``Chicago Hope'' and ``Picket Fences'' for CBS. 

[[Page 48911]]
Fox offers itself as a ``perfect laboratory model'' of a broadcast 
network that has not been subject to regulatory constraints as a 
producer. We believe that the fact that most of the prime time 
programming aired on the Fox network is produced by outside suppliers 
is evidence that permitting a network to own and syndicate programming 
does not result in foreclosing independent suppliers from the market.
    20. 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. While not directly addressing this issue, the 
Coalition does assert that the established networks have uniformly 
lowered the license fees they pay for prime time entertainment 
programming. However, the Coalition cites figures without providing any 
documentation. Moreover, as NBC points out, the Coalition does not 
indicate in citing its figures what type of programming is involved or 
the track record of the producer. As a result, we cannot assess the 
significance of the Coalition's numbers. We note, too, that CBS cites 
independent industry analysts as reporting that the average license 
fees paid by the three major networks, as estimated on a per-hour 
basis, remained virtually unchanged from the 1992-93 season through the 
1994-95 season. Thus, we find that proponents of retaining the fin/syn 
rules have provided no probative evidence that the established networks 
have exercised undue market power since 1993 in their negotiations for 
financial interests and syndication rights in television programming.
    21. Mergers or acquisitions involving networks, studios, cable 
systems and other program providers since our 1993 fin/syn decision 
took place. CBS cites a number of mergers that have occurred since 1993 
that have resulted in the formation of large new competitors in the 
video production and distribution markets. Among these are the merger 
of Viacom Inc., Blockbuster Entertainment Corp., and Paramount 
Communications, Inc., which has resulted in a company with both 
production and distribution capabilities. To the extent that such 
mergers have strengthened the production and distribution capabilities 
of the merging parties, the three original networks are facing more 
effective competitors in the video production and distribution markets. 
We note as well the recent announcements that the Walt Disney Company 
plans to acquire ABC and that Westinghouse Electric Corp. plans to 
purchase CBS. The Commission will, or course, be reviewing these 
acquisitions in the normal course of its regulatory business to ensure 
that they do not undermine the competiveness of the production and 
distribution markets.
    22. The growth of additional networks, including the development of 
Fox and its position vis-a-vis the three major networks. In their 
comments, NBC, CBS, and ABC point to the growing audience share of Fox, 
and to their own declining audience share, as evidence of the 
competition Fox provides to the established broadcast networks. CBS 
notes that the aggregate prime time viewing share of the three original 
networks, which had already fallen to 59% in 1992, dropped further to 
57% in the 1993-94 season. NBC, CBS, and ABC also point to the 
emergence of the United Paramount and Warner Brothers networks as 
evidence of both the forward integration of existing television 
programming producers into the distribution of programming through 
broadcast television outlets and the increased number of potential 
purchasers of television programming. INTV argues that these new 
networks cannot compete effectively with the established networks 
because of the structural advantages enjoyed by the latter--primarily 
the number of VHF stations owned by or affiliated with the established 
networks. INTV also suggests that the two newest networks have not had 
a significant competitive impact because they supply only 2 to 4 hours 
of weeknight prime time programming. We have, however, already decided 
in our Second R&O that any structural advantages of the established 
networks are no longer sufficient to allow them to dominate the program 
production and distribution markets. Moreover, Fox has competed 
effectively for a number of VHF affiliates and initiated a series of 
affiliate switches, which have resulted in some of the established 
networks having fewer, rather than more, VHF affiliates than they did 
in 1993. Thus, any structural advantage that the established networks 
may have had based on ownership of an affiliation with VHF stations has 
been diminished rather than increased since our Second R&O. Even if the 
impact of the United Paramount and Warner Brothers networks is 
currently relatively small, they nonetheless appear to be viable new 
competitors for the established networks and may increase their market 
share as Fox has done. Given Fox's growth in audience share, as 
documented by Economists Incorporated in our PTAR proceeding, and the 
emergence of two additional broadcast networks, we find that the 
established broadcast television networks have faced more, rather than 
less, competition from broadcast television purchasers and distributors 
since 1993. In keeping with this finding, we disagree with King World's 
claim that the established networks have bottleneck power over the 
broadcast television distribution system.
    23. The growth in the number and types of alternative outlets for 
sale of programming (e.g. the development of the Direct Broadcast 
Satellite (``DBS'') service; cable penetration; wireless cable 
development). We determined in our Second R&O that cable networks were 
competitors to the established broadcast television networks in the 
purchase of television programming. CBS and ABC point out in this 
proceeding that there has been continued growth in the number and 
audience share of not only cable networks but also other networks using 
alternative distribution technologies (e.g., DBS, wireless cable), and 
they cite data provided in Economists Incorporated's PTAR comments that 
demonstrate the increased market share of cable networks. The Coalition 
argues that cable and other services are not effective competitors to 
broadcast television, and that cable and other non-broadcast networks 
therefore are not effective competitors to broadcast networks. However, 
we have already decided in our Second R&O that these alternative video 
delivery systems provide sufficient competition with the broadcast 
networks to obviate the need for fin/syn restrictions and, absent 
evidence of new developments, this conclusion need not be revisited. 
Moreover, based on the evidence in the record before us, we find that 
the established broadcast television networks have faced more, rather 
than less, competition for the acquisition of television programming 
from non-broadcast television purchasers since 1993.
    24. Proponents of retaining our remaining fin/syn rules have failed 
to carry their burden of proof that earlier relaxation of these rules 
has threatened diversity in the television program production and 
distribution markets, or enabled the established networks to engage in 
anticompetitive activities to the detriment of the public interest; or 
that the current conditions of the production and distribution markets 
warrant retention of the rules. Proponents of retaining the rules have 
not provided persuasive evidence that the established networks engage 
in, or 

