Network Financial Interest and Syndication Rules

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MM Docket No. 95-39; FCC 95-382]

Network Financial Interest and Syndication Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission repealed significant portions of its financial

interest and syndication (``fin/syn'') rules, scheduled the remaining

rules for expiration, and committed itself to conducting a proceeding

six months prior to the scheduled expiration date. On April 5, 1995,

the Commission adopted a Notice of Proposed Rule Making initiating the

instant review of these rules. It also sought comment in the Notice of

Proposed Rule Making on whether to accelerate the expiration date for

the remaining rules in the event it determined that no basis had been

shown for retaining them. Having

[[Page 48908]]

considered the record before it, the Commission finds that those

parties favoring retention of the remaining fin/syn rules have failed

to meet their burden of proof, and that continuation of the rules

therefore is not justified. The intended effect of this action is to

eliminate the fin/syn rules in their entirety without delay.

EFFECTIVE DATES: Sections 73.659, 73.660, 73.661, and 73.663 are

removed effective September 21, 1995. Section 73.662 is amended

effective September 21, 1995, and removed effective August 30, 1996.

FOR FURTHER INFORMATION CONTACT:

Robert Kieschnick, (202) 739-0770, or David E. Horowitz, (202) 776-

1653, Mass Media Bureau, Policy and Rules Division.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Report and Order in MM Docket No. 95-39, FCC 95-382, adopted August 29,

1995, and released September 6, 1995. The complete text of this

document is available for inspection and copying during normal business

hours in the FCC Reference Center (room 239), 1919 M Street NW.,

Washington, DC 20554, and may be purchased from the Commission's copy

contractor, International Transcription Service (202) 857-3800, 2100 M

Street NW., Washington, DC 20037.

Synopsis of the Report and Order

1. The fin/syn rules, which were adopted in 1970 to limit network

control over television programming and thereby foster diversity of

programming through the development of diverse and antagonistic

programming sources, restricted the ability of the three established

networks (ABC, CBS, and NBC) to own and syndicate television

programming. As stated above, we initiated the instant proceeding

pursuant to our Second R&O in MM Docket No. 90-162, in which we

determined that, given competitive conditions in the television

programming marketplace, the fin/syn rules should be repealed in their

entirety. While we concluded in the Second R&O that market conditions

did not justify retention of the fin/syn restrictions, we also

determined that several critical non-market factors warranted a

staggered repeal rather than immediate elimination of all of the rules.

First, we developed a scheme to allow us to observe the operation of a

partially deregulated market for a period of time to see whether our

assessment that the networks would not act in ways detrimental to

diversity and competition following deregulation was valid. Second, a

gradual phase-out of our restrictions on active syndication in

particular appeared warranted because we considered that lifting the

restraints on such syndication posed a more significant risk of damage

to outlet diversity than that posed by lifting the other restraints, in

the event our conclusions about the reactions of the marketplace proved

wrong. Finally, we recognized that immediate elimination of all the

rules could be disruptive and have unintended and unforeseen negative

effects.

2. The rules that we retained, and which we consider here, relate

to active syndication on the part of the networks, their involvement in

the first-run non-network market, warehousing of programs, and

reporting requirements. Under these rules, the networks have been

prohibited from actively syndicating prime time entertainment network

programming or first-run non-network programs to television stations

within the United States. Any such program for which a network holds a

passive syndication right must have been syndicated domestically

through an independent syndicator. Further, networks have been

prohibited from holding or acquiring a continuing financial interest or

syndication right in any first-run, non-network program distributed in

the United States unless the network had solely produced that program.

The anti-warehousing safeguards we adopted were designed to prevent a

network from withholding prime time programs from the syndication

market for an unreasonable period of time. Finally, sem-annual

reporting requirements were imposed on the networks.

3. Both the Second R&O and the Notice were explicit that parties

who oppose the scheduled expiration of the remaining fin/syn

restrictions would bear the burden of proof in this proceeding. In the

Notice, we further explained that commenters opposing the expiration of

the rules would ``need to convince us that, based on the current status

of the program production and distribution markets and the activities

of the networks since 1993, the Commission should continue regulation

in this area. Parties arguing for retention of fin/syn restrictions

should support their positions with empirical data and economic

analysis.'' Notice at para. 12. Thus, because we determined that, as of

1993, market conditions did not justify retention of the fin/syn rules,

we made clear that those favoring retention of the rules would have to

present evidence of the networks' behavior and the status of program

production and distribution markets since that time.

