the PDF of the Caucus Original Filing
Federal Communications Commission
Washington, D.C. 20554
In the matter of:
MB Docket 02-277: 2002 Biennial
Regulatory Review of the Commission’s Broadcast Ownership Rules and Other
Rules Adopted Pursuant to Section 202 of the Telecommunications Act of
MM Docket 01-235: Cross-Ownership of
Broadcast Stations and Newspapers; and
MM Docket 01-317: Rules Concerning
Multiple Ownership and Radio Broadcast Stations in Local Markets; and
MM Docket 00-244: Definition of Radio
FOR TELEVISION PRODUCERS, WRITERS & DIRECTORS
BINDER RODAN PRODUCTIONS, INC.
BLINN ECHO COVE PRODUCTIONS
MICHAEL BRAVERMAN TOOTS PRODUCTIONS, INC.
CARDINALE BAY PARKWAY PRODUCTIONS, INC.
CONSIDINE LOGO ENTERTAINMENT
SUZANNE DE PASSE DE PASSE ENTERTAINMENT
BONA VIN DI BONA PRODUCTIONS
CLARK PRODUCTIONS, INC.
DONIGER BETTINA PRODUCTIONS LTD.
DORTORT BONANZA VENTURES, INC.
MICHAEL FILERMAN MICHAEL FILERMAN PRODUCTIONS
FONTANA LEVINSON/FONTANA COMPANY
CHARLES W. FRIES CHUCK FRIES PRODUCTIONS
GAY SENTRY PRODUCTIONS
GIMBEL ROGER GIMBEL PRODUCTIONS INC.
GREEN GREEN/EPSTEIN/BACINO PRODUCTIONS, INC.
JACK GROSSBART JOAN BARNETT GROSSBART BARNETT PRODUCTIONS
SALLY HAMPTON KMA PRODUCTIONS
LEONARD HILL LEONARD HILL FILMS
KEMP BUNGALOW 78 PRODUCTIONS
LATHAN SIMMONS-LATHAN ENTERTAINMENT
MILLER LEE MILLER PRODUCTIONS
PAPAZIAN PAPAZIAN-HIRSCH ENTERTAINMENT
DOROTHEA G. PETRIE DOROTHEA G. PETRIE PRODUCTIONS
PIERSON DARK CANYON PRODUCTIONS, INC.
RICH JOHN RICH PRODUCTIONS, INC.
RUSH HERMAN RUSH ASSOCIATES, INC.
SANDRICH WET SAND PRODUCTIONS
VON ZERNECK VON ZERNECK SERTNER FILMS
January 31, 2003
Charles W. Fries Chair
Chuck Fries Productions
1880 Century Park East #315
Los Angeles, CA 90067
Leonard Hill Chair-Govt. Affairs Comm.
Leonard Hill Films
4500 Wilshire Blvd. 3rd Flr.
Los Angeles, CA 90010
See the PDF of
the Caucus Original Filing
RESPONSE COMMENTS THE CAUCUS FOR
PRODUCERS, WRITERS AND DIRECTORS
In their joint comments, Fox, NBC and Viacom
attempt to make the case that "…the time has come for the Commission to
abandon the media ownership regulatory scheme in its entirety."
They argue that "… market forces coupled with antitrust enforcement are
more than adequate to protect the agency’s legitimate public interest
The Caucus for Producers, Writers and Directors (The Caucus) strongly
dissents from these assertions.
The Joint Commenters have peppered their
response with seemingly benign terms like "economic efficiencies"
The Caucus asks that the Commission consider that these seemingly
innocuous terms are used as stand-ins for the evidently noxious concept of
The impression encouraged by those filing for
yet greater deregulation is one of benevolent dynamism. Gone are the
images of back-room deals. Their pleadings suggest that regulations
impede progress and are just so many speedbumps on the technological
superhighway that promises to unite the land of the free.
But the suggestion that regulation has been an
impediment to innovation is misleading and self-serving. The media
syndicates who expertly manipulate government subsidy to convert public
property to their private benefit, have the audacity to suggest that the
same regulators, who freely bestowed the unique benefit of exclusive
spectrum access, now thwart real progress by maintaining vigilance over
the manner in which that public asset is exploited. The media syndicates
don’t own the airwaves. They just want the license to behave as if they
Regulation has fostered innovation and promoted
The assertion that regulation has defeated
innovation or eroded diversity is contradicted not only by the original
comments filed by the Caucus, it has been eloquently rebutted by the most
senior executives of the distinguished (and hugely profitable) firms that
have filed in favor of eliminating virtually all regulatory safeguards.
