Fight Over Lucrative TV Reruns to Resume : Entertainment: A court panel throws out the FCC’s new financial interest and syndication rules, crafted after years of wrangling.

In a decision that reopens the fight between Hollywood and the networks over access to lucrative TV rerun profits, a Chicago federal appeals court on Thursday threw out the Federal Communications Commission’s new financial interest and syndication rules.

A three-judge panel, employing unusually strong language, called the new rules an “unprincipled compromise of Rube Goldberg complexity” and said the FCC failed to justify the plan it adopted last year.

Those new rules, crafted after years of contentious lobbying and political wrangling, permit the networks to own up to 40% of the programs aired on their prime-time schedule and participate indirectly in rerun profits.

At stake is hundreds of millions of dollars in revenue from such hit prime-time series as “The Cosby Show,” “Murphy Brown” and “Who’s the Boss?”

Since 1970, the networks have been banned from owning a financial stake in the programs they air as part of an effort to curb their power. The FCC, however, modified the regulations last year, arguing that the growth of cable and videocassette recorders have lessened the network’s audience share.

Judge Richard Posner of the U.S. 7th Circuit Court of Appeals wrote that “stripped of verbiage, the opinion, like a Persian cat with its fur shaved, is alarmingly pale and thin.”

Network officials were jubilant about the decision, saying it could force the FCC to further liberalize the fin/syn rules while they are being rewritten. However, such optimism may be ill-founded. The Clinton Administration, which has close ties to Hollywood, may appoint an FCC more sympathetic to the interests of producers.

Representatives of the studios, which produce most of the prime-time TV programming, blasted the decision by noting that Posner had worked as a consultant for CBS in a related case.

Posner filed an affidavit on behalf of CBS in federal court in Los Angeles in 1977, arguing against adoption of fin/syn consent degrees by the Justice Department against the networks.

In the 22-page opinion released by Posner on Thursday, the court said the FCC failed to demonstrate its case for a partial repeal of the regulations, given the voluminous record on the decades-long regulatory battle. The court did not address the record itself.

Posner wrote that the FCC’s justification of its decision “is not adequately reasoned. Key concepts are left unexplained, key evidence is overlooked, arguments that formerly persuaded the (FCC) and that time has only strengthened are ignored, contradictions within and among FCC decisions are passed over in silence.”

Posner gave the parties 15 days to submit briefs on whether the old fin/syn regulations should be restored or scrapped altogether while the FCC rewrites its new rules. Predictably, lawyers for Hollywood TV producers blasted the court’s decision. Diane Killory, a lawyer for a coalition of independent Hollywood program producers, said it would “have a devastating impact on the entire production industry and program diversity.”