4. In both the Second R&O and the Notice, we also set forth a list

of fourteen factors that we deemed relevant to our review of the

remaining rules. See Second R&O at para. 118; Notice at para. 12.

5. We find that commenters favoring retention of the remaining fin/

syn rules have failed to carry their burden of demonstrating that,

based on empirical data and economic analysis of the television program

production and distribution markets and network activities since 1993,

the rules are necessary to ensure competitive market conditions or

source and outlet diversity.

6. Certain arguments made by these commenters suggest that the

Commission must prove that repeal of the rules is justified. The

Association of Independent Television Stations, Inc. (``INTV''), for

example, argues that there is no rational basis for sunsetting the

rules, that the FCC has found that the networks have the incentive and

ability to deprive independent stations of access to syndicated

programming, and that the Commission must make contrary findings based

on substantial evidence in order to sunset the rules. We disagree.

Based on a thorough review of extensive record evidence, the Commission

concluded in the Second R&O that the development of competitive

conditions in program production and distribution markets and the

decline of network dominance warranted the total repeal of the rules.

This decision was affirmed by the Seventh Circuit. Capital Cities/ABC,

Inc. v. FCC, 29 F.3d 309 (7th Cir. 1994). Moreover, the Court warned

the FCC that only a compelling reason could justify retention of the

rules after their scheduled expiration. Id. at 316. Thus, absent such a

compelling showing on the part of those seeking to retain the rules,

there are no grounds for suggesting, as INTV does, that the Commission

must reexamine its conclusions regarding the lack of need for fin/syn

regulation.

7. The Coalition to Preserve the Financial Interest and Syndication

Rule (``Coalition'') acknowledges in its reply comments that it must

carry the burden of proof. Nonetheless, its discussion at times

suggests that the burden of proof has shifted to those favoring

expiration of the rules, i.e., the networks. Thus, the Coalition

asserts that the networks have failed to show that certain arguments

submitted and findings made in proceedings conducted prior to 1993 are

no longer valid. However, absent a showing based on post-1993 evidence

that such earlier arguments and findings

[[Page 48909]]

are valid now, the networks are not required to disprove them.

8. Proponents of retention of the rules also argue that repeal of

the rules will yield no benefits. The Coalition, for example, states

that the purpose of the instant proceeding is to test the Commission's

1993 predictions regarding the beneficial effects of repealing the

rules, and argues that, since 1993, our relaxation of the rules has not

resulted in predicted public welfare benefits. Similarly, King World

Productions, Inc. (``King World''), which focuses its comments on

first-run syndicated programming, argues that allowing the networks to

syndicate first-run programming would produce no public benefit and a

probability of harm to source diversity.

9. The purpose of this proceeding, however, is not to determine

whether any particular benefits have been realized as a result of the

partial elimination of our fin/syn rules. Rather, we provided for the

instant review of our remaining rules because we wanted to be certain

that their removal would not cause harm. Among our concerns was the

possibility that we may have erred in predicting that the networks

would not be able to abuse their position if we removed all

restrictions on syndication. However, we have already concluded, and

the Seventh Circuit has agreed, that the syndication rules are no

longer justified by the conditions of the program distribution market,

and we are concerned here only with preventing any harm that could

result if we were wrong. We anticipate that the repeal of our fin/syn

rules will have benefits over time, but our focus here is on whether or

not there is evidence that repeal will threaten diversity in the

program production and distribution markets.

10. Generally speaking, many of the pro-fin/syn arguments presented

in this proceeding are unconvincing because they rely on conclusions

reached by the Commission or others prior to 1993, or on analysis of

network behavior before that time. Proponents of retaining the rules

also rely in part on arguments that were rejected in the Second R&O.

Our Notice stated that commenters opposing the scheduled expiration of

our rules would need to present information about and analysis of

network activities and the operation of program markets since 1993.

Thus, arguments based on earlier analyses or data are irrelevant to the

instant review (unless the data are used as a comparative benchmark),

as are arguments rejected in our Second R&O.

