Fin-syn
Encyclopedia
The Financial Interest and Syndication Rules, widely known as fin-syn rules, were a set of rules imposed by the Federal Communications Commission
of the U.S.
in 1970. The FCC sought to prevent the Big Three television network
s from monopolizing the broadcast landscape by preventing them from owning any of the programming they aired in primetime. The rules also prohibited networks from airing syndicated programming they had a financial stake in. The rules changed the power relationships between networks and television producers, who often had to agree to exorbitant profit participation in order to have their shows aired. Some argue the rules brought about a golden era of independent television production by companies like MTM Enterprises
(The Mary Tyler Moore Show
) and Norman Lear's
Tandem Productions (All in the Family
).
Controversial from the very beginning, the fin-syn rule was relaxed slightly during the 1980s. Following the severe changes in the TV landscape, such as the rise of the Fox network
and cable television
, fin-syn was abolished completely in 1993.
It was the repeal of fin-syn that ultimately made broadcast netlets UPN
and The WB financially interesting for its highly vertically-integrated parent media conglomerates Paramount Pictures
(Viacom
) and Time Warner
, respectively.
On an average the number of shows that have been broadcast prime-time by the three main networks (CBS, NBC and ABC) per season has been between 63-75 shows since 1987-88 to 2001-02. In 1987-88 out of a total of 66 prime-time shows being broad cast there were no such shows where the network was either a producer or a co-producer. This number rose steadily to the point that in 1992-93 there were about 6 shows out of a total of 67 shows produced or co-produced by the network however as a result of the repeal of the fin-syn rules this figure jumped to 11 the next year whilst the total number of shows was barely 73. In 2001-02 this figure rose to 20 shows that were network produced - a change from zero percent, to nine-percent, to fifteen percent and from there to twenty percent - over two decades.
Today, each of the four major networks has an affiliated syndication company:
Closely related to fin-syn, the Prime Time Access Rule
seeks to strengthen local and independent producers by preventing affiliates from airing network programming during much of the early evening. This rule was eliminated in 1995.
Deficit financing minimized the substantial risks and costs of developing programs for the networks while initially affording the studios considerable benefits as well. In successful cases, the studio receives a large return on its investment when it re-sells the show in a combination of syndication windows because the sales provide nearly pure profit: no additional work typically goes into the show and the network receives none of the payment. However, if the show is cancelled by the network before producing enough episodes to be syndicated, or if no syndication buyers want the show, the production company must absorb the difference between the cost of production and the original license fee, which can now amount to millions of dollars for each season.
As of 2004, most "reality TV" producers think that deficit-financing will never fly because the vast majority of reality production companies are too small to wait long enough for the big payoff. Instead of syndication, producers have been covering gaps between license fees and rising production costs by selling shows' formats to foreign territories and developing integrated marketing deals with advertisers.
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...
of the U.S.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
in 1970. The FCC sought to prevent the Big Three television network
Television network
A television network is a telecommunications network for distribution of television program content, whereby a central operation provides programming to many television stations or pay TV providers. Until the mid-1980s, television programming in most countries of the world was dominated by a small...
s from monopolizing the broadcast landscape by preventing them from owning any of the programming they aired in primetime. The rules also prohibited networks from airing syndicated programming they had a financial stake in. The rules changed the power relationships between networks and television producers, who often had to agree to exorbitant profit participation in order to have their shows aired. Some argue the rules brought about a golden era of independent television production by companies like MTM Enterprises
MTM Enterprises
MTM Enterprises was an American independent production company established in 1969 by Mary Tyler Moore and her then-husband Grant Tinker to produce The Mary Tyler Moore Show for CBS...
(The Mary Tyler Moore Show
The Mary Tyler Moore Show
The Mary Tyler Moore Show is an American television sitcom created by James L. Brooks and Allan Burns that aired on CBS from 1970 to 1977...
) and Norman Lear's
Norman Lear
Norman Milton Lear is an American television writer and producer who produced such 1970s sitcoms as All in the Family, Sanford and Son, One Day at a Time, The Jeffersons, Good Times and Maude...
Tandem Productions (All in the Family
All in the Family
All in the Family is an American sitcom that was originally broadcast on the CBS television network from January 12, 1971, to April 8, 1979. In September 1979, a new show, Archie Bunker's Place, picked up where All in the Family had ended...
).
Controversial from the very beginning, the fin-syn rule was relaxed slightly during the 1980s. Following the severe changes in the TV landscape, such as the rise of the Fox network
Fox Broadcasting Company
Fox Broadcasting Company, commonly referred to as Fox Network or simply Fox , is an American commercial broadcasting television network owned by Fox Entertainment Group, part of Rupert Murdoch's News Corporation. Launched on October 9, 1986, Fox was the highest-rated broadcast network in the...
and cable television
Cable television
Cable television is a system of providing television programs to consumers via radio frequency signals transmitted to televisions through coaxial cables or digital light pulses through fixed optical fibers located on the subscriber's property, much like the over-the-air method used in traditional...
, fin-syn was abolished completely in 1993.