No less an expert than Sumner Redstone, Chairman of Viacom, observed:
Financial Interest Rules have greatly increased the diversity of available
programming…. Nobody wants a monopoly or an oligopoly, except for the
monopolist and the oligopolist… The most ominous scenario would be a
merger or consolidation of a network and a major studio in an environment
where the financial interest and syndication
longer existed. If the conditions that existed and which led to the
imposition of these rules in the first place seemed horrendous then, I can
only say, in the words of Al Jolson, "Wait a minute, folks, you ain’t seen
Mr. Redstone has proven
to be both an astute businessman and a candid commentator. His warning
about the anti-competitive implications of broadcast deregulation foretold
the market-numbing practices that The Caucus warned of at the 1990 En Banc
and further elaborated on in its most recent filing. The combination and
recombination of media assets in the wake of the repeal of the Financial
Interest and Syndication Rules has been startling. It has skewed
competition and undermined diversity to the delight of a few media
oligopolists but to the detriment of the public interest.
decimated the community of independent program suppliers
The joint filing
of Fox, Viacom and NBC neither comments on nor even notes the catastrophic
implications deregulation has had on the community of independent program
suppliers. Yet the public interest in preserving a vital, entrepreneurially
driven community of independent production companies has been widely
proclaimed by NBC President Robert Wright who has observed:
success of America’s television networks depends on the preservation of a
healthy independent production industry… Television’s most successful
break-through programs have frequently come from independent producers. The
major studios compete directly against the independents… Networks depend on
a robust independent production industry and benefit from having as many
prospective suppliers as possible. Economically and creatively, NBC does
not want to be dependent on only five or six studios for all our
programming. That is not in NBC’s best interest, and it is not in the
As was evident in our
original comments, The Caucus concurs with the president of NBC. The
preservation of a dynamic community of competitive independent program
suppliers is in the public interest. We call the Commission’s attention to
the absence of such arguments in the filing of the joint commenters. And we
note with alarm that NBC is now dependent on essentially one studio for all
its programming. That studio is NBC Productions.
NBC is not alone. Just
seven companies (AOL-Time Warner, Viacom, Sony, Disney, News Corp., Vivendi-Universal
and NBC) now account for over 75 per cent of the income earned by all
members of the Writers Guild of America.
Independent production companies have been driven to the verge of
extinction. Gone are MTM, Cannell Studios, Reeves, Rysher, New World,
Lorimar, SEE, Witt-Thomas, Miller-Boyett, Orion, Republic, ITC and the
like. The few remaining independent companies, Bochco, Kelley and Wolf most
notably, have survived only because their established shows were originally
launched when Financial Interest and Syndication Regulations were still in
place. There are no new companies with deals that even remotely resemble
the fortunate legacy that sustains the last few independents.
situation should not surprise those who have observed the entertainment
industry. In 1990, Bob Wright warned that "At the same time that
distribution opportunities have exploded, control over supply has been
driven into the hands of an extremely powerful cartel. This is certainly
not what the FCC desired when they designed the Rules."
Again, The Caucus concurs in Mr. Wright’s conclusion. Yet we note that the
comments submitted by NBC in 2003 contain no similar warnings about the
dangers inherent in the extremely powerful media cartels that have been
spawned by deregulation.
Regulation was responsible
for the creation of new networks
The joint respondents
have chosen to rewrite the very history authored by their long- serving
chief executives. And, subsequent to their filing, they have gone even
further. Ellen Agress, senior vice president, Fox Entertainment, addressed
the public forum on media regulation hosted by Columbia University Law
School. In her remarks, Ms. Agress said "…history has shown that
deregulation in the early 1990s helped create the Fox network…"
Those remarks reflect an erroneous interpretation of the facts.
Contrary to Ms. Agress’
assertion, the birth of the Fox network was testimony to the salutary
effects of regulation. The network launched in 1987, seven years prior
to the deregulatory decisions that Ms. Agress credits for its creation. Fox
was able to assemble a critical mass of independent, non-affiliated stations
precisely because the restrictions contained in the 1970 regulations
promulgated by the FCC made it impossible for the dominant networks to
control the off-network rights to the programs they aired. Fin/Syn had the
intended, and wholly desirable consequence of greatly expanding the number
of independent stations.
In this regard, it is
worth citing the testimony given by the President of Warner Bros. to the FCC
in 1990. Speaking of the impact of FCC regulation on competition, Robert
twenty years since the Rule was adopted, the number of independent stations
has increased five-fold - from 70 stations in 1972 to 340 today. By freeing
the syndication market from Network control, the Rule has fueled the growth
of independent stations, which rely on off-network syndicated programming
for a substantial portion of their revenue. The growth of program producers
under the Rule has paralleled that of independent stations. The Rule has
achieved and continues to achieve the Commissions stated goal of fostering
‘greater diversity of programs and program sources’."