11. We turn now to an examination of the arguments made in this

proceeding that provide data and/or economic analysis relevant to the

period from 1993 to the present. In the discussion set forth below, we

consider these arguments as they relate to the fourteen factors set

forth in the Second R&O and the Notice.

12. The extent to which a network-owned program is syndicated

primarily to that network's affiliates. The only relevant data on this

issue were submitted by those favoring elimination of the remaining

fin/syn rules. Thus, for example, the National Broadcasting Company,

Inc. (``NBC'') provides figures for its single in-house production that

has been in active first-run syndication by a third-party syndicator

since 1993, a series entitled ``News 4 Kids.'' As of May 1995, this

program was being carried on 210 stations, of which only 49--or 23%--

are either owned by or affiliated with NBC. In contrast, the proponents

of retention of the rules did not provide evidence showing that

network-owned programs are syndicated primarily to network-owned or -

affiliated stations. King World states in its comments that NBC

launched a weekly series entitled ``Memories Then and Now'' which, in

its initial season, was carried on 44 stations, 31 of which were either

owned by or affiliated with NBC. According to King World, this program

illustrates how the networks exploit their affiliates to exercise power

over the distribution system. However, the figures King World cites are

for February 1992, a period of time that is not relevant to this

proceeding except insofar as it is used to place post-1993 network

behavior into context. Moreover, even if we consider these figures as

relevant here, we note that NBC points out that ``Memories Then and

Now'' was syndicated by an independent distributor, and that King World

does not claim that NBC had any influence over the syndicator's sales

practices. According to NBC, the fact that the program was a failure in

syndication shows that NBC does not have the power over the

distribution system that King World claims. If it had such power, NBC

states, it would have been able to force sufficient clearances to make

the show a success. ABC also points out that the clearance of a program

by only 31 NBC affiliates does not show that the networks have used

their affiliates to exercise undue control over the distribution

system. Finally, we observe that no evidence was presented showing that

Fox Broadcasting Company (``Fox''), which is permitted under our rules

to engage in active syndication, has favored its affiliates in

syndicating Fox programming. We find that evaluation of fin/syn repeal

under this factor fails to support a conclusion that the networks favor

affiliates in syndicating their programs.

13. The percentage of network programming in which a network has

obtained a financial interest or syndication right. According to the

Coalition, the established networks have taken financial interests,

through either co-productions or in-house productions, ``in

approximately 40 percent of new shows picked up since the Commission

eliminated the financial interest rule in 1993.'' Coalition Comments at

17. The Coalition asserts that this figure is evidence of the exercise

of the established networks' market power in the purchase of

programming. However, the Coalition does not explain how it arrived at

this figure. Moreover, as both Capital Cities/ABC, Inc. (``ABC'') and

NBC point out, the Coalition's figure, even if valid, merely shows that

the established networks have not had a financial interest in the

majority of new shows picked up since the Commission eliminated the

financial interest rule, a circumstance that is inconsistent with the

contention that the networks have exercised undue market power. In sum,

no evidence has been presented that demonstrates that the established

networks have exercised undue market power in acquiring a financial

interest in prime time entertainment programming.

14. Further, no party has presented any evidence indicating that

the established networks have allowed their financial interests in or

syndication rights to programming aired during prime time to influence

their decisions to either retain or cancel that programming. Under our

current rules, the established networks may have both a financial

interest in and syndication rights to programming produced in-house.

NBC states that every network in-house program that premiered in the

fall of 1994 was canceled by its respective network by the end of the

broadcast season, and asserts that this fact refutes any suggestion

that the networks accord favored treatment to their in-house

productions. We find that proponents of retaining the remaining fin/syn

restrictions have not demonstrated network favoritism toward

programming in which they have a financial interest, or to which they

have syndication rights, in any way that would adversely affect

diversity within the program production market.

15. The relative change in the number of independent producers

creating and selling television shows to the networks. In its reply

comments, the Coalition suggests that data from a study

[[Page 48910]]

submitted by Economists Incorporated in comments filed in MM Docket No.

94-123, the Prime Time Access Rule (``PTAR'') proceeding, demonstrate

that ``source diversity has declined dramatically since the financial

interest rule was repealed.'' Coalition Reply Comments at 25.

