In the Matter of CONSIDERATION OF THE OPERATION OF, AND POSSIBLE CHANGES IN, THE "PRIME TIME ACCESS RULE", SECTION 73,658(k) OF THE COMMISSION'S RULES PETITIONS OF: NATIONAL BROADCASTING CO

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In the Matter of CONSIDERATION OF THE OPERATION OF, AND POSSIBLE CHANGES IN, THE "PRIME TIME ACCESS RULE", SECTION 73,658(k) OF THE COMMISSION'S RULES PETITIONS OF: NATIONAL BROADCASTING CO., INC. (NBC) MIDLAND TELEVISION CORP. (KMTC, SPRINGFIELD, MO.) KINGSTIP COMMUNICATIONS, INC. (KHFI-TV, AUSTIN, TEX.) (FOR DELETION OF THE RULE) MCA, INC. (TO PERMIT USE OF "OFF-NETWORK" MATERIAL PLUS 25 PERCENT NEW MATERIAL)

Docket No. 19622 RM-1967, RM-1935, RM-1940, RM-1929

FEDERAL COMMUNICATIONS COMMISSION

37 F.C.C.2d 900

RELEASE-NUMBER: FCC 72-957

October 30, 1972 Released; Adopted October 26, 1972

JUDGES:

BY THE COMMISSION: COMMISSIONERS ROBERT E. LEE AND H. REX LEE CONCURRING AND ISSUING STATEMENTS; COMMISSIONERS JOHNSON AND HOOKS CONCURRING IN PART AND DISSENTING IN PART AND ISSUING STATEMENTS.

OPINION:

[*900] I. INTRODUCTION AND DISCUSSION

A. Introduction

1. In this proceeding, the Commission seeks information as to the effect and operation of Section 73.658(k) of its Rules -- the "prime time access rule" -- and invites comments on changes in that regulation which may be appropriate for the future. The categories of information sought, and possible changes, are discussed at some length below. One matter should be clarified at the outset: while "possible changes" include repeal of the rule, the institution of this proceeding does not represent a Commission view at this time that the rule should be repealed, now or later. See par. 15, below.

2. Section 73.658(k) was adopted in the Report and Order in Docket 12782, May 1970 (23 FCC 2d 382, 18 R.R. 2d 1825). It was affirmed generally on reconsideration in August 1970 (25 FCC 2d 318, 19 R.R. 2d 1869). In general, it provides that after October 1, 1971, network-affiliated stations in the "top 50 markets" may present, during the four hours of "prime time" each evening, no more than three hours of material from the three national networks, ABC, CBS, and NBC. Effective October 1, 1972, subparagraph (k)(3) of the rule provides that the time thus cleared of network programs (i.e., one hour a night, generally [*901] the hour from 7 to 8 p.m. E.T. and P.T., 6 p.m. C.T. and M.T.) may not be filled with "off-network" material(programs which have appeared on one of the three networks) or feature films which have been shown by a station in the market within the past two years. Thus, in effect, one hour of prime time each night must be devoted to material which is neither network programming nor in one of these other categories. n1 The basic purpose of the adoption of the rule was set forth as follows (23 FCC 2d 395-396, par. 23, 18 R.R. 2d 1844):

n1 At the same time as the "prime time access rule", the Commission also adopted other restrictions on the three networks, contained in Section 73.658(j) and sometimes called the "syndication" and "financial interest" rules. These sharply restrict the extent to which these organizations may engage in the non-network distribution of TV programs, or "syndication", or acquire interest in TV programs other than the right to network exhibition. These rules are not directly involved in the present proceeding. The "prime time access rule" applies by its terms only to the top 50 markets. However, the networks decided that, as a matter of business judgment, they could not continue to present more than three hours of prime-time programs for the rest of the country if barred from access to their affiliated stations in the top 50 markets for more than that amount of prime time. Therefore, network prime-time schedules have been cut back to 3 hours a night across the board, generally a half-hour less than had previously been programmed by them.

We believe this modest action will provide a healthy impetus to the development of independent program sources, with concomitant benefits in an increased supply of programs for independent (and, indeed affiliated) stations. The entire development of UHF should be benefited... It may also be hoped that diversity of program ideas may be encouraged by removing the three-network funnel for this half hour of programming. In light of the unequal competitive situation now obtaining, we do not believe this action can fairly be considered "anticompetitive" where the market is being opened through a limitation upon supply by three dominant companies...:

3. Among the matters to be considered herein are the various petitions listed above. n2 We shall describe briefly the petitions and oppositions thereto, and then set forth the Commission's purposes in this proceeding, dealing with the prime time access rule and the "access period." n3

n2 Three of the petitions seek, in effect, repeal of the rule -- those of NBC and the two individual stations listed, both UHF stations in comparatively small "intermixed" markets. These three petitions have been supported by some individual station licensees (not all of Company, Inc. (Westinghouse, a large station owner and supplier of non-network program material, and long one of the chief proponents of the rule) and by American Broadcasting Companies, Inc. (ABC) insofar as NBC seeks rule-making looking toward early repeal of the rule. Hughes Sports Network also opposed the two UHF petitions.

n3 The term "access period" is used herein to refer to the portion of prime time which is generally cleared of network programs in the top 50 markets, as the rule operates. For the 1971-72 season, this has included all nights from 7 to 7:30 p.m. E.T. and P.T. (6-6:30 p.m. C.T.); 7:30-8 p.m. E.T. (6:30-7 p.m. C.T.) except for all networks' affiliates on Tuesday nights and CBS and NBC affiliates on Sunday nights; and 10:30-11 p.m. E.T. (9:30-10 p.m. C.T.) for CBS and NBC affiliates on Tuesday, ABC affiliates on Wednesdays, NBC stations on Fridays, and CBS affiliates on Sundays. There are a number of exceptions to this general pattern.

For 1972-73, the "access period" will be more uniform as far as nights of the week are concerned, being 7-8 p.m. E.T. and P.T. (6-7 p.m. C.T.) on all nights for ABC stations and all but Sundays on CBS and NBC; and, on Sundays, 7-7:30 p.m. and 10:30-11 p.m. for CBS and NBC affiliates.

4. Another pending petition to limit use of TV "re-runs" generally. This proceeding does not directly involve the subject-matter of another recently filed petition, that by Mr. Bernard Balmuth and a group called S.T.O.P. (Save Television Original Programming), asking for a general rule limiting use of prime-time repeat material on network owned or network-affiliated stations to 25% of the broadcast year (RM-1977). This petition, which has drawn substantial support and opposition, will be considered by the Commission in the near future. [*902] It is not to be considered in the present proceeding, as such, but the two are clearly related to a degree; for example, the feasibility of developing and producing a given non-network series could vary depending on whether the supplier must furnish 39 individual programs (75% of 52 weeks) or may get by with as few as 26 (50%) or perhaps even less. We merely call attention here to the pendency of this petition, and to the fact that it may be appropriate to give this subject consideration in rulemaking. Parties may wish to prepare their comments herein with this in mind.

B. The Petitions for Rule Making

5. As mentioned, three of the above-captioned petitions for rule-making -- those of NBC and two UHF stations in comparatively small "intermixed" markets -- seek repeal of the rule, the two individual petitions both apparently asking it for this coming year, 1972-73, and NBC envisioning it in time for the 1973-74 season. NBC asks the Commission to initiate forthwith a Notice of Proposed Rule Making broad enough to include rescission of the rule, to develop on an expedited basis the facts as to how the rule is operating, and to convene a conference among members of the staff and all interested parties, to devise methods to obtain this material promptly and completely. NBC's argument relates largely to the asserted decline in the television audience in the 7:30-8 p.m. (E.T.) period, compared to what it has been when network programs were presented then, assertedly 7% in the top 50 markets and 6% elsewhere, compared to no change or some increase for the remainder of prime time (and also an increase for Tuesdays, when the networks have begun their programming at 7:30 following the waiver to ABC). n4 While NBC recognizes that part of the audience change has been a shift to independent stations from network affiliates, it asserts that, as the above figures show:

n4 Other sources discussing this subject, including Westinghouse Broadcasting Co. in opposing the petition, claim lesser audience-loss figures, such as 4% or 2% over-all for the 7:30-8 p.m. period. It appears unquestionable that, in markets where there are independent stations as well as network affiliates, there has been a shift in viewing during this period away from the affiliates to the independents. ... the preference for network programming is so strong that millions of viewers would rather not watch television at all than watch non-network programming.

Therefore, it is claimed, as shown by the other two petitions, stations are adversely affected, particularly those in small markets which always have had narrower margins. NBC also claims that the rule has not been and will not yield benefits in terms of an expanded production of quality first-run material, or of increased diversity of programming. It is claimed that there are very few new producers, and that many, and the most successful, "first-run" programs are those which are continuations or revivals of network prime-time or daytime material (Hee Haw, Lawrence Welk, Wild Kingdom, Let's Make a Deal, To Tell the Truth, Truth or Consequences, What's My Line and Juvenile Jury are cited as examples). A study by an advertising agency of November 1971 non-network programming (7:30-8 p.m. E.T.) is cited, giving for the top 10 programs in audience two off-network [*903] series, five continuations of network series, two revivals, and only one entirely new series (Primus), with only one of them reaching an audience as large as the tenth-rated 7:30-8 p.m. network program of the previous year, High Chaparral.

6. Westinghouse Broadcasting Company, Inc. (Westinghouse), which is both a large multiple TV and radio owner and an extensive supplier of syndicated material, vigorously opposes the NBC petition, as premature and unsupported. It is urged that as far as gathering information is concerned, a new proceeding is unnecessary; Docket 12782, which was not closed out, can be re-opened for this purpose; and that adoption of the proposal will have a most discouraging effect on the development of non-network material, and in fact will "make a mockery" of the full and fair test which the rule is supposed to have this coming year, adding to the uncertainty which already unfortunately prevails and which has a depressing effect on the program-production activity. Westinghouse asserts that despite NBC's criticism of the course of non-network program development, it list 32 new first-run series, of which several are properly regarded as truly innovative (cited are Westinghouse's Doctor in the House, David Frost Revue and Norman Corwin Presents, Primus from Metromedia, and Story Theatre and Rollin's on the River from Winters-Rosen). Westinghouse claims that this is a good record, particularly in view of the adverse circumstances which prevailed (the uncertainly as to the rule itself until it was affirmed on appeal in May 1971, which gave producers little time before the fall season, and the exemption to permit use of "off-network" material) and the industry's traditional preference for proven and successful program ideas. ABC's arguments in opposition to a rule-making (through not to the gathering of information) are much the same as those of Westinghouse; it is said that development of a viable first-run syndicated programming market may well require innovation, and that "innovation typically follows from experimentation; and experimentation requires time." In short, it will be several years before a really sound judgment can be reached as to the success of the rule, or lack of it; and that meanwhile the Commission can best maximize the chances for success by going on record to the effect that the Rule will be given a reasonable opportunity -- not "one "one year of full effectiveness under the 'gun' of a repeal proceeding." n5

n5 ABC asserts that the lower audience mentioned by NBC may reflect largely the presentation of "off-network" material during the access period -- naturally, people prefer present network programming to former network programming.

