FCC Leaves Independents in the Cold

By BRIAN LOWRY

Oct. 24, 2001 12 AM PT

Hundreds of people filled the Beverly Hilton Hotel for an address by Federal Communications Commission Chairman Michael Powell on Friday, but it was hard to take one’s eyes off the few high-ranking television executives present. For while the crowd listened silently and intently, you had a sinking suspicion it was all those power brokers could do to contain grins that would put the Cheshire cat to shame.

Here was Powell, after all, telling entertainment industry moguls precisely what they want to hear. And although many executives sought to put Al Gore in the White House, it’s hard to imagine his lockbox yielding anyone to run the FCC--except perhaps Motion Picture Assn. of America Chairman Jack Valenti--who could caress TV’s corporate bosses with more soothing prose.

Indeed, amid a deluge of industry consolidation that has washed company after company out of the television business--the latest being Sony Pictures Entertainment, which last week confirmed examining a plan to gut its Columbia TriStar TV production unit--Powell didn’t offer independent producers so much as an umbrella. In fact, he actually suggested monopolies aren’t necessarily a bad thing so long as they don’t negatively affect the public, an assertion that will no doubt have Microsoft’s Bill Gates scratching his pointed head.

“We have, must and do look at this only from the perspective of the eyes and ears of the consumer,” Powell told the Hollywood Radio and Television Society gathering.

While the FCC chairman conceded there is “rightful anxiety” about concentration of media ownership, he stressed that rules curtailing entertainment giants are outdated and the government must be shown strong justification to maintain them. Given the proliferation of channels, he added, television and media are “more diverse in 2001 than at any time in their history.”

All of that sounds reasonable, perhaps, until you consider the staggering number of media outlets owned by a handful of companies and how major conglomerates have exploited existing guidelines to further their interests. It’s also worth noting that if government has a limited role to play now, as Powell stated, the FCC has hardly been so reserved in helping bring us to this point.

For starters, the FCC opened the door (some would say Pandora’s box) to consolidation in the early 1990s by eliminating long-standing rules that effectively barred a network from merging with a major studio. However, regulators left in place restrictions preventing foreign companies from owning TV stations, keeping studio owners Sony, Matsushita and Seagram from buying a broadcast network--although Rupert Murdoch’s News Corp. somehow limboed under the bar despite its Australian lineage.

Suddenly unfettered when it came to providing themselves programming, networks began relying on their own production arms, hungry to cash in on two fronts--selling the lucrative rerun rights as well as advertising--if they stumble on the next “Friends” or “The Simpsons.”

As a result, companies lacking a network affiliation have gradually been squeezed out. Sony is only the latest studio to beat a strategic retreat (Universal did much the same in 1997), while a slew of lesser suppliers--among them Orion, MTM, Spelling Entertainment and New World--either ceased to exist or were absorbed by larger entities.

“If you can imagine the great and mighty Sony abandoning the business, what does that tell you?” said Norman Horowitz, a veteran TV executive who once headed Columbia’s distribution arm. “What does that say about anybody else who wants to get into the TV business and develop programming?”

In addition, the FCC is expected to further relax rules limiting how many TV stations a company can control, inevitably leading to small owners being sold to large groups and more situations where a single entity owns multiple TV stations in one city--as Fox does in Los Angeles with KTTV and KCOP, having begun shuttling programs between the two channels as part of a formula to maximize profits and lower operating costs.

At the same time, major companies are capitalizing on the current economic downturn to drive harder bargains. With stock prices depressed, they can more easily gobble up smaller fish and come out of this current malaise bigger than ever, as demonstrated by NBC’s recent deal to buy Spanish-language network Telemundo.

Entertainment attorneys and agents say protestations of poverty have become a daily mantra from the show-biz conglomerates--an approach that is neither particularly new or subtle: Gradually drive competition out of business, then use that oligopoly market clout to exact more favorable terms when negotiating deals.

As for diversity, Powell is right about the volume of choices but underestimates or ignores the impact of consolidated ownership on the creative process. Sure, there is a vast supermarket of programming available, but if getting a show on means handing the network a financial stake in its future--with Fox-affiliated companies providing 75% of that network’s prime-time lineup--then some programs are going to be more equal than others when vying for shelf space on the most trafficked aisles.

Many of those old enough to remember Norman Lear’s heyday as an independent producer have clung to the notion the FCC might eventually intercede, but Powell’s little chat made clear that on his watch, “All in the Family” will simply refer to Paramount placing shows on sister network CBS and ABC toting water for parent Disney. Moreover, with each new merger, the likelihood that even a hands-on FCC will have the fortitude to try prying these corporate monoliths apart fades.

Powell expressed satisfaction that new technologies and the need to please consumers will help keep the remaining combatants honest; still, Sony Corp. of America Chief Executive Howard Stringer, perhaps fittingly, sounded what could be a prescient alarm in 1993, back when he was lobbying for CBS as president of its broadcast group.

“We stand in danger of creating an information underclass in this society,” he said. “I believe there is a real value to television that is available to everyone.”

As it stands, Powell’s regulatory scheme brings to mind the movie “Rollerball,” where the rules of the game are gradually stripped away until there are none left, or at least no referee to enforce them. Whether this makes you cheer the merits of deregulation or quake in your boots, those grinning executives seemed to realize that they are playing in a league all their own, one with barely enough teams to yield a full round of playoffs.

Brian Lowry’s column appears Wednesdays. He can be reached via email at [email protected].