The launch of the Fox
network was a significant accomplishment. Its innovative spirit has
contributed to the public interest. But let’s set the record straight. The
launch of Fox reflects positively on the far-sighted regulations adopted by
the FCC to encourage competition and protect against the predatory practices
of incumbent media chains.
It is noteworthy that
Fox, which so evidently benefited from the pro-competitive bias of the
broadcasting rules, sought to have those same rules overturned in the early
1990’s. Once blessed with the competitive advantage inherent to incumbency,
Fox determined that there were enough networks. It is reasonable to
conclude that the crusade to overturn federal media regulations now reflects
Fox’s self-interest and not the interest of the public at large.
Competition can only be
secured by carefully crafted regulation
There seems to be broad
consensus that competition is the only dependable guarantor of a vital,
diverse national media. Not surprisingly Fox, Disney, Viacom, Time/Warner
and the other established media syndicates have argued to the Commission
that competition results from the absence of regulation. And that
contention, a contention which the Caucus strenuously rebukes, is the nub of
the argument before the Commission.
The Caucus, indeed the
entire creative community, would ask that the Commission consider that
carefully crafted, content-neutral, self-enforcing regulations do not
restrict competition, they preserve and enhance it. Without regulation the
already awesome power of incumbent programming services will swell. The
free marketplace of ideas will be trampled. The entrepreneurial spirit that
animates so many small and mid-sized companies survives only so long as
regulations are maintained that prohibit the predatory tendencies of
The success of the
American experiment has been premised on the repudiation of entrenched
prerogative and a distinct distaste for preferential treatment. Recent
events, particularly those involving Enron, WorldCom, and Adelphia only
reinforce the need for federal regulation aimed at maintaining transparency
and focused on rooting out anti-competitive conflicts of interest.
The filing of the joint
commenters, ignores the simple fact that program suppliers occupy a
competitively disadvantaged position in the electronic entertainment
marketplace. There are a plethora of sellers and a paucity of buyers. New
channels may have been added to the dial, but control over those channels
still rests in the hands of essentially six huge media syndicates.
has granted special franchise rights to those who own the arenas in which
programming is played and thus allowed programming services to have an
inherently advantaged position when dealing with the creators of content.
And it is, therefore, fitting that the Commission take steps to maintain a
level playing field.
Predatory practices in
entertainment are best cured by regulation and not litigation
It is fatuous for Fox
or NBC or Viacom to argue that small businesses and individual creative
talent can be secure in the notion that anti-trust remedies can cure
predatory practices. Programming moves with lightning speed. The same
cannot be said of the application of anti-trust actions.
The Justice Department
filed suit against NBC in 1972 for anti-trust violations. That suit was not
settled until 1980. No independent program supplier can afford the costs,
measured in either time or money, required to prosecute an anti-trust
and self-dealing must be curbed
self-supply are essential to restore a semblance of fair competition.
Programs supplied by entities owned or controlled by the programming service
are subject to market-numbing self-dealing. Without limits on the amount
of in-house production that a given programming service can transmit, the
suppliers of content are forced to surrender economic considerations in
order to gain access to the national audience.
production of entertainment reduces both the economic and the creative
independence of the program supplier. In-house producers are subject to the
creative directives of the executive hierarchy of the programming service at
every step of the production process. This centralized authority over all
aspects of creative decision making is antithetical to diversity and
Restrictions on in-house
production need to be coupled with a prohibition on the ownership of
multiple networks. The assertion by Viacom that "… common ownership of
television networks can lead to increased diversity of programming…"
is far-fetched. Even when the two networks target different demographics,
the creative control over all manner of production related decision making
is still concentrated in the hands of a single executive. No one executive
should be entitled to have veto power over who produces, writes, directs and
acts in the programs of two different networks. That concentration of
decision making authority is antithetical to diversity and creative freedom.
Dual network ownership
also promotes "repurposing" and cross-promotion, neither of which contribute
to diversity. Witness the manner in which CBS reran "The Amazing Race" on
UPN just two days after its first run on what industry pundits referred to
as "the mother ship"
Likewise, UPN stations ran a one hour special entitled "The March to
Madness" that was an extended commercial for the NCAA Men’s Basketball
Tournament that was to air exclusively on the CBS mother ship.
When affiliated networks
rerun each other’s programs or engage in collusive cross-promotion, the
public’s interest is sacrificed for corporate profit. Repurposing steals
away scarce programming slots that would otherwise be filled with original
fare. Even Judge Richard Posner seems to have understood that "reruns are
the antithesis of diversity".
ownership is a threat to the public welfare
As Marshall McLuhan once
suggested, television is our tribal fire. And that fire is ignited by the
friction of creative ideas competing against one another in a free and open
market. Well crafted regulation serves to shield that fire from the
suffocating effects of concentrated control.