It was the repeal of fin-syn that ultimately made broadcast netlets UPN
UPN
United Paramount Network was a television network that was broadcast in over 200 markets in the United States from 1995 to 2006. UPN was originally owned by Viacom/Paramount and Chris-Craft Industries, the former of which, through the Paramount Television Group, produced most of the network's...
and The WB financially interesting for its highly vertically-integrated parent media conglomerates Paramount Pictures
Paramount Pictures
Paramount Pictures Corporation is an American film production and distribution company, located at 5555 Melrose Avenue in Hollywood. Founded in 1912 and currently owned by media conglomerate Viacom, it is America's oldest existing film studio; it is also the last major film studio still...
(Viacom
Viacom
Viacom Inc. , short for "Video & Audio Communications", is an American media conglomerate with interests primarily in, but not limited to, cinema and cable television...
) and Time Warner
Time Warner
Time Warner is one of the world's largest media companies, headquartered in the Time Warner Center in New York City. Formerly two separate companies, Warner Communications, Inc...
, respectively.
On an average the number of shows that have been broadcast prime-time by the three main networks (CBS, NBC and ABC) per season has been between 63-75 shows since 1987-88 to 2001-02. In 1987-88 out of a total of 66 prime-time shows being broad cast there were no such shows where the network was either a producer or a co-producer. This number rose steadily to the point that in 1992-93 there were about 6 shows out of a total of 67 shows produced or co-produced by the network however as a result of the repeal of the fin-syn rules this figure jumped to 11 the next year whilst the total number of shows was barely 73. In 2001-02 this figure rose to 20 shows that were network produced - a change from zero percent, to nine-percent, to fifteen percent and from there to twenty percent - over two decades.
Today, each of the four major networks has an affiliated syndication company:
- ABCAmerican Broadcasting CompanyThe American Broadcasting Company is an American commercial broadcasting television network. Created in 1943 from the former NBC Blue radio network, ABC is owned by The Walt Disney Company and is part of Disney-ABC Television Group. Its first broadcast on television was in 1948...
: Disney-ABC Domestic Television - CBSCBSCBS Broadcasting Inc. is a major US commercial broadcasting television network, which started as a radio network. The name is derived from the initials of the network's former name, Columbia Broadcasting System. The network is sometimes referred to as the "Eye Network" in reference to the shape of...
: CBS Television DistributionCBS Television DistributionCBS Television Distribution is a global television distribution company, formed from the merger of CBS Corporation's two domestic television distribution arms CBS Paramount Domestic Television and King World Productions, including its home entertainment arm CBS Home Entertainment... - FoxFox Broadcasting CompanyFox Broadcasting Company, commonly referred to as Fox Network or simply Fox , is an American commercial broadcasting television network owned by Fox Entertainment Group, part of Rupert Murdoch's News Corporation. Launched on October 9, 1986, Fox was the highest-rated broadcast network in the...
: 20th Television20th Television20th Television is an American television production and syndication company that was formed in 1992 by 20th Century Fox Film Corporation, a division of the Fox Entertainment Group, part of News Corporation.... - NBCNBCThe National Broadcasting Company is an American commercial broadcasting television network and former radio network headquartered in the GE Building in New York City's Rockefeller Center with additional major offices near Los Angeles and in Chicago...
: NBC Universal Television DistributionNBC Universal Television DistributionNBCUniversal Television Distribution is the television distribution arm of the NBCUniversal Television Group in the United States, and is a subsidiary of General Electric...
Closely related to fin-syn, the Prime Time Access Rule
Prime Time Access Rule
The Prime Time Access Rule was instituted by the Federal Communications Commission in 1970 to restrict the amount of network broadcast programming that a local television station, Owned-and-operated station by or affiliated with a television network may air during "prime time"...
seeks to strengthen local and independent producers by preventing affiliates from airing network programming during much of the early evening. This rule was eliminated in 1995.
Deficit financing
Before the fin-syn rules, the networks attained greater control and less risk by forcing production companies to deficit finance their programs while also demanding a percentage of the syndication revenues. Deficit Financing is an arrangement in which the network pays the studio that makes a show a license fee in exchange for the right to air the show. The license fee is in exchange for the right to air an episode a few times (as a first- and re-run episode), and does not cover the complete cost of production. The studio remains in ownership of the show.Deficit financing minimized the substantial risks and costs of developing programs for the networks while initially affording the studios considerable benefits as well. In successful cases, the studio receives a large return on its investment when it re-sells the show in a combination of syndication windows because the sales provide nearly pure profit: no additional work typically goes into the show and the network receives none of the payment. However, if the show is cancelled by the network before producing enough episodes to be syndicated, or if no syndication buyers want the show, the production company must absorb the difference between the cost of production and the original license fee, which can now amount to millions of dollars for each season.
As of 2004, most "reality TV" producers think that deficit-financing will never fly because the vast majority of reality production companies are too small to wait long enough for the big payoff. Instead of syndication, producers have been covering gaps between license fees and rising production costs by selling shows' formats to foreign territories and developing integrated marketing deals with advertisers.