With a nudge from the Reagan administration, the Federal Communications Commission has taken a first step toward deregulating the television industry by unanimously agreeing to permit television networks to purchase an interest in cable and other non-broadcasting programming.
At first blush, with each major network developing cable networks and other new video services, lifting these restrictions might not seem that significant. But, in fact, the networks say their ability to develop shows and utilize older programming has been delayed pending interpretation of the FCC regulation. The FCC voted 3 to 2 last year, under the Democratic leadership of former chairman Charles Ferris, not to adopt the same proposal on networks and programming submitted then by CBS Inc. And three of the current FCC members, apparently convinced of the merits of the move by CBS and new FCC Chairman Mark Fowler, changed their 1980 votes and agreed to lift the ban.
Further, the Reagan administration urged that the restriction be lifted in strongly worded filings with the FCC by the National Telecommunications and Information Administration and the Council on Wage and Price Stability. It effectively reversed key portions of the NTIA's position during the last year of the Carter administration.
The issue received high-level consideration at the Office of Management and Budget, which led to the council's filing on behalf of the White House.
Some broadcasting industry officials also are reading the decision as a demonstration of Fowler's stated commitment to move quickly to end much of the FCC's regulatory role in television. In a widely discussed speech last week, Fowler told a broadcasting audience that the FCC's "historic" role as a "grand pooh-bah of the Potomac determining what kinds of programs a broadcaster must air must change."
In fact, Fowler even previewed the FCC's decision in his speech, which was made several days before the action. "I question whether there is any valid purpose served by structural rules that limit your ability to develop programming material for use by new media like cable television which cry out for more programming to provide to the American people," Fowler said in the June 12 speech.
At issue is the 11-year old FCC "financial-interest" rule which has been interpreted as barring networks from owning an interest in programs that will be distributed in any way besides regular network broadcasts. The rule could have barred the cable and videodisc operations of CBS -- which led the fight to modify the regulation -- from using existing and future television fare.
"In particular, CBS has been reluctant to enter into coproduction arrangements for programs intended for initial broadcast on television by CBS' would-be coproducers and for later presentation by CBS Cable or CBS Video in the new technologies," the network said in an April 1981 memo to the FCC.
CBS and the other networks argued that the rule was issued when programming sources and audiences were limited by the structure and network dominance of the television industry.
Today, however, dozens of producers and other entrepreneurs are making television programs for distribution via cable and for sale on tape. Thus, the distribution and viewing patterns of the television audience no longer require regulations that limit the control of programming, the industry argued.
The administration forcefully agreed. "It seems unlikely that programs produced for a special audience will even be aired on network television or that their success in non-broadcast markets will be greatly affected by such broadcast," the administration wrote in its COWPS filing.
"Extension of the financial-interest rule to nonbroadcast markets would not serve to enhance competition, nor would the quantity or quality of programming available to the public be increased," the COWPS said. Denying the petition "would restrict program producers' access to an important additional source of funding and limit the programming that the networks could contribute to non-broadcast markets," the White House agency concluded.