[[Page 48912]]
threaten to engage in, affiliate favoritism to the detriment of non-
network stations; that the established networks place or retain 
programming in their schedules because of their financial interests in 
or syndication rights to that programming, or for other than legitimate 
competitive reasons; or that the established networks have reduced the 
pool of suppliers of television programming through anticompetitive 
practices.
    25. In addition, proponents of retaining the remaining fin/syn 
rules have provided no evidence unrelated to our fourteen factors that 
would cause us to question whether the conclusions we reached in 1993 
remain valid today. Nor have they shown that the semi-annual reports 
submitted by the networks reveal ownership patterns that pose a threat 
to programming diversity. Moreover, there is persuasive evidence that 
the established broadcast television networks have faced increased 
competition for the acquisition of television programming from 
broadcast and non-broadcast television distributors since 1993, and 
there is evidence which suggests that the market power of the 
established networks, as determined by their prime time audience share, 
has decreased since 1993. We therefore decline to alter our 1993 
decision to sunset the remaining fin/syn rules. In light of the fact 
that the commenters have not shown a need to retrain these rules, we 
also conclude that there is no justification for strengthening any of 
the rules, as the Coalition urges.
    26. Finally, we note that both the Coalition and INTV urge us to 
retain, and indeed strengthen, our reporting requirements for the 
networks even if we allow the rest of the fin/syn rules to expire. 
These parties argue that it is important for the Commission to monitor 
the network's conduct following repeal of the remaining rules in order 
to assess the impact of such repeal. However, neither of these 
commenters has demonstrated the need to continue reporting 
requirements, and we decline to do so.
    27. In our Notice, we sought comment on whether, in the event 
proponents of retention of the fin/syn rules failed to meet their 
burden of proving that retaining the rules is warranted, we should 
amend our rules to allow for an expiration date earlier than November 
10, 1995. Commenters in this proceeding have failed to demonstrate that 
market conditions and networks behavior since 1993 justify retraining 
the rules. In addition, no evidence or argument has been submitted 
showing that repeal of the remaining rules before November 10, 1995, 
would disrupt the conduct of business by parties relying on the rules, 
although we sought comment on this point. We also note, as discussed 
above, that the networks now face more competition than in 1993 for the 
acquisition of television programming from broadcast and non-broadcast 
television distributors. Moreover, we have described at length the 
negative effects of the fin/syn rules on production and distribution 
markets in our earlier decisions. Under these circumstances, we 
conclude that no public interest purpose would be served by allowing 
the rules to remain in effect until November 10, 1995. We thus conclude 
that all of the remaining fin/syn rules will be repealed immediately 
upon publication of this Order in the Federal Register.

