American television has lots of vices, but too few viewing choices is not one of them. We've got three major networks, and a fourth (Fox) is emerging. Nearly two-thirds of homes get cable TV with its dizzying array of specialized channels. If you don't like any of that, you can pop a cassette into your VCR (owned by 69 percent of TV households). The idea that Americans remain prisoners of the three major networks is laughably outdated.
What's weird, then, is that we're still punishing the networks for power they long ago lost. In 1970, the Federal Communications Commission prohibited ABC, CBS and NBC from owning most prime-time entertainment programs (such as "Roseanne") and from selling the programs abroad or for reruns on local stations. The idea was to spur new programming sources and to prevent the networks from denying reruns to independent (non-network) stations. With today's diversity, the restrictions are unjustified. The FCC is reviewing the rule and should repeal it.
Naturally, the rule's beneficiaries object. They're mainly independent TV producers and the eight big Hollywood studios, which produce or have a stake in more than 70 percent of prime-time shows. The FCC rule gives them a protected market for network programs. So this is a megabuck quarrel. Consider the "Cosby Show." Its rights for off-network reruns were sold for nearly $800 million, estimates Paul Kagan Associates, a media research firm. The producers got rich and not NBC, the network that runs "Cosby." General Electric, NBC's owner, is livid.
But there's more to this dispute than money. The basic competition in television today pits over-the-air broadcasting against cable. The FCC penalizes over-the-air broadcasting by lowering its profitability. The less profitable the networks are, the less they can pay for entertainment programs, movies and sports events. Over time, more of the best programming will move to cable.
"There's no sense handicapping the networks," says Henry Geller, a communications expert in Washington.
As the FCC's top lawyer in 1970, Geller supported the restrictions on the networks. He changed his mind as network power dwindled. Between 1970 and 1989, the networks' share of the prime-time audience dropped from 90 to 64 percent. In the same period, the number of independent television stations jumped from 90 to 339, creating -- along with cable -- another big market for TV programs. Many hits now don't come from the major networks: for example "The Simpsons" (on Fox) or Arsenio Hall's talk show.
If the FCC dropped its rule, the networks would own and produce more prime-time entertainment programs (news and sports aren't covered by the rule). So what? Hollywood's complaint is that diversity and creativity would suffer. This argument rings hollow. The Fox network can now legally produce all its programs because it isn't covered by the FCC's rule. Still, Fox produces only about 40 percent of its programs. Its biggest hit ("Married With Children") comes from an outside producer.
Without diverse programming, the networks won't get enough good ideas to hold on to their shrinking audiences. Every year the networks finance scripts for dozens of new series. A small percentage of these scripts are then turned into pilots at a cost of $500,000 to more than $1 million. A fraction of the pilots become series. Some flop quickly; others flop slowly. Creating a winning series is a risky, unpredictable business. The many failures are expensive, and the few successes are blockbusters.
That's why the best writers and producers will always be well rewarded. These are the likes of Marcy Carsey and Tom Werner, the producers of "Cosby" and "Roseanne." Yet, independent producers -- who are often financed by major studios -- say a change in the FCC rule will hurt them by putting them at the networks' mercy. Maybe. But a rule change might also help by triggering a bidding war between studios and networks for creative talent. Broadcasting magazine recently reported, for example, that the creators of "The Wonder Years" signed a four-year deal with Disney worth between $18 million and $22 million.
It's not the FCC's job to determine whether an independent producer makes $2 million or $200 million. Nor should the FCC protect the major studios, which are increasingly foreign-owned. Columbia belongs to Sony, 20th Century-Fox to Rupert Murdoch's News Corp. and MGM/UA to Italy's Pathe Communications. Now Japan's Matsushita has agreed to buy MCA for $6.6 billion, and there are rumors (denied) that Orion may be sold to a Korean firm. These sales would leave only three major U.S.-owned studios (Disney, Warner Brothers and Paramount).
Entertainment is one of our successful global industries. American popular culture appeals around the world, and sales abroad of U.S. TV programs totaled $1.7 billion in 1989. Only time will tell whether foreign ownership of big studios compromises either the content or vitality of their movies and TV programs. But meanwhile, why should a U.S. government agency deliberately discriminate against some U.S.- owned companies (the networks) and in favor of foreign-owned companies (some studios)?
Changing the FCC rule wouldn't create better TV. It wouldn't automatically arrest the networks' audience slide. Mostly, it would redivide the economic pie for producing some good programs, a lot of bad programs and some truly terrible ones. Repeal would increase the value of the networks. Some big investors -- say, Laurence Tisch, who owns 25 percent of CBS -- might sell and reap a windfall. But that's no argument for inaction. Everyone's greedy in this dispute, and no one's greed is morally superior.
You can argue that the FCC's rule succeeded in fostering competition (more independent stations) or that it was overtaken by new technologies (cable and VCRs). No matter. All it does now is to create protected markets and undermine over-the-air TV. It deserves a quick burial.