TV Trust-busting

A battle is brewing over an important Federal Communications Commission (FCC) rule designed to encourage diversity in television programming. A Fox Broadcasting Company request for an 18-month waiver of the Financial Interest and Syndication Rule (fin-syn) could lead the FCC to consider relaxing or eliminating the controversial rule. The fin-syn rule prohibits networks from acquiring a financial interest in independently produced programs and from competing in the syndication market. Implemented in 1970, fin-syn was designed to curb the programming monopoly then held by the three major television networks: ABC, NBC and CBS.

Before fin-syn, independent producers were practically unable to gain access to the airwaves without giving up some financial interest in their shows to the networks. For example, in 1969, before agreeing to air the "Mary Tyler Moore Show," CBS demanded all distribution and syndication rights to the show, according to the Coalition To Preserve the Financial Interest and Syndication Rule. The coalition also reports that before the ruling, the three networks had a financial interest in 93 percent of the programs they broadcast between 1959 and 1964.

Proponents of fin-syn argue it has led to a proliferation of independent producers. By preventing the networks from demanding syndication rights from independent producers, fin-syn makes independent production financially feasible.

"The adoption of [fin-syn and related rules] in 1970 and the subsequent growth of a new and vibrant independent television station sector literally created the market for first-run syndicated TV programming, and enabled countless new production companies to get started," says Andrew Schwartzman, director of the Media Access Project, a Washington-based media watchdog group working on broadcast issues. Fin-syn, he asserts, has allowed "Americans [to] get more programming on more stations from more different producers."

Fox, not presently defined as a network by the FCC's standards, has been able to grow to its present size precisely because it is not subject to fin-syn. It is able to profit from producing, syndicating and buying interests in programs.

The FCC defines a network as having 15 or more hours of original programming each week, a limit which Fox will soon pass. If Fox is granted the temporary waiver, it will be able to obtain network status without complying with the fin-syn restrictions which apply to the three larger networks. During the proposed 18-month waiver period Fox could presumably persuade the FCC to modify either the fin-syn rule or the definition of a network. Fox would like to see network status tied to some "objective economic standard" such as audience share or percentage of total network revenues.

But the three networks adamantly oppose any special treatment for Fox. Stephen Weiswasser, senior vice president and general counsel for Capital Cities/ABC told Broadcasting Magazine that granting such a waiver would be "bad public policy." Weiswasser said Fox does not need special protection since it "is not a fledgling network, [but is] owned by News Corp., which is the third largest media corporation in the world."

This is where the debate heats up. When the FCC reviewed fin-syn and related rules in the early 1980s, it generated one of the most heavily lobbied battles in the agency's history. The FCC, with the approval of the Justice Department, the Department of Commerce and the Federal Trade Commission, recommended relaxation of the rules. But Congress and President Reagan pressured the FCC to hold off on a final vote and allowed the networks and proponents of fin-syn, notably the Motion Picture Association of America (many of whose members produce television shows as well as movies), to bargain over the issue. So although no action has been taken in more than six years, the issue is still open.

Fox maintains that the market, mostly as a result of cable television, has changed sufficiently to warrant relaxation of the ruling. It points to the fact that cable television now reaches 53 percent of homes in the United States.

The networks, while objecting to a fin-syn exemption for Fox, oppose the rule, as they have since its conception. Like Fox, they argue that the market changes make the rule outdated. NBC President and CEO Robert Wright, speaking at a recent National Association of Television Producing Executives (NATPE) conference, warned that fin-syn rules must be relaxed to allow networks to compete successfully with cable and other new market forces. Although he acknowledged the networks are healthy now, he claimed that their future survival is threatened. Said Wright, "We cannot continue to live behind television's equivalent of the Berlin Wall. Financial interest... would at least open up the potential of having more revenue streams."

But the Motion Picture Association of America along with a coalition of independent television stations, business, labor and consumer groups, argue that cable does not offer serious competition to the networks. Even the lowest-ranked network, for example, has 10 times as many viewers as the highest-ranked cable network. In addition, the networks possess exclusive licenses to the limited airwaves. Fin-syn restrictions make the airwaves more accessible to the motion picture industry and independent producers. As a result, its supporters argue, fin- syn provides more program diversity to consumers.

Not all consumer and labor groups support fin-syn, however. Some, including the National Council for Senior Citizens, the Amalgamated Clothing and Textile Workers of America and the National Education Association, have bought the networks' line that their future financial well-being is endangered. These groups worry that the rules will hamper the networks' ability to compete in the marketplace, giving cable and independent stations an unfair advantage. They fear that the networks might then stop providing "free" TV, an important source of information and entertainment for many in the United States, particularly the elderly.

