Networks Fight Studios for Rights Changing Stakes in Program Syndication Could Make or Break Networks Financially. TELEVISION INDUSTRY

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WHAT has been called "the battle of the titans" - between Hollywood studios and the three television networks - has created a serious split within the Federal Communications Commission (FCC).

Now, the verbal sparring is in its final phase, and an FCC decision is anticipated as early as next Tuesday.

The long and bitter controversy is over the Financial Interest and Syndication Rules, established in 1970 to answer concerns about the crushing powers television networks had at the time, and their sometimes arbitrary treatment of independent producers.

The rules - generally referred to as Fin-Syn - prevent the networks from owning even a partial interest in the shows which they commission from producers. Networks cannot syndicate shows domestically (though they are free to do so abroad) and they are strictly limited in the number of prime time shows they can produce on their own.

All this might be shrugged off as no more than an intra-industry tiff, were it not that the syndication business is worth $3 billion domestically plus $2 billion more internationally a year. The networks are arguing that considering their losses over the past year of both audiences and advertisers to cable, video sales, and the recession, the outcome of the Fin-Syn argument might well determine their survival.

On the other side, giving the networks permission to handle program reruns domestically would unquestionably have a devastating financial impact on many companies in the syndication business.

The effect that lifting the Fin-Syn Rules - or partially lifting them - would have on the average television viewer is difficult to determine. At first glance, the changes seem unlikely to affect program content or quality. But the changes would be felt if the loosening of the rules drastically changes business conditions in either the film or television industries.

Once before, in 1983, the FCC stood ready to make a decision on Fin-Syn. Arguing that the rules were no longer necessary, the FCC was prepared to rescind Fin-Syn, but the commission was overruled by then-President Reagan.

More recently, Alfred Sikes, the FCC chairman, backed up by the FCC staff, publicly made it clear that, times and conditions having changed, he favored rescinding of Fin-Syn.

Howls of protests came from the studios, who currently contribute some 70 percent of all filmed network programming.

A few weeks ago, it became clear that the FCC, presumed to be in favor of the networks, was actually split 3 to 2 in favor of Hollywood and only a partial lifting of Fin-Syn.

The pro-studio majority on the FCC was interested in a proposal by commissioner Andrew Barrett that would keep much of Fin-Syn intact. …