Hughes Sports Network, opposing the two UHF petitions although not that of NBC, briefly urged some of the same arguments as Westinghouse and ABC, including the assertedly "premature" nature of any proceeding at this time.

7. In reply, NBC added somewhat to some of its earlier arguments. It stated that 1972-73 is as good a "test" year as any, and that the pendency of a rule-making proceeding can have no adverse effect on the results of such a test, since the programming which is available will already have been planned and largely produced, before the fall season begins.

8. The petitions by the two UHF stations mentioned, essentially similar to each other, emphasize the "economic injury" argument urged [*904] by NBC, particularly with respect to their own situations as UHF stations in intermixed markets, at a competitive disadvantage vis-a-vis the VHF stations in the same markets (two in Springfield, Mo., one in Austin, Texas). They claim that they are able to survive as long as they have the exclusive right to present a full line-up of one of the three networks in their areas; but with the "access rule" cutback, they are seriously injured, through loss of the network revenues which they formerly receiver for the time involved and through having to pay the costs of programming the time themselves. It is said that, with the lower audience which is obtainable for the non-network material (particularly with the greater problems in tuning UHF to being with), the small revenues they obtain from selling the time on a non-network basis do not being to compensate for these increased costs. The point is also made that, with non-network material being extremely costly, they cannot compete for desirable "access time" programs with their VHF competitors. Hughes Sports Network opposed these filings.

9. The MCA, Inc. petition. The petition of MCA, Inc. (RM-1929) looked toward the adoption of rules (in time for the 1972-73 season) under which material would comply with the "off-network" restrictions of the rule if it consisted of "off-network" material plus about 25% new material (4 programs out of 13, 7 out of 26, etc.). MCA urged this as a measure to permit more production of new non-network material of quality, by eliminating some of the tremendous costs and risks involved in an entire new series. It was claimed that this would mean more good-quality material, at lower cost and thus more easily available to stations, particularly those in small markets and UHF stations in intermixed markets, which often have limited resources. MCA has long been a vigorous opponent of the rule, and expressed here its doubts as to its merits; but it stated that this is one small step which the Commission can, and should, take quickly to ease part of the problem. The Commission denied this petition in April 1972 ( Petition of MCA, Inc., 34 FCC 2d 825, 24 R.R. 2d 1771). n6 The chief basis of decision was that the petition -- which sought a change in time for the 1972-73 year -- was premature.

n6 In its present rule-making petition, NBC mentions the MCA petition and asserts that, if the Commission is going to give consideration to this type of change in the rule, it might well give consideration also to letting new network material back into the cleared time, rather than older "off-network" programming.

C. The reasons for this proceeding and the Commission's views on it.

10. There is clearly a need for a proceeding dealing with the prime time access rule. First, there is the need to gather information about how the rule is working, both as compared to no rule and as compared to how it would work with various changes discussed herein. As to the propriety of gathering such information that this time, there appears little room from argument, and, indeed, no party really contests this. This Commission has some degree of obligation to conduct a continuing examination into the effect of any of its rules; and this is particularly true where, as here, the rule represents a breakthrough into a new area of regulation, previously not subject to rules or restrictions. It is [*905] especially true here because of the degree of controversy which surrounded the rule both before and since its adoption. Also, we expressed in our decision in Docket 12782 the belief that the rule should and would be examined from time to time, to see what changes, if any, should be made in it. Therefore some gathering of information is clearly in order. This could be done in Docket 12782; but that proceeding is over 10 years old and a great volume of material has been accumulated in it. We believe it preferable, from the standpoint of reaching prompt decisions herein, to call for the submission of the new, current material in a new proceeding. However, Docket 12782 has not been closed out, and the material therein is rather readily available; we will accept comments referring to it just as if the material were re-submitted herein.

11. Also, as far as the information-gathering may be "premature", we recognize that information for the 1972-73 year, which is what basically will be involved here, may not be as favorable to the rule as that for some later period, when more of the necessary adjustments and developments involved have occurred. However, we believe that, if allowance is made for further developments, as commenting parties are urged to outline in as much detail as is now possible, a fairly accurate idea of the rule's prospects can be obtained at this point. We will make such allowances in reaching any decision herein.

12. There is a second clear basis for this proceeding: the apparent need for certain changes in the rule if it is to operate in the public interest to the maximum extent. These include some of a more or less mechanical nature, to ease the burden on affected parties and the Commission, and others of a more substantial nature. The need for changes, as outlined herein, does not need much elaboration. The rule in its application and administration has given rise to a very large number of waiver requests, which have been a burden to the parties involved and to us. It is, obviously, highly desirable to eliminate the need for many of these, by adopting general rules which more nearly fit the range of situations which are involved. The sports area is one example of situations where a general rule would appear feasible and much preferable to present practice. Probably of more basic significance are areas such as the "off-network" situations, where it is questionable whether the rule if literally applied would serve the public interest, and where, at the same time, any deviation from it on an ad hoc basis appears to give problems. Moreover, apart from the specific problems in various areas which have arisen, there is a more general consideration. No "new rule", such as this one, can be expected to be 100% sound and correct when it is first adopted. After a year's experience under it, it is appropriate to see how it is working and make those changes which appear appropriate.

13. Thus, in view of the above considerations, an over-all proceeding is warranted at this time. We have decided to include in that proceeding the question of whether the rule should be retained or rescinded. Three of the petitions before us, listed above, have raised this question, and in our view these can best be disposed of in the context of this proceeding, and particularly in light of the information gleaned through [*906] it. In any overview such as this, we should have flexibility to take any and all actions which the record may show to be in the public interest. Moreover, we see no adverse consequence from proceeding in this fashion. The programming for the 1972-73 season will not be affected because, as NBC points out, it is already "set", or virtually so. As to the effect on the future, particularly the 1973-74 season, the short answer is that we plan to gather the data and dispose of the basic issues raised by the petitions on a prompt basis -- in early 1973, and before there can be too much of an untoward effect on the 1973-74 season.

14. Indeed, from the point of view of the proponents of the rule, this approach should be advantageous, because -- if the review is favorable to the rule -- it will remove any cloud over it, not only for the next year but quite likely for several years to come. To put it otherwise, there must be an overview, in light of the nature of the rule and need for at least some changes in it, and, that being so, it is better to effect the overview at this point and "get this matter behind us." As to the timing of this examination, the "off-network" and "feature film" provisions of Section 73.658(k) (3) will now be in effect, and we should be able to get a good indication of the rule's prospects. As stated, we will make due allowance for the fact that the rule is still fairly new, so that perhaps it has not yet reached its full potential. Parties are urged to comment, in as much specific detail as possible, on what significance should be attached to the fact that the rule is still rather new, and any related uncertainties.

15. We make one final point -- although it should be unnecessary. The Commission has not adopted any decision or view, even of a tentative nature, as to the desirability of rescinding the rule. It would be wholly wrong for us to do so, when the 1972-73 year is just getting under way and there is no data before us as to the efficacy of the rule under full conditions, i.e., with Section 73.658(k) (3) in effect. Indeed, we stress that the presumption is the other way: the Commission has a rule which is now going into full effect, and there is thus a clear and considerable burden upon the opponents to demonstrate that, in actual operation, the rule will not serve the public interest, particularly in light of the purposes set forth in paragraph 2, above. This proceeding gives interested parties an opportunity to make showings on this critical issue, and thus facilitate an informed Commission decision. In light of the petitions and other circumstances, nothing less would be appropriate, but nothing more is to be inferred from what is simply a sound and fair way to proceed to the disposition of significant pending petitions.

II. SPECIFIC INFORMATION REQUESTED AND SUBJECTS INVOLVED

A. Information Sought

16. As mentioned, one of the most important purposes of this proceeding is to gather information about the operation of the prime time access rule, both in relation to the changes proposed herein (including rescission of the rule), and generally for the Commission's guidance as to the future. What is sought is information as to effect [*907] and impact -- from the operation of the rule as compared to operation without it, and from the various modifications considered herein (and past waiver actions) as compared to operation under the rule as now in effect. The effect on future development is also highly important. The specific points covered below are all subsidiary to that general objective. The information sought falls into two general areas: programming information and economic information, the latter involving three aspects -- the impact on stations, the economics of program production and distribution, and the effect on the program production business. In both areas, the Commission expects to rely partly on data other than that submitted in comments, as discussed below; but unquestionably commenting parties can be of considerable assistance if their information is specific and complete.

17. Programming data. With respect to programming, the Commission intends to rely partly on data contained in TV Guide for the various parts of the county, and also American Research Bureau (ARB) audience survey material, which lists the programs presented by stations covered (e.g., May 1972). However, this data is not always completely informative as to the nature of the program; we hope that as many TV station licensees as possible will present information in this area (including the networks, both as networks and as station licensees). As mentioned, the primary objective is to obtain information as to the effect and impact of the rule or possible changes in it (or waivers of it). n7 The specific information sought is as follows:

n7 While this investigation relates largely to "top 50 markets" network-affiliated stations, other stations are invited to comment, since the rule in practice has had an effect "across the board."

(a) The programs that the station has been presenting in the "access periods" during 1971-72, will present in 1972-73, and will present further in the future as far as it can be projected: (1) under the rule basically as it now stands; (2) if there were no "prime time access rule"; n8 (3) with various changes in the rule, including adoption of a "21 hours a week" standard, possible relaxation to permit some use of "off-network" material as part of regular program series or for individual programs or short series, and others mentioned herein. We hope licensees will submit enough information to give an idea of the nature of the program as well as its title, in particular (except for network programs and the better-known syndicated programs) whether it is locally originated or syndicated, and the program type. The three networks are expected to indicate, as best they can at this point, what programs they would be presenting as network material in 1972-73 and later years, during the "access periods", if this time were available to them.

