Sharing That Syndication Gravy

By John S. DeMott

An FCC ruling allows the networks to sop up some of the profits

Old television programs do not die; they go into syndication. M*A*S*H, which left the CBS schedule in February after eleven years of increasing popularity, is syndicated to hundreds of independent stations around the U.S.; it can be seen ten times weekly in New York City alone. Golden oldies like The Honeymooners and I Love Lucy have been in syndication for more than a decade. There is big money in syndicating such shows. The independent stations pay top rates for them to cash in on advertising revenues. After syndication fees are deducted, many of the dollars that flow back to the producers are pure profit, since production costs have been largely recovered. M*A*S*H, for example, will gross at least $250 million, and probably much more, during its years in syndication. In a major ruling last week, the Federal Communications Commission tentatively decided that the three commercial networks can share in the estimated $800 million worth of annual re-run gravy.

By a 3-to-l vote, the commission would modify a 1970 regulation decreeing that the networks could not collect any money from U.S. syndication of shows. Now the networks will be permitted to buy syndication rights to a prime-time entertainment show, in hopes of reselling them at a profit after it becomes popular. More significantly, they will be permitted to buy a share in a show's eventual profits from syndication.

Under the ruling, although the networks can retain profit shares indefinitely, they must sell syndication rights by the time shows have been on the air for five years, the usual period before they go into syndication. That would prevent networks from withholding shows from the market. And they have no say in when or where the syndicated programs are aired. In many U.S. cities, syndicated M*A*S*H programs run head-to-head with, say, the CBS Evening News, winning audiences and advertiser dollars from network programs. By 1990, two commissioners said, even that regulatory vestige should be dropped, and the networks should be able to control the syndication of some programs.

The commission also decided to drop another 1970 rule that barred networks from financing and owning TV programs produced by others. Except for news shows and documentaries, such programs account for most network offerings.

The FCC staff began having second thoughts in the late 1970s about the earlier decision. By removing the networks as sources of financing for new TV shows, the commission in effect turned production almost totally over to the major studios like Paramount, Universal, Warner Bros, and Twentieth Century-Fox, and to the big independents like MTM, Lorimar and Spelling, who are able to afford the megabucks necessary to launch a new program. That, reasoned the staff in a 1980 report, simply concentrated the program supply power in fewer hands instead of dispersing it.

The 1970 action stemmed from a fear that without such restrictions, ABC, CBS and NBC would gain virtual monopoly control over the business of supplying programs. Now, however, the FCC noted, the markets for programs have altered drastically. Independent stations and emerging cable-television and videocassette operations have taken a growing share of the TV audience away from the networks. Hence the networks' potential monopoly may not exist. The networks, under the ruling, would be allowed to finance and own up to 100% of new shows.

The networks' victory was not total, since they wanted total repeal of the restrictions. Also, the FCC must now permit the public to comment on its decision, and a few months could pass before the ruling becomes effective. Said David Boies, a lawyer for CBS: "We're pleased they went as far as they did. We're disappointed they didn't go farther."

The FCC hopes that the new sources of money for program development from the three networks will help diversify TV's offerings. But in Hollywood, independent producers shuddered at the commission's actions. Alan Horn, president of Norman Lear's Embassy Communications, feared that the ruling meant that new shows would once again be dictated by the networks. Said he: "The networks will be even more powerful tomorrow than they are today." He recalled that even so small an issue as whether Archie Bunker should be seen diapering his grandson had been contested by CBS. Viewers saw Archie change the diapers, but only because CBS did not want to alienate Embassy, which had other big winners on the air at the time: Maude, Good Times and The Jeffersons.

Said Mel Blumenthal, executive vice president of MTM: "Independent producers will become little more than robots responding to the whims of networks." Without being able to anticipate full revenues from syndication, producers argued, they would have no incentive to swallow losses on offbeat new shows. The award-winning Hill Street Blues, for example, is supplied to NBC by MTM at a loss of $ 1.43 million a year.

--By John S. DeMott.

Reported by Gisela Bolte/Washington and Denise Worrell/ Los Angeles

With reporting by Gisela Bolte, Denise Worrell This file is automatically generated by a robot program, so viewer discretion is required.