The Coalition to Preserve the Financial Interest and Syndication Rule dismisses this concern, saying that because the networks are increasingly investing in cable television, they will benefit from, rather than be harmed by, cable's growth: "ABC owns the ESPN cable networks, General Electric (GE) owns NBC and CNBC, a cable channel. And ABC News and CBS News are considering cable news alliances. Through its financial subsidiary, GE Capital, GE also has loaned more than $1.6 billion to cable operators, giving it a substantial stake in the success of cable."

Another objection to the repeal of fin-syn comes from the Program Producers and Distributors Committee. They worry that relaxation of the rule may also lead to repeal of its companion, the prime time access rule (PTAR). This rule mandated that the networks provide a daily one-hour, prime-time slot for local stations, independent producers and syndicators to fill, and it allowed them to participate in a wide-open environment without being overwhelmed by network competition.

Consumer groups argue that the FCC must maintain fin-syn and PTAR to fulfil its responsibility of ensuring a diversity of programming. Schwartzman of the Media Access Project says, "[Fin-syn] rules, and the integrally related prime time access rule, have worked. They are a paradigm of pro-competitive structural rules which enhance democratic values. We're better off for them."

- Katherine Isaac

Contaminated Coors

The Environmental Protection Agency (EPA), the Food and Drug Administration (FDA) and the Colorado Department of Health are investigating the safety of Coors beer and possible civil and criminal reporting violations concerning water contamination and hazardous waste discharges. For the first time ever, federal and state regulators took samples of Coors beer, the water used to make it, groundwater near the plant and a nearby creek to determine possible contamination with trichloroethane, a non- carcinogen, and tetrachloroethylene, a carcinogen. "We are looking at everything," said Dave Shelton of the Colorado Department of Health. "The most obvious violation, early on, seems to be their failure to notify [us] concerning the discharges into the river and the additional waters going into their treatment facility."

The company's knowledge of the contamination dates back to 1981, when the Adolph Coors Company first discovered "groundwater contamination under the container plant that ultimately had infiltrated a relatively few of the numerous springs used by the company as a source of its brewing water," according to a report prepared by Theodore Halaby, an attorney retained by Coors to investigate the matter. At the time, the report says, "the Board of Directors was advised by an employee (not presently employed) who was most experienced in such matters, that there was no necessity to report these circumstances to the authorities." Halaby writes that this assessment was based on the fact that "the groundwater contaminants were isolated and contained; and steps were being taken to resolve the problem; and no health or environmental risk existed."

Three years later, Coors discovered further evidence of contamination. In 1984, "some employees complained of off-taste in the drinking water in the can plant," Peter Coors, President of Adolph Coors Co., admitted in a prepared statement. In response, he said, the company "tested the drinking water fountains and discovered low levels of a noncarcinogenic cleaning solvent in the water." Still, Coors Co. did not notify the health department.

State and local environmental investigations will focus on potential violations of the Clean Water Act, the Safe Drinking Water Act, the Resource Conservation Recovery Act and the Superfund. State health department official Shelton outlined the regulators' goals: "We are trying to put together all the pieces, verify and ... find out one, if there are any current health risks; two, if we can prevent this sort of thing from happening in the future; three, if there are any violations." He added, "Our eyes aren't closed to anything at this point. .. . We aren't ruling out criminal violations."

In June 1988, an anonymous informant called the Colorado Department of Health to report possible water contamination, but it was not until then that Coors prepared a series of reports on the contamination and submitted them to the state health department.

After a Denver area reporter began investigating the contamination of Coors beer, the company revealed that in ridding the water of contaminants it was discharging them into the creek from which it takes its water.

EPA is now investigating more seriously and "looking into all possibilities," according to agency official Rich Lathrop.

Coors is concerned that publicity surrounding the contamination could hurt its business, which has built its reputation on the claim that Coors beer is made from clean water. A Coors representative acknowledged the seriousness of the situation, saying, "we aren't interested in having this all over North America ... [it could] be very damaging to our business." Peter Coors, however, sought to defuse the situation in his prepared statement. "There's one thing you must know," Coors asserted. "These issues never posed a health or safety risk to our employees, our consumers, or the community. We have worked diligently to ensure that all Coors products meet the stringent standard of quality and purity that is the hallmark of this company. We diligently monitor our water to protect its purity, and our water is as clean and fresh as it was in 1873 when Adolph Coors founded this company."

- Russell Mokhiber