(b) What has been and would be the effect, in terms of the presentation of and demand for new syndicated or local programming (and on the incentive to produce such material) of one or more of the following:

[*908] (1) grant of waiver to stations in the top 50 markets to carry network news at the beginning of prime time without having it count toward the permissible three hours, if preceded by a full hour of local news.

(2) grant of waiver to the networks to present one-time news and public affairs programs without counting in the permissible three hours; on a more general exemption for programming of these types. n9

(3) Change to a "21 hours a week" standard instead of three hours a night, either completely or partly, such as allowing a small amount of occasional deviation to "make up" network programs lost through preemption, or to clear a one-hour segment between news and network programs, or permitting flexibility within the 21-hour framework provided at least a half-hour of non-network material is presented each night.

(4) permitting generally (or refusing to permit) sports "runover" waivers, for example games in the late afternoon running, somewhat past 7 p.m. E.T.; or permitting presentation without limit of a small number of important events such as the Olympic games. n10

(5) Changes in Section 73.658(k) (3), including: (1) relaxing the "off-network" restrictions with respect to individual "special" programs or short series, or generally permitting as much as 25% of a series to be old material, or a considerably higher percentage such as urged by MCA, Inc. in RM-1929; and changes in the "feature film" provisions as mentioned in paragraph 41, below. n11

(6) Providing that, as far as the Mountain and Pacific time zones are concerned, a program schedule will meet the rule if it complies with the three hour restriction in the Eastern and Central time zones.

(c) What non-network programming (syndicated or local), intended for carriage during the "access periods", will be available to stations during the 1972-73 season? We hope that program producers and syndicators, and station licensees as to local material, will give full and reasonably specific information in this respect.

(d) To the extent the basic concept of the rule -- limitation to three hours of prime-time network programming, and thus promotion of independent program sources -- is not working in optimum fashion to further the public interest, how would the situation be either improved or worsened by substantial liberalization of the "off-network" restrictions, for example, as urged by MCA, Inc., in RM-1929?

n8 If there is no other information indicating what would be the station's practice in the absence of the rule, it may show its programming for the 1970-71 season, the last before the rule became effective.

n9 This question is regarded as particularly important because the availability of such material is an essential ingredient of broadcasting in the public interest, and at the same time diversity of viewpoints is also highly significant. Commenting parties are asked to indicate how much such material is available from non-network sources, or is likely to be in the future, and how this would be affected by our action here.

n10 We are particularly interested in what effect an occasional "runover", to the extent of 10 minutes or so, actually has on what the station presents in the following hour -- whether it presents the same non-network programs it would have otherwise but simply "clips" them, or whether it substitutes other material, and if so what.

n11 See paragraph 48 below, concerning four recent decisions in the "off-network" area as to which parties may wish to comment.

[*909] 18. Possible criteria for evaluating program "diversity" and similar matters. One of the primary purposes of the rule was to promote diversity of program sources and ideas (see paragraph 2, above). We therefore seek information on this subject, particularly how the rule works in practice in this respect. In addition to its general meaning -- the extent to which material is different from other material presented in the market currently or in the recent past -- this concept could have a number of different particular aspects:

(a) programming which is of a different type from most other programming fare, for example, the factual-fictional distinction made in the Wild Kingdom and Lassie decisions;

(b) the number of times, if any, that the exact same program has been presented in the market, at least in recent years, for example only once earlier on the network as opposed to two or more times;

(d) the extent to which the material, while never itself shown before, is simply a continuation of a series which has already run in the market (on a network or non-network basis) to the extent of hundreds of generally similar episodes. There are doubtless other specific aspects.

19. Another related but much more difficult matter is being advanced -- that of "program quality". For instance, MCA Inc. in its petition asserts that the non-network material being presented in the access period is "of shoddy and inferior quality." n12 The Commission has traditionally, and wisely, eschewed the role of being a judge of the "quality" of programming. We therefore have great difficulty in evaluating this aspect of the present matter. Interested parties are of course free to submit -- and if they treat this subject at all, we hope that they will submit -- showings making objective points in this regard. We ourselves have not formulated any objective standards for making "quality" judgments, and do not now perceive the basis for doing so. Thus, factors such as ratings, comparative production costs, and critical favor (or lack of it), while obviously relevant to the issue, have never been regarded as reliably and objectively determinative of the issue of "quality" or what is "superior" or "inferior" program material. As indicated, parties advancing arguments along these lines are urged to do so on some kind of objective basis.

n12 Obviously, what is generally involved here is comparative quality, non-network "access period" material vis-a-vis the network material which would be shown then in the absence of the rule. This raises the question of what network programming should be used as a basis of comparison (for example, a good deal of it does not last as long as one season).

20. Economic data: effect on stations. n13 As indicated above, one of the chief lines of argument against the rule is the asserted adverse economic effects on stations, perhaps particularly small-market stations and UHF stations (e.g., the two petitioners mentioned here, in intermixed markets). Initially, we stress that "economic injury" considerations are pertinent only where they have consequences significantly [*910] impairing licensees' ability to operate in the public interest. The Act does not guarantee any level of profitability.

n13 The stations referred to here are not only, or even primarily, the stations in the top 50 markets which are literally covered by the rule. With the cutback in network schedules across the board, stations in other markets are affected also.

21. There are certain problems inherent in attempting to get this type of information in public comments. First, to be of probative value, either economic data concerning impact on stations must include data for all stations -- the "universe" -- or it must include data from a representative and scientifically valid sample of that universe. There is no assurance that comments in themselves will provide either of these. Second, there is sometimes, and might be here, an understandable reluctance on the part of the licensees to "bleed in public", even if substantially impacted economically. Therefore, it is necessary to take steps to assure that the material in this area on which decision is reached is complete and valid, even if it means going beyond what is publicly filed. Also, of course, it is desirable to set forth certain guidelines with respect to material which is filed publicly, to make sure that it is complete and probative. n14

n14 An example of the type of problem which may arise in this connection is the petition by the Springfield, Mo. UHF licensee (RM-1935). This party set forth figures as to what it has lost in network compensation through the cutback ($112.50 weekly); and the costs for the non-network programming it has to buy instead ($172.50 in expenditures, plus $55 freight charge, plus $300 in commercial positions given for "barter" programs). On this basis, it estimated that the rule was costing it $640 a week, or over $33,000 a year. However, it did not state what revenue it receives from the sale of its non-network time during the access period, simply asserting that it has had a 26% audience loss for the 6:30-7 p.m. (C.T.) period, and that its revenues from the sale of this time on a non-network basis did not amount to recovery of the increased costs. Obviously, the material in the petition does not give a complete picture. This material was supplemented by petitioner and counsel after a Commission staff inquiry.

In general, commercial time given in "barter" programs is not properly includable as a cost item in this analysis, since it is reflected in the reduced revenue received for a non-network program when only part of the commercial time in it is available to the station to sell. However, stations may make a showing in this respect if they wish, since, if a substantial amount of the commercial time in a program must often be given to the program supplier, it represents an inherent limitation on the return which the station can expect from the program.

22. The following provisions indicate what is expected of parties filing herein concerning the economic impact of the rule on their stations, and what may be required in addition to the comment material:

(a) Comments by licensees claiming adverse economic impact on their stations, if they wish to have their claims given serious consideration, must make a complete showing therein as to the "access periods", i.e., those periods when they presented non-network programs but would have presented network material if the networks had continued their 1970-71 prime time pattern: This shall include exact data as to revenues from network programming and non-network programs, and the costs of the latter (including outright costs, and transportation or other charges, if any), for the 9-month period from October 1, 1971 through June 30, 1972. If effect on the value of "adjacencies" is claimed, this must be accompanied by data as to how much was so received in 1970-71, and how much was in fact received, for the same 9-month period.

(b) Parties filing comments raising "economic injury" arguments need not necessarily show in their comments the complete picture as to the station's revenues, expenses, and profit or loss; [*911] but they must be prepared to file immediately after their comments, if it is requested, an FCC Form 324 giving this data for the 9-month period mentioned above. This will be handled subject to the usual provisions as to confidentiality governing Forms 324.

(c) At some point, it may be necessary to inquire of all commercial television licensees, or at least all of those which are network affiliates in markets having at least three stations, as to data concerning the financial effect of the rule on them. This inquiry, which would require clearance by the Office of Management and Budget, is not being instituted at this time, but may later be instituted this year if it appears necessary on the basis of the comments filed.

23. Economic data: the economics of program production and distribution. One of the most common lines of argument against the rule is that, with networking being a very efficient mechanism and much the cheapest way of distributing programming and supplying advertising support for it, any alternative method of program supply entails more money for distribution and less for production, and, therefore, lower quality, particularly because of the very high and increasing costs of such production. Related is the argument that, with these high costs and with the risks involved in the non-acceptance of programs by the public and station customers, the networks are among the very few parties who can afford the risks involved in production of good-quality material. These arguments were, of course, considered at length in the Docket 12782 proceeding which led to adoption and affirmance of the rule. We have no intention of instituting a new or long and exhaustive re-exploration of the subject. On the other hand, we would certainly welcome and take into account new data in this area, if offered within the time frame of this proceeding as indicated below.

24. We seek data on subjects like the following:

(a) What actually is the cost of producing "good-quality" programming, both network and non-network (syndicated or local) either per episode or total? (Figures in the previous record in Docket 12782 have contained a rather wide variety of figures).

(b) To what extent is program quality related to production costs, and, specifically, how (higher salaries for better people, more processing and therefore more technicians, etc.).

(c) What are the comparative costs of distribution of network programming and non-network syndicated material, and, with the latter, of securing advertising support for it?

(d) To what extent is it realistic to assume that there is a fixed sum of money available for the whole program-supply process, so that if more goes into distribution, less is available for production?

(e) To what extent do the higher costs and risks involved in non-network production and distribution (if they are higher) mean that prime time programming is going to be of a type cheaper to produce, such as so-called "game shows", rather than the material which has previously characterized prime time?

25. Economic data: effect on the program production industry and employment therein. As indicated in paragraph 2, above, a main purpose of the rule was to provide a healthy production industry, able to supply independent programming. One of the arguments against the rule is the assertedly depressing effect on the U.S. program-production [*912] industry. While the factual basis of such arguments is not always completely clear, it appears to consist chiefly of two actual or potential lines of development: (1) the substantial extent to which, to keep costs down, "access period" non-network material consists of material originating, or at least produced, outside the U.S.; and (2) the extent to which access-period non-network material is of a sort sometimes called "game shows" -- relatively inexpensive material similar to (often a continuation of) programs which have appeared on daytime television -- rather than the sort of material which is characteristic of network prime time television. Comments on this subject are invited.