Specifically, the Coalition relies on Appendix E of the study to show

that there has been a reduction in the number of suppliers of prime

time entertainment series since the 1993-94 season. This appendix lists

the packagers of programming included in the prime time schedules of

ABC, NBC, and CBS Inc. (``CBS'') from the 1969-70 season to the 1994-95

season and the percentage of prime time network programming supplied by

these packagers. Figures for the 1995-96 season are projected based on

one week of the announced fall line-up on the three networks.

Economists Incorporated defines ``packager'' for purposes of this

calculation as the entity that assumed contractual responsibility to a

network for production or delivery of a series.

16. While we agree with the Coalition that the Economists

Incorporated study indicates a decline in the number of packagers of

programming included in the prime time schedules of ABC, NBC, and CBS

from 29 in 1993-94 to 17 in the fall of 1995, we do not agree that

these figures necessarily demonstrate a reduction in source diversity

due to either the relaxation of our fin/syn rules or anticompetitive

behavior on the part of the three networks. We note that Appendix E

also shows that the number of packagers declined from 31 to 26 from

1990-91 to 1991-92, which was prior to the relaxation of our rules. We

believe that this decline, which cannot be attributed to elimination of

the financial interest rule, is instead attributable to the inherent

riskiness of prime time programming, which may also explain the change

in the number of packagers on which the Coalition comments. In

addition, we observe that the identity of the packagers listed in

Appendix E varies from year to year. This suggest that the list for any

given year does not represent all program suppliers selling to the

networks, nor can the variations in the lists be used to support a

finding that suppliers are being excluded from the market. We also

observe that Warner Brothers, which is developing a new broadcast

television network to compete with ABC, CBS, and NBC, is providing

23.33% of the prime time entertainment schedule of the three major

networks for the fall of 1995. This figure tends to discount any claim

that ABC, CBS, and NBC are trying to restrict the supply of programming

provided by competitors. In short, the information cited by the

Coalition does not demonstrate that relaxation of our fin/syn rules has

led to any reduction in the number of independent producers actively

competing to create and sell television shows to the networks. Finally,

to the extent that there has been any decline in the number of

suppliers of prime time programming, it may be due at least in part, as

CBS claims, to the major studios supplying an increased percentage of

prime time programming.

17. Concentration of ownership in the program production industry.

In connection with this factor, commenters favoring retention of the

fin/syn rules focused on levels of network ownership of prime time

entertainment programming. The Coalition asserts that the networks'

share of copyrights in such programming has increased from 29% to 35%

since repeal of the financial interest rule but does not provide

documentation for these figures. INTV contends that the percentage of

prime time entertainment series produced in-house by the networks

increased from less than 1% in 1984-85 to 7.6% in the 1993-94 season.

(We note that Economists Incorporated, upon which INTV relies, has

revised its figures of 7.6% for 1993-94 to 6.3%.) However, neither the

Coalition nor INTV establishes a clear trend toward increased network

ownership of such programming that is attributable to the relaxation of

our fin/syn rules or that constitutes a cause for concern from a public

interest standpoint. Moreover, looking at the percentages of hours of

prime time entertainment series accounted for by in-house network

production since 1993, we observe that these percentages have

fluctuated from year to year. Accordingly to NBC, in-house productions

accounted for 20.2% of the established networks' prime time

entertainment series hours in 1992-93, 19.0% of these hours in 1993-94,

25.8% of these hours in 1994-95, and 22.2% of these hours in the Fall

1995 schedule. (We note that the wide difference between the figures

cited by INTV and those cited by NBC is due to the fact that INTV's

figures refer to the percentage of the number of prime time

entertainment series produced in-house, whereas NBC's figures document

the number of hours of such programming.) Thus, we cannot say, based on

the showings made in this proceeding, that the networks have acted to

preclude the prime time programs of other producers from reaching the

market, or that program production has been concentrated in the hands

of the networks as a result of the relaxation of the fin/syn rules to

the detriment of the viewing public. Indeed, the fact that

independently owned ``packagers'' provided 80.97% of the prime time

programming hours included in the schedules of ABC, CBS, and NBC during

the 1993-94 season, provided 74.2% of these hours during the 1994-95

season, and are scheduled to provide 77.7% of these hours in the

upcoming 1995-96 season clearly demonstrates that the three established

networks are not precluding independent product from their schedules

and thereby concentrating ownership of prime time programming in their

hands.