Final Regulatory Flexibility Analysis

    28. Pursuant to the Regulatory Flexibility Act of 1980, the 
Commission has set forth the following Final Regulatory Flexibility 
Analysis. The Secretary shall send a copy of this Report and Order, 
including the Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration in accordance 
with the Regulatory Flexibility Act, 4 U.S.C. Sec.  601 et seq.
    29. Need for and Purpose of this Action: This action is taken to 
accelerate the expiration of the Commission's remaining fin/syn rules--
previously scheduled for November 10, 1995--so that the rules will 
expire upon publication of this Order in the Federal Register.
    30. Summary of Issues Raised by the Public Comments in Response to 
the Initial Regulatory Flexibility Analysis: None.
    31. Significant Alternatives Considered and Rejected: The 
Commission considered retaining the remaining fin/syn rules. However, 
after reviewing the comments submitted in this proceeding, the 
Commission concluded that the proponents of retaining the rules had not 
met their burden of proving that the rules are still needed to achieve 
the FCC's goals of source and outlet diversity in the television 
programming marketplace. One commenter in this proceeding argued that 
the fin/syn rules should be strengthened. The Commission considered 
this argument but concluded that it was without merit in light of the 
fact that no need for retaining the rules at all had been demonstrated. 
The Commission also considered leaving the remaining fin/syn rules in 
place until their previously scheduled expiration date of November 10, 
1995, but concluded that no evidence had been presented showing that 
earlier repeal would disrupt the conduct of business by parties relying 
on the rules. Given the increased competition facing the networks and 
the negative effects of the fin/syn rules on production and 
distribution markets, the Commission concluded that no public interest 
purpose would be served by waiting until November 10, 1995, to sunset 
the rules.

Ordering Clauses

    32. Accordingly, It Is Ordered that pursuant to the authority 
contained in Sections 4(i), 4(j), 301, 303(i), 303(r), 313 and 314 of 
the Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i), 
154(j), 301, 303(i), 303(r), 313 and 314, Sections 73.659 through 
73.663 of Part 73 of the Commission's Rules, 47 CFR Part 73, Are 
Amended as set forth below, effective upon publication of this Order in 
the Federal Register.
    33. In keeping with our recent decision in our PTAR proceeding, It 
Is Further Ordered that section 73.662 of Part 73 of the Commission's 
Rules, 47 CFR Part 73, Is Further Amended as set forth below, effective 
August 30, 1996.
    34. It Is Further Ordered that MM Docket No. 95-39 Is Terminated.

List of Subjects in 47 CFR Part 73

    Radio broadcasting.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Part 73 of title 47 of the Code of Federal Regulations is amended 
as follows:

PART 73--RADIO BROADCAST SERVICES

    1. The authority citation for part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334.

    2. Sections 73.659 through 73.661, and 73.663, are removed and 
reserved.
    3. Sections 73.662 is amended by revising the heading and 
introductory text to read as follows:


73.662  Definitions for television prime time access rules.

    For purposes of Sec. 73.658(k):
* * * * *
    4. Effective August 30, 1996, Sec. 73.662 is removed and reserved.

[FR Doc. 95-23366 Filed 9-20-95; 8:45 am]
BILLING CODE 6712-01-M