B. Specific proposals on which comments are invited.

26. In the following paragraphs, comments are invited on specific proposals; under each topic, the proposals are set forth first, followed by a brief discussion of the pertinent considerations. Usually, they are on a "one or more" basis, i.e., one, or more than one, of the suggestions might be adopted if it appears in the public interest.

27. Initially, one point should be stressed. Putting forth a proposal for comment herein does not mean that the Commission necessarily has a view, even tentatively, that it should be adopted. It simply indicates our view that the proposal should be considered in light of the comments and data received in the proceeding. Further, on some of the matters, study may indicate the need for further, perhaps more specific, proposals; this is one reason why this is a "Notice of Inquiry". However, we have given notice herein of the "subjects and matters at issue", and therefore all interested parties are specifically advised that the Commission has the flexibility and discretion to adopt rule changes in the following areas if it finds that the public interest would be served thereby (with the exceptions footnoted below). n15

n15 The foregoing discussion applies to the proposals set forth in this subsection B, which are, for the most part, in the direction of relaxations of the rule. As to other matters set forth below in subsection C, extensions of the rule in various respects or "exemptions" for certain types of programs other than news and public affairs, this is an Inquiry proceeding only. See also par. 49 in this subsection B.

28. Effective dates of changes. If rule changes are adopted, there is then the question of when they should be made effective, for example: (1) the usual 30 days or so after publication in the Federal Register, or (2) for the next season, starting October 1, 1973, or perhaps even thereafter. As to some minor changes, the first approach might well be appropriate; it appears obvious that major changes, or rescission, could not well be adopted before the next season (these would probably include matters such as a flat "21 hours a week" standard and modification of the "off-network" restrictions to or approaching the extent urged by MCA, Inc.). Comments on the appropriate dates of changes are invited.

29. Changes in the direction of a total or partial "21 hours a week" standard. Comments are invited on the question of adopting one or more of the first three following proposals, or, in the alternative, adopting the fourth proposal listed, going to a flat "21 hours a week" standard.

[*913] (a) Leaving the basic three-hour-per night formulation, but providing that stations may exceed that amount on one or two nights a month to the extent of a half-hour or an hour, provided they reduce network prime-time material a corresponding amount within the next 14 days.

(b) Leaving the basic three-hour restriction, but providing that stations may deviate from it (following notification to the Commission) where they regularly present some news at the beginning of prime time and desire to clear a following one-hour segment regularly for an hour-long local or syndicated program, and the only way they can do this and continue to carry desired network material is to exceed the 3-hour limit on another night. n16 (see Hubbard Broadcasting, Inc. (KSTP-TV), 32 FCC 594 (October 1971). The "21 hours a week" standard would apply in these cases.

(c) Providing that stations may adhere to a "21 hours a week" standard, but must continue to present at least a half-hour during prime time each night of material which is not network, off-network nor recently shown feature film.

(d) A flat "21 hours a week" standard. If this is to be adopted at all, it will not be before October 1, 1973.

n16 This is probably more of a problem in the Central and Mountain zones, where prime time begins at 6 p.m. rather than 7, than elsewhere. According to ARB February-March 1972 audience survey data, about two-thirds of the "top 50 market" stations in those zones carry news in the early part of prime time, compared to only about one-third in the rest of the U.S.

30. The "21 hours a week" argument was one raised by several stations in waiver requests in 1971, in support of requests for waiver to exceed the permissible three hours on one night a week, accompanied by a reduction on another night. In general, this was rejected, although it was one of the considerations in grant of waiver in the Hubbard Broadcasting case cited. We similarly rejected the concept, for the future, in denying ABC's request for continuation of its waiver for Tuesday nights ( American Broadcasting Companies, Inc., 33 FCC 2d 1038, March 1972). The reasons have been a belief that time should be available to non-network program sources on a regular basis, the same period each night or at least not varying from week to week, in order to encourage the development of such material, for example programming suitable for "stripping" in early prime time. Also, there was some thought that stations might simply fulfill their obligations under such a relaxed restriction on one "junk night", presenting all of their non-network material then and programming the remaining evenings with 3 1/2 hours or more of network material.

31. Nevertheless, there appear to be some considerations supporting this type of relaxation. First, it would increase licensee flexibility; as noted in the Hubbard decision, this appears to be the only way stations can clear time for a one-hour non-network program if they carry news after the beginning of prime time, and continue to carry desired network material. Also, it could be that adherence to a strict three-hour standard tends to discourage occasional preemptions of network programs for desirable local material, if the station is faced with the complete loss of the network program and perhaps even carriage of it by a competing station in the market (whereas, under a "21 hours a week" standard, the station could "make up" the program preempted on another evening). n17 These are the thoughts behind the first two proposals above. Another consideration is that it might not be a bad thing [*914] for some of the cleared "access periods" to be later in the evening, since somewhat different types of programming might thus be presented and encouraged (see paragraph 57, below). Parties supporting relaxation along one or more of the lines indicated should give specific examples of situations where the present restriction is undesirable, if there are any; parties opposing such relaxation should indicate specifically why it is important to have time available on a regular basis. n18 Another pertinent question in this connection is whether, whatever may be decided as to individual stations, the networks themselves should be permitted any deviation from a three-hour standard.

n17 This has come up largely in connection with local sports events, such as basketball, in which cases the station is probably going to go for the preemption, whether it can "make up" the network program later or must forego it entirely. However, there could be desirable local material for which the choice would not be so clear.

n18 One problem with adopting a flat "21 hours a week" standard is that there are a number of stations which regularly present less network prime-time material than that, most often where they preempt a network movie, or other network material on one evening, to present their own local movie. If these stations were permitted to apply this non-carriage to the whole week, it could result in their keeping very little time open for new non-network material. Comments on this type of situation are invited.

32. Other changes in computation of prime time network programming. Comments are invited on the adoption of one or both of two other changes in the method of determining the amount of permissible primetime programming. The first change set forth below is designed to resolve automatically the situation prevailing in a few markets not observing daylight-saving time (presently Detroit, Grand Rapids, Indianapolis and Phoenix) during the portion of the year (late April to late October) when it is observed in the U.S. generally. This change is believed self-explanatory. The two changes are as follows:

(a) Providing that, automatically as a matter of rule, in the case of "top 50" markets which do not observe daylight-saving time, during the "daylight-saving time" part of the year (late April to late October) prime time will be moved back one hour, e.g., to 6-10 p.m. E.T. instead of 7-11 E.T., for these stations, corresponding to the local time at which network material is actually received in these places.

(b) Providing that, with respect to prime time network programming (or possibly other evening material also) any arrangement which complies with the rule in the Eastern and Central time zones will also be acceptable for stations in the Mountain time zone, and possibly also the Pacific time zone.

33. The second change above is based on a suggestion by NBC in the recent proceeding (Docket 19475) in which we changed the "prime time" programming for the Mountain time zone to 6-10 p.m. M.T. NBC's suggestion was that stations in the top 50 markets in the Mountain zone be permitted to carry more than three hours of prime-time network material if the schedule of such programs in the Eastern, Central and Pacific zone meets the standards of the rule, so that the excess occurs only in the Mountain zone. This was adopted only in part in the Report and Order in Docket 19475 (24 R.R. 2d 1972, FCC 72-578, 37 F.R. 13622), with respect to situations where the network material that evening is live and simultaneous, such as a sports event, and where the station in the Mountain zone broadcasts no other network material during prime time (including "pre-game shows") the same evening. The Phoenix NBC affiliate, supported by NBC, has recently sought reconsideration of our refusal to adopt the entire NBC proposal.

34. While the change in "prime hours" to 6-10 p.m. M.T. will eliminate many of the problems which have arisen this past year (such as sports or movie "runovers" which occur after 11 p.m. E.T.), and [*915] others will be taken care of by the NBC proposal as adopted, it may be that further extension along these lines will be appropriate. Comments are invited on whether the Note to Section 73.658(k) adopted recently should be extended to include complete sports events where there has been a "pre-game show", or "runovers" of events which are not live, simultaneous material, such as movies. Comments are also invited on whether this principle should also extend to additional programming presented by networks on the same evening in the East before the particular event but which Mountain zone stations wish to present after the event. n19 Comments are also invited on whether the same principle should be extended to the top 50 markets in the Pacific zone, not so much in connection with "runovers" (which are not a problem since the sports event occurs quite early) but for network programming presented before the game in the East but which these stations may wish to present after the game in the West (or material programmed especially for the West). n20 The Commission does not have any views at this time as to whether changes along these lines should be adopted: we have recognized before the problems which stations in these time zones face in integrating "simultaneous" material into the usual pattern of delayed broadcasting which prevails there. One important consideration, here and elsewhere, is to what extent relaxation along these lines actually will impinge on the availability of prime time on these stations to non-network sources. Comments on this point are solicited. These are examples of changes that will be made at an early date if it appears that the public interest will be served thereby.

n19 See KOOL-TV (Phoenix, Arizona), FCC 72-735 (August 16, 1972).

n20 See Academy Award and Miss America programs, 33 FCC 2d 743, 23 R.R. 2d 987 (February 1972); and the waiver granted NBC affiliates on August 29, 1972 (FCC 72-782).

35. Rules designed to deal with sports event situations. One of the most common subject of waiver requests, and Commission consideration of them, has been in connection with sports events. The following rules are proposed to deal with these situations for the future; the first three below are alternatives, and the fourth, involving a somewhat different concept, is a separate matter which may be adopted with or without one of the others.

(a) With respect to "runovers" into prime time of late-afternoon events (and possibly also some events scheduled for prime time) putting the burden of accommodating the "runover" on the networks and stations in the carriage of network programming, by providing that if a late-afternoon event runs over into prime time (i.e., after 7 p.m. E.T., or 6 p.m. C.T.), network evening programs must simply start that much later, so as to leave a full hour for non-network material at the beginning of prime time (e.g., if the event runs until 7:10, the network's evening material could not start until 8:10). n21

n21 This type of scheduling, while unusual, is certainly not unknown, for example following Presidential messages early in prime time. It may be that this is the simplest way of dealing with the matter, particularly if the incidence of sports event "overruns" is as small as the networks say it is.

(b) Providing by rule that it is assumed that sports events will last no more than a certain time, and ignoring runovers beyond that time. (Comments are invited on what are appropriate time allotments for various types of events; it presently appears that 3 hours for [*916] baseball and football, and 2 1/4 hours for basketball, should be sufficient, at least in the absence of a "pre-game show" or post-game material.) Comments are also invited on the matter of pre-game shows and post-game shows generally; to what should any assumed fixed period for sports telecasts permit these? We are presently of the view that it should be only in connection with games of unusual importance -- playoffs or championship games -- and not regular season contests, and not for more than 15 minutes (see our action of August 29, 1972, FCC 72-782, 25 R.R. 2d 228, granting waiver to NBC affiliates).