18. Audience shares of first-run syndicated programming carried by

non-network affiliated stations during prime time. According to INTV,

expiration of the fin/syn rules will limit the ability of independent

stations to acquire first-run prime time syndicated programs. INTV

states that first-run programming accounts for only 39% of the prime

time programming of independent stations, and that this programming

``rarely achieves'' ratings comparable to the ratings of programming

shown on the networks. However, the Economists Incorporated data cited

by INTV reflect only programming aired in the top 50 markets in

November 1994, and do not include ratings information. Thus, the data

cited do not support INTV's claims. ABC notes that first-run

productions such as ``Star Trek/Deep Space Nine,'' ``Kung Fu,'' and

``The Legendary Journeys of Hercules'' have been syndicated

successfully in prime time without reliance on the networks'

affiliates. In sum, it has not been shown that competitive first-run

prime time programming is unavailable to independent stations, nor has

it been demonstrated that the repeal of our remaining fin/syn

restrictions would diminish the amount of first-run programming

available to independent stations or otherwise be detrimental to the

diversity of programs and program sources.

19. The overall business practices of emerging networks, such as

Fox, in the network television and syndication business. Although it

does not directly discuss its business practices, Fox provides

information in its reply comments about its production of prime time

programming. Fox states that it currently produces only 3\1/2\ of its

own 15 hours of prime time network programming, and that it produces a

substantial amount of programming for other networks, including

``Chicago Hope'' and ``Picket Fences'' for CBS.

[[Page 48911]]

Fox offers itself as a ``perfect laboratory model'' of a broadcast

network that has not been subject to regulatory constraints as a

producer. We believe that the fact that most of the prime time

programming aired on the Fox network is produced by outside suppliers

is evidence that permitting a network to own and syndicate programming

does not result in foreclosing independent suppliers from the market.

20. Network negotiating patterns, particularly the manner in which

networks obtain financial interests and syndication rights and the

extent to which successful negotiations over back-end rights influence

network buying decisions. While not directly addressing this issue, the

Coalition does assert that the established networks have uniformly

lowered the license fees they pay for prime time entertainment

programming. However, the Coalition cites figures without providing any

documentation. Moreover, as NBC points out, the Coalition does not

indicate in citing its figures what type of programming is involved or

the track record of the producer. As a result, we cannot assess the

significance of the Coalition's numbers. We note, too, that CBS cites

independent industry analysts as reporting that the average license

fees paid by the three major networks, as estimated on a per-hour

basis, remained virtually unchanged from the 1992-93 season through the

1994-95 season. Thus, we find that proponents of retaining the fin/syn

rules have provided no probative evidence that the established networks

have exercised undue market power since 1993 in their negotiations for

financial interests and syndication rights in television programming.

21. Mergers or acquisitions involving networks, studios, cable

systems and other program providers since our 1993 fin/syn decision

took place. CBS cites a number of mergers that have occurred since 1993

that have resulted in the formation of large new competitors in the

video production and distribution markets. Among these are the merger

of Viacom Inc., Blockbuster Entertainment Corp., and Paramount

Communications, Inc., which has resulted in a company with both

production and distribution capabilities. To the extent that such

mergers have strengthened the production and distribution capabilities

of the merging parties, the three original networks are facing more

effective competitors in the video production and distribution markets.

We note as well the recent announcements that the Walt Disney Company

plans to acquire ABC and that Westinghouse Electric Corp. plans to

purchase CBS. The Commission will, or course, be reviewing these

acquisitions in the normal course of its regulatory business to ensure

that they do not undermine the competiveness of the production and

distribution markets.