The position of the
Caucus has remained constant over the last twenty-eight years. Consolidated
media ownership is a threat to the public welfare. The same consistency
cannot be found in the position espoused by the major studios. It is worth
recalling that only thirteen years ago the distinguished CEO of the MPAA
testified before the FCC that:
"Concentration of power in any medium – particularly one which is, for all
intents and purposes, the gatekeeper to three out of every five U.S.
television homes – is to be feared and must be curbed. Concentration of
power denies consumers the benefits of competitive pricing and of diverse
programming. Concentration of power also denies those who produce
programming the ability to obtain a fair market price for their products,
and may even deny producers access to the market altogether."
The articles of faith that Disney and Paramount
and their sister studios preached to the Commission only a few years ago are
strangely absent from their latest filings. Jack Valenti, once counseled
the FCC that it "… must not craft any decision that is tolerant of huge
corporate enterprises so overwhelmingly in control that the national
television audience becomes the province of the few to the dismay of the
The always ebullient Mr. Valenti is now uncharacteristically quiet.
Though the original comments submitted by The
Caucus were directed largely at repudiating the pseudo-science that led Dr.
Mara Einstein to suggest that regulation was antithetical to diversity, we
now seek, by way of this response, to more fully articulate the specific
regulations that we believe are consistent with the Commission’s stated
desire to foster diversity, competition and localism.
The Caucus believes that
the Commission must maintain the regulations currently under review. We
support the retention of the restrictions against dual network ownership,
the local station ownership cap, the regulations aimed at limiting common
ownership of multiple stations in a single market and the rule that bars
common ownership of a newspaper and a TV station in the same city.
Furthermore, we propose
a set of minimal, interrelated, content-neutral safeguards that should be
enacted to counter the anti-competitive implications of the ever
accelerating merger of media conglomerates.
Specifically, The Caucus
Established broadcast networks (those that schedule
more than 15 hours of weekly content) and large scale cable or satellite
programming services (those that reach more than 35 per cent of the national
audience) shall be restrained from producing more that 50 per cent of their
entertainment programming in-house.
Established networks and large scale cable and satellite services shall be
restrained from controlling distribution or having a financial interest in
the off-network or off-cable/satellite rights of that portion of their
entertainment schedule provided by outside suppliers.
Established networks and large scale cable and satellite services shall be
restrained from obtaining in-perpetuity licenses to entertainment content.
License terms shall be capped at four years for series and two years for
These three regulations
will promote competition and stimulate diversity. Without a limitation on
in-house production, media syndicates will be free to engage in self-dealing
and artificially manipulate the value of programs to the disadvantage of the
creative community and the public alike. Absent a bar on acquiring a
financial interest in secondary rights, the dominant media chains will
simply extract the benefits of ownership from the program producer. And,
lacking a specific limitation on license term, independent outlets will be
deprived of access to vital program inventory and the fair value of content
will not be tested against the competitive dynamics of the open market.
is to be commended for the thorough review of the rules that it has
undertaken. Many pundits dismissed this preceding even before it began.
Noted editor and historian, Lewis Lapham, despaired:
"All the questions (of
media regulation) touch on the democratic character of the joint American
enterprise, but none of them is likely to engender a public debate. Allied
with the commercial ambitions that it supposedly restrains, the government
will do what is necessary to muffle the political argument, and the press,
dazed by the wonders of technology and the splendor of money, will provide
the cues for sustained applause."
The preceding now
undertaken by this FCC will determine, in large measure, whether Mr. Lapham
was a cynic or a seer. The willingness of the Commission to promote an open
debate encourages The Caucus to believe that the public interest will not be
subverted. We are daunted by the array of powerful corporate forces whose
access to the national audience gives them unique leverage in this debate.
But we are confident that the FCC will fully ventilate the issues and arrive
at a rulemaking that is aligned with the interests of diversity, competition
Joint Filing, January 2, 2003, p. iv
Redstone, Sumner; remarks to The Caucus, January 11, 1990, in The Caucus
Quarterly, April, 1990
NBC Press Release, Washington DC, October 3, 1990, p. 2
Comment of the Writers Guild of America, FCC Filing, January 4, 2003, p.
Los Angeles Times, January 17, 2003, p. C3
Daly, Robert; (December 14, 1990) FCC En Banc (MM Docket 90-162)
Testimony of Robert Daly, p. 2
Joint Filing, January 2, 2003, p.46
"Quick TV Reruns", CBSNEWS.COM, March 21, 2002
Schurz Communications v. FCC, 982 F.2d 1043, (7th Cir.),
1992, at 1055
Valenti, Jack (March 1, 1990) FCC Hearing on Cable Regulation
Valenti, Jack (December 14, 1990) FCC En Banc (MM Docket 90-162)
Testimony of Jack Valenti, p.12
Lapham, Lewis, Harper’s Magazine, January, 1994, p. 10