(c) Providing that if an event runs more than a few minutes over the allotted period -- say more than 5 minutes, or more than 10 minutes -- the network or its affiliate will have to "give back" a half hour of time on some evening during the following few days.

(d) Designating by rule a certain number of unusually important sports events, which, along with related material, may be presented without observing the Section 73.658(k) limitations. These might include the summer and winter Olympics, the World Series, New Year's Day and other year-end bowl games, the Super Bowl, and possibly a few others; but we are certainly of the view that it should not extend beyond a small number of events.

36. Considering that sports events involving possible prime-time problems occur on only a limited number of days of the year -- probably no more than 50 for each network -- it appears that this subject may have aroused more concern, and required more action, than it is worth. It appears eminently desirable to adopt a definite rule, or at least an over-all policy, in this area. Comments are particularly desired on what actually is the impact from a relatively small and occasional "runover" on the availability of prime time to non-network sources. In other words, what do stations do if the event runs until 7:10 p.m. E.T.? Do they simply carry the same material they would have carried if the event had ended at 7, "clipping" it slightly, or do they substitute other, shorter material, and, if so, what? One thing which should be borne in mind, also, is that while the networks often put their requests in terms of being able to carry the event to completion, this is not usually true. Rather, it is a question of whether, if they do, they may still carry their full complement of evening material. n22

n22 The discussion here, except for the fourth proposal mentioned above, relates largely to the late-afternoon situations. Sports events actually scheduled for prime time do not raise any great number of problems, and it appears that these may be handled by adjustments in time-computation along the lines mentioned in pars. 32-34, above.

37. Relaxation of the "off-network" restrictions of the Rule. Comment is invited on the following changes in the "off-network" restrictions of the rule, contained in Section 73.658(k) (3). One or more of the first four changes in the "off-network" restrictions set forth below may be adopted, with or without the fifth, which is really a somewhat different concept. The possible changes are as follows:

(a) Providing that the "off-network" restrictions do not apply to material which was not part of a regular network program series, i.e., an individual "special" program or a small series of material, say no more than six programs; n23 or providing that while the rule imposes a general restriction on all [*917] material, stations in the top 50 markets may present up to hours per year of off-network material coming in the above categories (comments are invited on what this figure should be).

(b) Providing that a "package" of material may be presented including some, but no more than 25%, or some smaller percentage, of off-network material (e.g., special Christmas programs in the "Lassie" or other series).

(c) Providing that stations may present without restriction (or up to hours a year) of "off-network" material, provided the material itself was not shown on a network within a certain number of years (e.g., 5) and the series of which the particular material is a part has not been on the network for a less number of years (e.g., 2).

(d) Continuing the 1972 arrangement of considering waivers of this restriction, on an ad hoc basis, but providing for more orderly treatment, including public notice of such waiver requests, and more or less simultaneous consideration of all such requests well in advance of the year for which waiver is sought (e.g., requests would have to be in by March 1, 1973 for the 1973-74 season, and decision would be reached by May 1). Comments are invited on whether, if such an approach is to be adopted, a certain total number of hours of off-network material should be permitted, and if so, what that figure should be. n24

(e) Adoption of a rule looking toward the type of relaxation urged by MCA, Inc. in RM-1929, permitting any off-network material to be presented as part of a package of which at least 25% is new material. We also raise the question of whether, assuming such a relaxation is to be made, a higher percentage of new material, e.g. 50%, should be required.

n23 The rule as adopted in May 1970 actually read in terms of excluding only material which was "off-network syndicated series programs." The change to restrict off-network material generally was made in the August 1970 decision to reconsideration.

n24 Parties may wish to comment on this subject in light of the four decisions referred to in paragraph 48 below, concerning "off-network" material, and on the matter of objective standards which might be appropriate in this connection (see paragraph 40).

38. The "off-network" restriction is potentially one of the most troublesome areas of the rule. It represents, not the objective of the rule to lessen network control of television programming (which is taken care of by the basic "three-hour" limitation plus the "syndication" and "financial interest" rules) but, rather, that of protecting the newly "cleared" portion of prime time for access by non-network sources of program material. As such, it obviously serves a needed purpose; but, at the same time, it is also a significant restriction, including in its present form a bar on the presentation of some highly worthwhile material, sometimes -- as with "one-time" material, and probably short program series -- material which if presented during prime time would not have a very substantial impact on the availability of time to non-network sources. The latter was one of our chief reasons for the grant of waiver to the six-program Six Wives of Henry VIII series ( Time-Life Films 35 FCC 2d 773). For this reason, we raise the issue of whether relaxation should be considered along the lines of the first two approaches set forth above, or, alternatively, approaches (c) or (d), which would probably mean more relaxation. As elsewhere herein, parties opposing relaxation are urged to discuss the impact and effect of any such relaxation, by rule or waiver, on the availability of prime time to non-network sources of new material, with specific examples of actual or potential preclusion.

39. Item (e), above, inviting comments essentially on the MCA request or a modification of it, represents a somewhat different concept: whether, in view of the very high cost of and asserted risk involved in producing new material, it might not be desirable to permit a "mix" of new and off-network programs in a package, and, if so, what percentage of new material should be required. Parties supporting such [*918] a change should discuss in detail the impact it would have on station purchase and presentation of truly new material.

40. In connection with this subject generally, and particularly the approach set forth as item (d), above, comments should discuss to what extent the judgments involved here can appropriately reflect program quality determinations, and, if they can or must, what objective standards can be formulated in this connection so as to avoid subjective judgments. With respect to items (a) and (b), above, comments are invited on whether this type of exemption should be granted only in the news and public affairs area, and what is the availability of this highly important type of material from non-network sources.

41. "Feature film". Section 73.658(k)(3) also contains restrictions on the use of movies during the cleared portion of prime time; as the rule reads, there is an ambiguity as to whether a film previously shown as a network program is thereafter "an off-network" program, permanently barred from these hours, or is a "feature film" which can be used in them after two years from its previous showing. It appears that other changes may also be appropriate. Comments are invited on one or more of the following changes:

(a) Clarification of whether a movie previously shown on a network is an "off-network program" or a "feature film" for purposes of Section 73.658(k)(3), and which of these two alternative constructions would most serve the public interest. n25

(b) Whether, in this respect, there should be any difference between movies originally made primarily for theatre exhibition, and those primarily made for television (e.g., treating the former as "feature films" but the latter as "off-network" programs); and if there is to be a difference, what test should be applied if there is any question (e.g., where the film first appeared).

(c) Whether it is really in the public interest and consistent with the basic objectives of the rule to permit during "cleared" time the use of feature films shown in the market as recently as two years ago, or whether instead this period of prohibition should be longer, such as five years, or perhaps permanently with respect to a previous showing on the station itself.

(d) Whether, on the other hand, in view of the economic structure of the film-buying business, the "two year" period should be shortened, say to one year, at least as to feature films bought by the station up to mid-October 1972 (this is essentially what is urged in a pending request by a Salt Lake City station).

n25 If network-shown movies are to be treated liberally, comments are invited on a matter which has been raised: how can "feature film" be defined so as to prevent a high percentage of network entertainment programs being classified as "feature film" so as to get this more liberal treatment?

42. Aside from the obvious desirability of removing the ambiguity mentioned, this subject presents some more basic considerations. As far as the presentation of an individual film is concerned, it probably makes little difference to the viewer if it appeared previously in the market as a network program or a locally shown film, or whether it was created for theatre showing or especially for television. From this standpoint a fairly liberal approach might not be inappropriate.

43. But there is also another consideration. The use of "feature films" during early evening hours by network stations in the top 50 markets has not up to now been great, averaging only about one hour per week per market of prime time according to ARB audience survey data for February-March 1972. However, there are some indications that this may increase, particularly if the Commission adopts a rather liberal [*919] view, so that stations in these markets will devote a considerably larger amount of time to such material. This would, of course, have an impact on the availability of prime time to other kinds of non-network material (local or syndicated). While the rule was not designed to promote any particular type or form of programming, it was certainly intended to promote new non-network material; and presentation of movies already shown looks in the other direction. Comments on this point are invited.

44. The same general considerations might also indicate a lengthening of the "two-year" period for any film, and particularly where the previous showing was on the station itself -- a situation in which, normally, there should be no problem in determining whether or not a given movie was or was not run in the past, even years ago. This was the reason for limiting the period to two years on reconsideration in August 1970. Comments are invited on whether it would be appropriate to bar permanently from the cleared hours feature films previously run on the same station, as well as on the desirability of lengthening the period generally. On the other hand, the point has been urged recently that the usual basis on which films are bought -- such as "five years and five runs" at a very high price -- almost automatically requires that more than one of the runs be in prime time, if the station is to be able to recover its investment. It is urged that therefore a lesser restriction should be adopted, as to the station's re-use of its own material. Comments are invited.

45. Exemption for regular network news following an hour of local news, and for one-time (or other) network news and public affairs programs. Comments are invited on adoption of one or more of the following, as a matter of rule or at least of fixed policy:

(a) Continuing for the future (and putting into the rule) the policy adopted for 1971-72, and recently for 1972-73, concerning a waiver for network news at the beginning of prime time where it follows a full hour of local news (e.g. from 6-7 E.T.). Under this policy, such network news does not count against the permissible three hours.

(b) Continuing, for 1973-74 and later years, the waiver or exemption granted for one-time network news and public affairs programs ("documentaries").

46. As to the first matter mentioned, we have favored this policy. As we have noted, the broadcast of in-depth coverage of local news and problems, in major cities, is to be encouraged as definitely in the public interest; and, as a practical matter, stations can avoid the impact of the rule anyhow by splitting their news, so as to present a half-hour of local first, then network (e.g., at 6:30 p.m. E.T.), and then local against at the beginning of prime time. There appears no reason to require this "bracketing" form of scheduling as a matter of rule, although 19 stations in the top 50 markets do it (25 operate under the waiver). On the other hand, this does represent a substantial impingement into the availability of prime time to non-network sources; and comments should be invited at this time on whether this policy should be made permanent.