22. The growth of additional networks, including the development of

Fox and its position vis-a-vis the three major networks. In their

comments, NBC, CBS, and ABC point to the growing audience share of Fox,

and to their own declining audience share, as evidence of the

competition Fox provides to the established broadcast networks. CBS

notes that the aggregate prime time viewing share of the three original

networks, which had already fallen to 59% in 1992, dropped further to

57% in the 1993-94 season. NBC, CBS, and ABC also point to the

emergence of the United Paramount and Warner Brothers networks as

evidence of both the forward integration of existing television

programming producers into the distribution of programming through

broadcast television outlets and the increased number of potential

purchasers of television programming. INTV argues that these new

networks cannot compete effectively with the established networks

because of the structural advantages enjoyed by the latter--primarily

the number of VHF stations owned by or affiliated with the established

networks. INTV also suggests that the two newest networks have not had

a significant competitive impact because they supply only 2 to 4 hours

of weeknight prime time programming. We have, however, already decided

in our Second R&O that any structural advantages of the established

networks are no longer sufficient to allow them to dominate the program

production and distribution markets. Moreover, Fox has competed

effectively for a number of VHF affiliates and initiated a series of

affiliate switches, which have resulted in some of the established

networks having fewer, rather than more, VHF affiliates than they did

in 1993. Thus, any structural advantage that the established networks

may have had based on ownership of an affiliation with VHF stations has

been diminished rather than increased since our Second R&O. Even if the

impact of the United Paramount and Warner Brothers networks is

currently relatively small, they nonetheless appear to be viable new

competitors for the established networks and may increase their market

share as Fox has done. Given Fox's growth in audience share, as

documented by Economists Incorporated in our PTAR proceeding, and the

emergence of two additional broadcast networks, we find that the

established broadcast television networks have faced more, rather than

less, competition from broadcast television purchasers and distributors

since 1993. In keeping with this finding, we disagree with King World's

claim that the established networks have bottleneck power over the

broadcast television distribution system.

23. The growth in the number and types of alternative outlets for

sale of programming (e.g. the development of the Direct Broadcast

Satellite (``DBS'') service; cable penetration; wireless cable

development). We determined in our Second R&O that cable networks were

competitors to the established broadcast television networks in the

purchase of television programming. CBS and ABC point out in this

proceeding that there has been continued growth in the number and

audience share of not only cable networks but also other networks using

alternative distribution technologies (e.g., DBS, wireless cable), and

they cite data provided in Economists Incorporated's PTAR comments that

demonstrate the increased market share of cable networks. The Coalition

argues that cable and other services are not effective competitors to

broadcast television, and that cable and other non-broadcast networks

therefore are not effective competitors to broadcast networks. However,

we have already decided in our Second R&O that these alternative video

delivery systems provide sufficient competition with the broadcast

networks to obviate the need for fin/syn restrictions and, absent

evidence of new developments, this conclusion need not be revisited.

Moreover, based on the evidence in the record before us, we find that

the established broadcast television networks have faced more, rather

than less, competition for the acquisition of television programming

from non-broadcast television purchasers since 1993.

24. Proponents of retaining our remaining fin/syn rules have failed

to carry their burden of proof that earlier relaxation of these rules

has threatened diversity in the television program production and

distribution markets, or enabled the established networks to engage in

anticompetitive activities to the detriment of the public interest; or

that the current conditions of the production and distribution markets

warrant retention of the rules. Proponents of retaining the rules have

not provided persuasive evidence that the established networks engage

in, or

[[Page 48912]]

threaten to engage in, affiliate favoritism to the detriment of non-

network stations; that the established networks place or retain

programming in their schedules because of their financial interests in

or syndication rights to that programming, or for other than legitimate

competitive reasons; or that the established networks have reduced the

pool of suppliers of television programming through anticompetitive

practices.

25. In addition, proponents of retaining the remaining fin/syn

rules have provided no evidence unrelated to our fourteen factors that

would cause us to question whether the conclusions we reached in 1993

remain valid today. Nor have they shown that the semi-annual reports

submitted by the networks reveal ownership patterns that pose a threat

to programming diversity. Moreover, there is persuasive evidence that

the established broadcast television networks have faced increased

competition for the acquisition of television programming from

broadcast and non-broadcast television distributors since 1993, and

there is evidence which suggests that the market power of the

established networks, as determined by their prime time audience share,

has decreased since 1993. We therefore decline to alter our 1993

decision to sunset the remaining fin/syn rules. In light of the fact

that the commenters have not shown a need to retrain these rules, we

also conclude that there is no justification for strengthening any of

the rules, as the Coalition urges.

26. Finally, we note that both the Coalition and INTV urge us to

retain, and indeed strengthen, our reporting requirements for the

networks even if we allow the rest of the fin/syn rules to expire.

These parties argue that it is important for the Commission to monitor

the network's conduct following repeal of the remaining rules in order

to assess the impact of such repeal. However, neither of these

commenters has demonstrated the need to continue reporting

requirements, and we decline to do so.

