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The demise of the network program ownership rules unloosed fear and greed-and transformed the TV business
Fear. That was the overwhelming feeling in Hollywood in late 1992, when a federal court ruled that the financial interest and syndication rules no longer made sense and put them on the path to gradual repeal over three years. The so-called finsyn rules barred the broadcast networks from owning prime time programming and syndicating it among TV stations and cable networks. Without the prohibitions, Hollywood feared, broadcast networks would eventually take over its business.
The elimination of the rules has transformed television in profound and lasting ways over the past seven years. And it was that fear that triggered many of the changes, at least initially.
Worried that they would have no outlet for their programming, Warner Bros. and Paramount launched their own broadcast networks in 1995. Warner Bros. gave American viewers The WB, in partnership with Tribune; Paramount, UPN, in partnership with the Chris-Craft TV stations group. And figuring it was better to eat than be eaten, Disney gobbled up Capital Cities/ABC in 1996 in a $19 billion merger.
"I would never have started The WB if the financial interest rules were not repealed," said Robert Daly, former chief executive officer of Warner Bros. I knew that eventually it would be harder and harder to get shows on the networks that they didn't own a piece of or control."
The other catalyst was greed. Freed of the restrictions, ABC, CBS and NBC tried to capitalize on the new opportunities. To varying degrees, they have entered the production and syndication businesses and demanded ownership stakes in shows that would guarantee them a share of syndication revenue.
The post-fin-syn restructuring of the TV business took two more major steps last year. First, CBS agreed to acquire King World, a major syndicator, for $2.5 billion, and then it agreed to a $36 billion merger with Paramount. That leaves only NBC without a major Hollywood studio connection.
It is a new world, one reflected in the new networks, the new entertainment mega-companies and virtually every contract for the production of a prime time show. But with seven years of perspective, it's clear that Hollywood's fears of network dominance were unfounded, as...