[*920] 47. The second matter is perhaps more difficult. The rule contains an exemption for "special news programs dealing with fast-breaking news events, on-the-spot coverage of news events", etc., but not for news or public affairs "documentaries", although when the rule was adopted there was some thought that the exemption should be broader to include them. (See concurring statement of Commissioner H. Rex Lee in FCC 70-466, 23 FCC 2d 428). There is, obviously, a high degree of importance to the presentation of such material in quantity, for the better information of the audience, and, at the same time, diversity of viewpoints and sources is probably more important here than it is with entertainment programming which is the main thrust of the rule. There is also a practical consideration: a number of programs presented by the networks during 1971-72 year have involved partly "on the spot coverage of fast-breaking events", etc., but partly background material of a documentary nature; and without the waiver, network staffs, and the Commission, might be faced with a fairly knotty problem of what is "on the spot coverage", what are "fast-breaking events", etc. n26 Existence of the waiver does serve in this respect to make life simpler. Comments on whether this exemption should be made permanent are invited, including, particularly, the matter of to what extent such material is available from non-network sources. Item (c) above requires little elaboration. As noted, the matter of a general exemption for this type of network material was considered at the time the rule was adopted, and has been raised again; in this general overview parties are free to comment on it.

n26 If an exemption or waiver policy for "one-time" network programs of these types (or more generally for such network material) is not adopted, it may well be desirable to adopt more definite standards as to what are programs falling within the exemptions now specified, for "on the spot coverage" and "fast breaking news events." Comments on possible standards are invited, for example a requirement that the program must contain a high percentage (e.g., 75%) of "live" coverage, or film shot within the last 24 hours, rather than being substantially background material.

48. Comment on waiver actions. Parties are invited to discuss certain waiver actions of the past year, including, particularly, the four involving "off-network" material (Wild Kingdom, Lassie, National Geographic, and Six Wives of Henry VIII), the ABC Summer Olympics decision, and the decision granting CBS waiver for one-time network news and public affairs material, or documentaries. We do not expect, nor require, that comment will be made separately on these matters; but rather that parties will discuss them in connection with specific changes in the rule, set forth above. They are set forth separately simply to call attention to them as problems which have arisen with the rule in its present form. Inviting comment on them does not represent a Commission view that they were wrong, but, rather, that to some extent they were reached on the basis of rather limited information, early or at least fairly early in the administration and application of the rule; and comment should be entertained before we decide whether the policies involved in these decisions (or the reverse of these policies, as some may argue) should be adopted as a permanent matter. n27

n27 The citations to these six decisions are, respectively: Mutual Insurance Co., of Omaha, 33 FCC 2d 583 (Wild Kingdom); Campbell Soup Co., 35 FCC 2d 758, 24 R.R. 2d 856 (Lassie); Storer Broadcasting Co., 35 FCC 2d 889, 24 R.R. 2d 868 (National Geographic); Time Life Films, 35 FCC 2d 773, 24 R.R. 2d 849 (Six Wives of Henry VIII); American Broadcasting Companies, Inc., 35 FCC 2d 340 and 765, 24 R.R. 2d 628 and 862 (Olympics); and Columbia Broadcasting System, Inc., 32 FCC 2d 55 and (for 1972) FCC 72-906 (October 11, 1972).

[*921] 49. Repeal of the rule. Repeal or rescission of the rule will be considered herein, for the reasons and subject to the limitations set forth in paragraphs 13-15, above. Parties may also wish to discuss -- if they urge such rescission -- alternative approaches to the problem of network control over television programming. As to the latter, obviously this is an Inquiry proceeding only.

50. The cumulative impact of the relaxations mentioned above. We have set forth above possible relaxations of the rule in a number of different areas. It is realized that the various changes, 2f made in the different areas, might have a cumulative impact on the availability of prime time to non-network sources, even though the impact from some of them individually might not be significant. Comments on this aspect of the matter are invited, along with views as to which are the particular "problem" areas from this standpoint.

C. Inquiry into other possible changes in the rule (extensions of its scope, etc.)

51. This portion of the Notice -- an Inquiry only, with changes along these lines to be adopted, if at all, only after further rule-making proceedings -- is designed to invite comments on some changes in the rule of a more fundamental nature than those mentioned in subsection B, above. As discussed in the following paragraphs, these include: (1) extensions of the scope of the rule, either as to time or as to markets covered; and possibly extending the "off-network" and "feature film" provisions of the rule to independent stations at least in some circumstances; (2) imposing certain requirements on stations as to use of the "access period", e.g., for local programming, children's or "minority group" programs, etc.; (3) exemptions from the rule to encourage the presentation of certain types of material on either a network or "off-network" basis (children's programs, etc.) n28 and (4) changing the form of the rule so as to specify a definite hour as the "access period", which might be a later hour than the first hour of prime time which is now generally "cleared" under the rule as it operates in practice. Setting these concepts forth, and inviting comments on them, does not by any means represent a Commission view that they should be adopted, now or ultimately, and in fact some Commissioners have doubts as to whether some of them are either realistically feasible or otherwise desirable; but they have been suggested and appear to have enough relationship to public-interest objectives to warrant opportunity for exploration in this over-all proceeding. One other matter should be pointed out: as indicated elsewhere, we regard expeditious resolution of the present proceeding as highly important; and if the time frame established does not permit thorough exploration of the various concepts set forth in this subsection, that will have to wait until later, to the extent it is appropriate.

n28 This is the same type of concept involved in the general exemption for network news and public affairs programs set forth in subsection B, above.

[*922] 52. The following are the concepts on which comment is invited:

(a) Possible extensions of the scope of the rule.

(1) Limiting network prime-time programming to 2 1/2 rather than three hours per night, so as to clear 1 1/2 hours for non-network use (or at least providing for this in the case of stations presenting local or network news at the beginning of prime time, so that they would have a full hour cleared for other non-network material).

(2) Extending the coverage of the rule to markets beyond the top 50, possibly to all markets having three or more network-affiliated stations.

(3) Having the "off-network" and "feature film" restrictions apply to independent stations (or at least independent VHF stations), to the extent of one hour at least per night.

(b) Required local uses of the access period. A requirement that some (or conceivably all) of the cleared "access period" time be devoted by affiliated stations covered by the rule to certain types of non-network material; including:

(i) local "live" programming (comments are invited on whether this should be required to be actually "live" or could include filmed material treated as live under the Commission's Rules).

(ii) programming designed for particular groups, such as minority groups (for example, the four specified in Section 73.680 of the Rules, and other "ethnic" groups), or children.

(iii) programming specifically designed to deal with the important problems in the station's community and coverage area as indicated by the licensee's survey to ascertain the needs, interest and problems of its community and area (generally this would be local material, but conceivably it could include syndicated programming of certain types).

(c) Encouraging, by way of exemption from the rule's restrictions on network and "off-network" material, the presentation of the same general types of material mentioned in (b), above (similar to the general exemption for network news and public affairs material covered under subsection B, above). Under such an approach, network or "off-network" material falling into these categories would not be counted for the purpose of computing the permissible amount of such material.

(d) Specifying a particular hour as the "access period", for example the third hour of prime time (9-10 p.m. E.T. and @P.T., 8-9 p.m. C.T. and M.T.).

53. The first two matters mentioned above -- extensions of the rule either as to time or as to markets covered -- has been suggested by various persons largely on the basis that if "cleared time" in major markets is a good thing, why is not more such time in more markets even better? As to the matter of time, this of course would mean more prime-time availability to alternative program sources; in particular, for the stations which present news at the beginning of prime time -- about half of those in the top 50 markets -- it would mean a full hour of non-network programs. As to the matter of geographic extension, one specific suggestion has been made as follows: while access to major markets is almost indispensable to the success of syndicated material, general access is also significant. One index of the success of a syndiated program is a percentage figure, shown in ARB and Nielsen reports: the percentage of the nation's TV homes which are in the "areas of dominant influence" (ADI's) of stations carrying the program. It is said that, as a very rough rule of thumb, a program producer is justified in spending $1,000 per episode on the production of a program, for every percentage point the program has, or is expected to have. It is asserted that extending the "prime time access rule" would tend to increase this percentage figure somewhat, with respect to clearance in [*923] the smaller markets, and therefore would mean more production expenditure and -- perhaps, to some extent -- better programs.

54. As to independent stations, it is sometimes claimed that it is unfair for independent stations in the top 50 markets to be free of all restrictions under the rule, for example being able to present "offnetwork" material during prime time in unlimited quantity. This argument is particularly made as to VHF in dependents, most of which in the top 60 markets are profitable, and sometimes highly so. Comments are invited on whether the "off-network" restrictions should be extended to such stations, for example so as to require an hour of prime time each night to be devoted to material which is neither network, off-network, nor feature film recently shown in the market. Comments are also invited on whether such an extension, if adopted, should be only to VHF stations, recognizing the particular problems which UHF stations still have. n29

n29 It appears likely that such a change, if adopted, would not have any marked consequences. Probably few independent stations present off-network syndicated material for more than three hours of prime time, since usually a movie is inserted into the schedule somewhere during the evening. However, the movie would be subject to the "two-year" restrictions of Section 73.658(k) (3), if such a change were made.

Comments are invited on whether another change mentioned in above, specifying a particular hour as the access period, should be applied to independent stations.

55. The second general area of inquiry is whether the public interest would be better served by requiring certain uses to be made by stations of the non-network portion of prime time, for example local programming, children's programming, or programming of particular significance to minority groups or meeting important local problems. To a degree, perhaps, this represents a shift in emphasis away from the matters stressed in the Report and Order adopting the rule, particularly insofar as this would encourage local rather than non-network syndicated material. A number of parties have expressed the view that this would be a good idea, more in accord with long-standing Commission objectives. It warrants exploration here, for one reason because of assertions (by the rule's critics such as NBC in its petition) that the rule in its present form produces mostly continuations and revivals of network series, often daytime material such as "game shows", whose proliferation does not necessarily warrant encouragement. Comments on these concepts are invited.

56. The same general type of consideration is the basis for the third general area -- whether the presentation of certain types of programs should be encouraged, from network or "off-network" sources, by granting them exemption from the three-hour limitation.

57. The last matter mentioned above -- changing the rule so as to provide a definite, and probably later, cleared portion of prime time -- is one which has been suggested by certain syndicator parties. The argument is that, as the rule now works, the "cleared" portion of prime time is generally the first hour, 7-8 p.m. E.T., a time when the audience is somewhat smaller than it is later, and also when many children are watching. It is said that if the time were made later, such as 9-10 p.m., the audience would be larger, and, also, it would be more entirely an adult audience. The latter, it is said, would permit more "innovative" programming than that appropriate earlier, when a substantial part of the audience is young people. Comments are invited on whether such [*924] a change would be appropriate, and, if so, what form of rule could be devised to reach this result.