27. In our Notice, we sought comment on whether, in the event

proponents of retention of the fin/syn rules failed to meet their

burden of proving that retaining the rules is warranted, we should

amend our rules to allow for an expiration date earlier than November

10, 1995. Commenters in this proceeding have failed to demonstrate that

market conditions and networks behavior since 1993 justify retraining

the rules. In addition, no evidence or argument has been submitted

showing that repeal of the remaining rules before November 10, 1995,

would disrupt the conduct of business by parties relying on the rules,

although we sought comment on this point. We also note, as discussed

above, that the networks now face more competition than in 1993 for the

acquisition of television programming from broadcast and non-broadcast

television distributors. Moreover, we have described at length the

negative effects of the fin/syn rules on production and distribution

markets in our earlier decisions. Under these circumstances, we

conclude that no public interest purpose would be served by allowing

the rules to remain in effect until November 10, 1995. We thus conclude

that all of the remaining fin/syn rules will be repealed immediately

upon publication of this Order in the Federal Register.

Final Regulatory Flexibility Analysis

28. Pursuant to the Regulatory Flexibility Act of 1980, the

Commission has set forth the following Final Regulatory Flexibility

Analysis. The Secretary shall send a copy of this Report and Order,

including the Final Regulatory Flexibility Analysis, to the Chief

Counsel for Advocacy of the Small Business Administration in accordance

with the Regulatory Flexibility Act, 4 U.S.C. Sec. 601 et seq.

29. Need for and Purpose of this Action: This action is taken to

accelerate the expiration of the Commission's remaining fin/syn rules--

previously scheduled for November 10, 1995--so that the rules will

expire upon publication of this Order in the Federal Register.

30. Summary of Issues Raised by the Public Comments in Response to

the Initial Regulatory Flexibility Analysis: None.

31. Significant Alternatives Considered and Rejected: The

Commission considered retaining the remaining fin/syn rules. However,

after reviewing the comments submitted in this proceeding, the

Commission concluded that the proponents of retaining the rules had not

met their burden of proving that the rules are still needed to achieve

the FCC's goals of source and outlet diversity in the television

programming marketplace. One commenter in this proceeding argued that

the fin/syn rules should be strengthened. The Commission considered

this argument but concluded that it was without merit in light of the

fact that no need for retaining the rules at all had been demonstrated.

The Commission also considered leaving the remaining fin/syn rules in

place until their previously scheduled expiration date of November 10,

1995, but concluded that no evidence had been presented showing that

earlier repeal would disrupt the conduct of business by parties relying

on the rules. Given the increased competition facing the networks and

the negative effects of the fin/syn rules on production and

distribution markets, the Commission concluded that no public interest

purpose would be served by waiting until November 10, 1995, to sunset

the rules.

Ordering Clauses

32. Accordingly, It Is Ordered that pursuant to the authority

contained in Sections 4(i), 4(j), 301, 303(i), 303(r), 313 and 314 of

the Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i),

154(j), 301, 303(i), 303(r), 313 and 314, Sections 73.659 through

73.663 of Part 73 of the Commission's Rules, 47 CFR Part 73, Are

Amended as set forth below, effective upon publication of this Order in

the Federal Register.

33. In keeping with our recent decision in our PTAR proceeding, It

Is Further Ordered that section 73.662 of Part 73 of the Commission's

Rules, 47 CFR Part 73, Is Further Amended as set forth below, effective

August 30, 1996.

34. It Is Further Ordered that MM Docket No. 95-39 Is Terminated.

List of Subjects in 47 CFR Part 73

Radio broadcasting.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 73 of title 47 of the Code of Federal Regulations is amended

as follows:

PART 73--RADIO BROADCAST SERVICES

1. The authority citation for part 73 continues to read as follows:

Authority: 47 U.S.C. 154, 303, 334.

2. Sections 73.659 through 73.661, and 73.663, are removed and

reserved.

3. Sections 73.662 is amended by revising the heading and

introductory text to read as follows:

73.662 Definitions for television prime time access rules.

For purposes of Sec. 73.658(k):

* * * * *

4. Effective August 30, 1996, Sec. 73.662 is removed and reserved.

[FR Doc. 95-23366 Filed 9-20-95; 8:45 am]

BILLING CODE 6712-01-M