III. SUMMARY

58. In view of the considerations set forth above, comments are solicited on the various matters mentioned, which in summary are the following:

(a) Gathering information as to the effect and impact of the rule and possible changes in it, particularly on the programming being and to be presented, and the economic consequences on stations (particularly in small markets) and the TV production industry, and the economics of program production and distribution. See pars. 16-25 above.

(b) To what extent -- in practice as well as in theory -- the rule promotes real diversity in program sources, program ideas, and programming itself. See paragraph 18 above.

(d) Other possible changes in computation of permissible programming during prime time -- a change to take care of the few "non-daylight saving time" markets, and a possible change to increase the extent to which programming arrangements acceptable for Eastern and Central time zone stations will be acceptable for Mountain and possibly Pacific, zone stations. See pars. 32-34 above.

(e) Rules to deal with sports events, in particular late-afternoon "runover" situations and "pre-game" shows; and also a possible rule listing a few important events (the Olympics, the World Series, etc.) which might be suitable for presentation without regard to the basic limitation of the rule. See pars. 35-36 above.

(f) Relaxation of the "off-network" restrictions; and modification of the "feature film" restrictions, in Section 73.658(k) (3), in the former respect to permit a limited amount of off-network material and, possibly, a rule to permit generally the use of off-network and new material in a "package", along the lines urged by MCA, Inc. Clarification of the "feature film" provision, as to feature films shown as network material and feature films produced primarily for TV rather than theatre exhibition, is also proposed. See pars. 37-44 above.

(g) Continuation of waiver or exemption with respect to news and public affairs programs, after October 1, 1973: the waiver for network news following a full hour of local news, and for "one-time" network news or public affairs programs, or documentaries, or a more general exemption for this type of network material. See pars. 45-47 above.

(h) Repeal of the rule.

(i) The possible cumulative effect of relaxation in various areas mentioned (par. 50, above).

(j) Possible extensions of the rule or further exemptions, as to which this is an Inquiry proceeding only. See pars. 51-57 above.

59. This Inquiry and Rulemaking proceeding is instituted pursuant to authority contained in Section 403 and Sections 4(i) and 303 (b), (g), (f), (i), and (r); 307(d); 308(b); 309(a); 313, 314 and 315 of the Communications Act of 1934, as amended.

60. Pursuant to applicable procedures set forth in � 1.415 of the Commission's Rules, interested persons may file comments on or before December 22, 1972, and reply comments on or before January 29, 1973. All relevant and timely comments and reply comments will be considered by the Commission before final action is taken herewith. In reaching its decision in this proceeding, the Commission may also take into account other relevant information before it, in addition to the specific comments invited by this Notice. For reasons stated in pars. 13-15, above, parties are herewith notified that the above timetable, which appears adequate, will be adhered to.

[*925] 61. In accordance with the provisions of � 1.419 of the Rules, an original and 14 copies of all comments, replies, pleadings, briefs, and other documents shall be furnished the Commission. Material filed will be available for public inspection during regular business hours in the Commission's Broadcast and Docket Reference Room at its headquarters in Washington, D.C.

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.

CONCURBY: LEE; REX LEE; JOHNSON (IN PART); HOOKS (IN PART)

CONCUR:

CONCURRING STATEMENT OF COMMISSIONER ROBERT E. LEE

I concur in the Notice of Inquiry and Proposed Rule Making. I hasten to add that this should not be interpreted as dissatisfaction with the existing rule but rather as an opportunity to review it with the expectation that the objectives of the rule may be improved.

CONCURRING STATEMENT OF COMMISSIONER H. REX LEE

I concur in the decision to initiate an inquiry into the effect and operation of the prime time access rule (Section 73.658(k) of the Commission's Rules) primarily because, as a general proposition, I favor an administrative agency's review of past regulation. However, my concurrence should not be interpreted in any way as either a repudiation of the rule or a prejudgment of the inquiry proceeding.

I would have preferred to delay the Commission's review of the prime time access rule in order to permit a more meaningful assessment of its impact during the current television season, i.e., 1972-1973, when the full force and effect of its provisions become applicable. Although I have no preconceptions about the use of prime time repeat material by the networks, as the majority decision indicates, there appears to be a relationship between the prime time access rule and television "re-runs." In fact, it is even suggested that "parties may wish to prepare their comments herein with this in mind." It seems to me that a more orderly course of action would be to consolidate the prime time access inquiry with an investigation into the ramifications of a limitation on network television "re-runs."

One other matter deserves consideration. At the time the Commission adopted the prime time access rule in 1970, I indicated that I was in favor of a provision which would have exempted news documentaries from the scope of the rule. It was my belief that failure to adopt such an exemption would tend to discourage the network presentation of news documentaries. I would hope that interested parties would comment on the validity of my earlier prediction in light of actual experience under the rule.

DISSENTBY: JOHNSON (INPART); HOOKS (IN PART)

DISSENT:

SEPARATE OPINION OF COMMISSIONER NICHOLAS JOHNSON CONCURRING IN PART AND DISSENTING IN PART

In 1970, after years of investigation and analysis, this Commission concluded that the domination of the television program production market by the three networks required Commission action. As part of [*926] that action, the Commission required that television stations in the top 50 markets take no more than three hours per night from the three networks. At least one hour had to come from independent producers, including the stations themselves. For at least one hour per night, there would be 150 buyers of television programming (three network affiliates in each of so markets) rather than three networks.

In the words of the Commission:

The public interest requires limitation on network control and an increase in the opportunity for development of truly independent sources of prime time programming. Existing practices and structure combined have centralized control and virtually eliminated sources of mass appeal programs competitive with network offerings in prime time.

In light of the unequal competitive situation now obtaining, we do not believe this action can fairly be considered "anti-competitive" where the market is being opened through a limitation upon supply by three dominant companies. n1

n1 Network Television Broadcasting, 23 F.C.C. 2d 382, 894-95 (1970).

In affirming the Commission's action, the U.S. Court of Appeals for the Second Circuit commented:

To argue that the freedom of networks to distribute and licensees to select programming is limited by the prime time access rule, and that the First Amendment is thereby violated, is to reverse the mandated priorities which subordinate these interests to the public's right of access... The evidence demonstrates that despite the fairly wide range of choice available to licensees, they have consistently decided to limit themselves to one program source during prime time. Thus, while the rule may well impose a very real constraint on licensees in that they will not be able to choose, for the specified time period, the programs which they might wish, as a practical matter the rule is designed to open up the media to those whom the First Amendment primarily protects -- the general public. (emphasis in original). n2

n2 Mt. Mansfield Television, Inc. v. F.C.C., 442 F.2d 470, 478 (2 Cir. 1971) (footnote omitted).

Now this Commission is embarking on a new proceeding to examine the functioning of the prime time access rule, propose modifications of it, and to consider its demise. Since I would have followed a substantially different course, I am compelled to dissent.

At the outset, one should note the extreme handicaps under which this rule has functioned in the short time it has been in effect. First, the Commission substantially undercut it by permitting off network material to fill the access time during the first year of the new rule. Second, roughly 75% of all requests for "waiver" of the rule have been granted by this agency. Third, the rule has never enjoyed unanimous support either here or in the White House. (Recently the trade press reported three sure votes for repeal of the rule.) The White House continues its partisan wooing of certain segments of the Hollywood community and networks by promising favorable FCC action.

I hasten to add that I believe my colleagues when they say that no decision has been made, that the presumption favors retention of the rule, and that they are perfectly willing to listen to arguments as to why the rule should be retained and even expanded. And I believe they are going to be surprised by the degree of support the rule will command in this proceeding. I doubt that the rule will be scrapped, or that there will be a return to the status quo, and I will have more to say about this later.

[*927] Another difficulty with this proceeding is the relative lack of information and analysis before the Commission regarding the basic facts surrounding this rule. As I have said over and over again, I believe this Commission simply must have a policy planning and analysis capability to provide the information necessary for rational decisionmaking. I would have hoped that this agency might have an analytic capability for an ongoing analysis of the structure of the television industry. Instead, we rely on not very systematic splurges in the Delphi technique, and we usually ask only those who have an economic interest in a policy outcome. But with the understanding that what follows is scarcely better than speculation, I think it useful to examine the effects of the rule on the principal groups affected by it.

Consumers. "Consumers" is the economist's euphemism for the viewing public. The quick and dirty analysis is that the apparent impact of the rule viewers are watching less television, and watching stations other than network affiliates. Perhaps, one might argue that therefore, consumers are watching programs (or doing other things) that bring them less satisfaction than the network programs did, and that there is therefore a net loss of consumer satisfaction. This analysis neglects some very hard questions about changes in consumer tastes and preferences, as well as problems with comparisons of interpersonal utility preferences. * And the evidence to support it is ambiguous at best. Counterbalanced against it is some evidence of increased choice, and more local programming. There is apparently some evidence of less network news and public affairs, and children's programming being deferred to later in the evening.

Networks. The dollar and cents effect appears minor, except that ABC, which supports the rule, seems to have been helped competitively.

Top-50 market network affiliates. This group appears to be better off financially as a result of the sale of commercials in purchased programming, rather than the revenues from network programs.

Smaller market affiliates. The networks might have elected to program this group for their affiliates in markets below the top 50. They choose not to. As a result, these stations have been adversely affected, although less than might have been expected.

Independent stations. There seems no doubt that these stations have been helped, in that they are now competing on a more equal footing with affiliates.

Program producers. Those who produce programs for the networks have probably been hurt; those who produce independent programming have been helped. There seems to be more imported programming in prime time -- for whatever reason. And the overall budget for program production may have declined as lower cost programming is produced and shown.

The FCC. The objective of the rule -- deconcentrating the television program production market -- seems to have been achieved, although the magnitude of that achievement in the scheme of things is in question. The administration of the rule has created endless headaches, and simplified FCC administration plays no small part in generating the present proceeding.

[*928] My own approach to this proceeding would have been to take a substantially different course. The majority is, in effect, conducting a "go-no-go" proceeding on a rule that is barely into a trial period. It sets rigid schedules for consideration, without knowing whether it or other parties are likely to be in a position to make a rational policy choice. The majority also apparently believes that it makes sense to consider a complete return to the network power situation that existed prior to 1970. Unless something has changed since 1970 in the basic competitive relationships in the television industry, I don't see how the Commission can return to that unsatisfactory situation. I see no evidence that such a change has occurred. The majority cites none.

Former Commissioner Cox, in his usual insightful way, predicted our current position when concurring in the adoption of this rule in 1970:

If [the rule does not have the desired result], I think the networks and their affiliates may face even more drastic action. As indicated by its filings in this proceeding, the Department of Justice has serious concerns about the state of the market for television programming. If the Commission waters down its action here, or if the new rule does not in fact open up the market, then I think it possible that the Department will proceed under the antitrust laws to apply the policies developed in the motion picture industry to broadcasting. Or the Commission itself, if faced with the permanent prospect of a slowly constricting program production industry, may decide that the only alternative is to attempt some kind of detailed regulation of the networks' program practices.

* * *

I therefore hope that, after a necessary period of readjustment, the rule we have adopted will generate a substantial flow of new programming for sale direct to stations and cable systems, without passing through the network selection process. If it does, I think we will have a healthier television industry. If it does not, then I fear that the industry may very well undergo very serious changes in form and character. n3

n3 Network Television Broadcasting, 23 F.C.C. 2d 382, 427-28 (1970).

There is an antitrust suit pending in California, which followed an FCC waiver of the prime time access rule in major part for the first year, combined with an FCC stay of other aspects of its action which remained in effect for about a year after the rules were affirmed in court. I am not sure it is cause for industry celebration that the FCC is considering abandoning rules adopted to deal with a serious competitive problem.

I would not have turned this proceeding into a "go-no-go" rulemaking, nor would I impose a rigid decision making schedule, when it is not known that the facts necessary for a rational decision are going to be available. And if the rule is to be abandoned, it must be replaced with a substitute calculated to meet the problem of network power, and designed to accomplish more than would be accomplished if the rule were retained. It was for these reasons that I made certain suggestions to my colleagues for areas of inquiry to consider alternatives to the rule. Some were incorporated and I need not dwell on them. Many were not and I want to discuss them here in the hope they will generate thought and perhaps future consideration.

[*929] Some concern was expressed that a more thorough proceeding would be delayed. But surely a graduated set of response dates would permit all the majority seeks in terms of time schedule.

To introduce the subject areas I believe warrant comments and inquiry, I should like to note some views expressed in 1970, at the time the prime time access rule was adopted. In the only telling portion of his dissent, Chairman Burch, in an opinion joined by then Commissioner Wells, said:

[Rather] than spending years on a rule of this nature, the Commission must concentrate on the obvious alternatives which have a different economic base and thus make a genuine contribution to diversity. These alternatives do exist and have not yet come to fruition.

First there is subscription television, which has a different economic base and and can present programming that is not necessarily designed for a mass audience and will still be economically attractive for an entrepreneur. There is cable casting, a technology which makes multiple channels available and which by its very nature changes the entire economics of programming. There is the non-commercial educational television system, which, with sufficient and appropriate funding, can make a tremendous contribution to diversity. n4

n4 Network Television Broadcasting, 23 F.C.C. 2d 382, 416 (1970).

Noble words and an inspiring program for Commission action. I might have endorsed it myself; it is certainly consistent with my oft expressed preference for competitive solutions rather than regulatory ones. The statement seems to acknowledge that a serious problem exists. The only question is the best solution and how to bring it about.

But what has happened in the past two years? Subscription television, shackled with restrictions, is still non-existent, and the thrust of Commission policy is toward ever more stringent restrictions. Cable television is strait-jacketed in a policy born of a political deal calculated to blunt its promising competitive benefits -- not to mention the morass of more than 1000 applications pending and stymied here. And public broadcasting is suppressed in a political power play and capture to which I heard no protest from the Commission majority. In each of these areas, the FCC abandoned any thought of a leadership position. I do not oppose the consideration of alternatives so long as it is not done as mere chicanery to effect delay and postpone solutions opposed by powerful interests.

If the problem, most broadly stated, is network domination, and if there is still interest in discussing alternatives, let them be considered. What follows are ideas. The majority refused even to include them in its notice. I neither support nor oppose them. But I do think they are worthy of inquiry.

(a) As an alternative means of increasing the number of buyers for television programming, and increasing the diversity of programming available to viewers, UHF stations (and vacant or unassigned UHF allocations) could be realigned into stations with significantly higher power, capable of serving wide regions, with the possibility of attracting audiences to compete with network affiliates, and the possibility of interconnecting them into a new network.

[*930] (b) Networks could be required to allow every station in the market to bid for network programming on a per-program basis, giving every station an opportunity to acquire network programming. Independent producers would also compete for station buys without having to face a fixed network affiliation for major stations in the market.

(c) Networks could be required to allocate their prime time programming on a pro rata basis among all the stations in the market. For instance, if there were six commercial stations in the market, and three networks each programming four prime time hours per night (84 hours total network prime time per week), no station could receive more than two network hours per night, or 14 hours per week. The economic benefits of networking would be spread among all stations in the market UHF and VHF alike. Independent producers would also have a prime time market comparable to networks. New stations coming on the air would have an assured source of programming.

(d) Networks could be required to program no more than 25% reruns per year. This question is directly related to issues and questions concerning the prime time access rule, and should be considered with it.

(e) Networks could be required to divest themselves of television program production facilities and talent agencies as well as any remaining syndication activities domestically or in foreign markets. This agency has apparently made an informal decision, never actually considered by the Commissioners, to do nothing about the Department of Justice suit against the networks, although arguments are being made that the subject matter of the suit is a matter within the FCC's primary jurisdiction. I dislike the continuing erosion of the FCC's power to affect the industries it regulates, but certainly there is no more powerful argument for that erosion than inaction, or action that fails to meet public interest needs, whether it be under the Communications Act or the antitrust laws.

(f) A final alternative could involve a seeming strengthening of the networks' monopoly position in an effort to, in fact, reduce it. One of the oft-overlooked reasons for the "quality" of the BBC's programming is that it is not one network but two. Thus, the "opportunity cost" of putting on minority appeal programming is virtually eliminated. (Opportunity cost is an economists' expression for what you lose by choosing a particular course of action. When an American commercial network chooses to put on programming that does not maximize audience it not only loses the production costs of that program, it also loses the "opportunity" to make the much greater revenue that a mass appeal program would create.) If a diversity of programming is what is desired, that can be created by creating a monopoly as well as by eliminating one. For example, if a means could be found whereby an individual network not only could, but would be required to, program every station in a given market, the net effect might well be more diversity than that created by three networks, each trying to copy each other's efforts to attract the entire audience (and ending up with about one-third each). Mass appeal programming would undoubtedly go on one, two, or three of the channels. But even it would be counter programmed -- that is, sports on one, a movie on another, and so forth. And the remaining channels [*931] would undoubtedly be programmed with minority appeal programming of various kinds -- in an effort to attract to television persons who would not otherwise be watching any television at all, and thereby increasing the total television viewing audience for the network. In exchange for this seeming monopoly advantage, we could require that no network could program more than one hour a day, or whatever, to reduce the barriers to entry into the networking business and increase the number of networks. If there were hours when no networks were programming at all, the proposal would, to that extent, create a market for the programming of independent producers as well.

(g) Networks or stations could be required to present a certain amount of material designed for particular groups (see section b, paragraph 52 of the majority Notice) or news and public affairs each night or each week as a condition to a decision of the rule.

These are ideas I believe relevant to any consideration of where the FCC goes with the prime time access rule. No doubt there are others. No doubt some could be rejected quickly once they were subjected to detailed analysis. I express no preferences for any. Each has a similar goal to that of the prime time access rule, however, to improve the competitive, free private enterprise functioning of the television program production market. Several alternatives approach the problem from a wholly different direction than that of the prime time access rule.

The FCC ought to be in the business of freely exploring, analyzing, and testing the alternatives for the benefit not only of the viewing public but the industries and unions involved as well. Its refusal to do so prompts this dissent.

*"Utility preferences" is economists' jargon for describing the variety of tastes and desires of individual consumers. Any single viewer-consumer has his own preferences for television programming -- as well as for a host of other ways in which he might spend his time. The difficulty arises when one tries to add together the preferences of large numbers of consumers to decide whether consumers as a whole are better off or worse off as a result of alternative sets of programming fare. Suppose the effect of the prime time access rule is to eliminate certain network programming and reduce the number of viewers watching any television program, or that different programs are watched than would be the case without the rule. Then, so the argument goes, the total consumer-viewer satisfaction is less than with this analysis is that no one knows how much loss a viewer suffers by doing something other than watch television, or by watching one program rather than another. There is a question whether consumer satisfaction for individuals can be added at all. No one knows whether those viewers who stopped watching television, or shifted to other programs because of the prime time rule, are essentially indifferent to the change. Viewers who watch the programming that replaced network programming because of the rule may find the new programming greatly preferable to their prior alternatives. And even this analysis presupposes that television watching is a net consumer benefit. The viewer is not, of course, the consumer -- he is the product [*932] sold by the advertiser (who is the consumer). Programming is virtually irrelevant in such a market analysis. (Various forms of subscription television, by contrast, do turn the viewer into a market place participant in the program selection process.) Nor is television watching necessarily a benefit at all. See the Kerner and Eisenhower Commission Reports, the Surgeon General's Report on violence in children's programs, How to Talk Back to Your Television Set and Test Pattern for Living. Mason Williams has said, "I finally decided the best I could do for television was not at all." After observing the industry's insensitivity to the impact of programming and commercials on small children (during the FCC's children's television hearings) I was prompted to recommend legislation to Congress making it a felony for anyone to keep a television set receiver in a home containing children under the age of six. In short, I am not sure that "utility preferences" is a concept that can contribute much to our analysis of the prime time access rule. But as long as we give Nobel Prizes in economics for the idea, the least the FCC can do is to hear it out.

STATEMENT OF COMMISSIONER BENJAMIN L. HOOKS CONCURRING IN PART; DISSENTING IN PART

IN RE: Notice of Inquiry and Proposed Rule Making in Prime Time Access Rule Matter.

There is no question in my mind that a re-examination of the direction and effect of the "Prime Time Access" Rules is necessary and desirable. I concur in initiating this analysis.

However, inasmuch as we are focused on the subject of Prime Time broadcast fare, I would have specifically requested an exploration -- through comments and otherwise -- of the possibility of requiring that a certain share of Prime Time be dedicated to local news and public affairs should the present Prime Time Access strictures be extinguished. See, in this connection, Notice of Inquiry In re: Formulation of Policies Relating to the Broadcast Renewal Applicants, stemming from the Comparative Hearing Process (F.C.C. 71-159, Docket No. 19154 released February 23, 1971), 27 F.C.C. 2d 580 (1971).