Fin-syn sin of omission

A new twist has been added to the controversial fin-syn fight, with the specter of a potential conflict of interest being raised over a federal judge’s involvement in the rules’ current battle in Chicago.

Judge Richard A. Posner, a member of Chicago’s U.S. 7th Circuit Court of Appeals now deciding the fate of new Federal Communications Commission financial interest and syndication rules, was hired by CBS in 1977 to argue against fin-syn-related antitrust consent decrees eventually enforced against the Big Three networks.

Posner is one of three judges currently reviewing the merits of fin-syn rules adopted last year by the FCC. Earlier this month, Posner seemed to take a decided pro-network position during oral arguments in the case, and network attorneys were clearly delighted by the judge’s line of questioning.

Posner’s earlier work on behalf of CBS, however, raises questions over whether he should be taking part in the decision.

“I’m very surprised that he wouldn’t have viewed this as a conflict of interest,” said one D.C. insider familiar with the judicial selection process.

Indeed, the federal statute governing whether judges should disqualify themselves from particular cases states: “Any justice, judge or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.”

The law states that a judge should recuse himself “where in private practice he served as lawyer in the matter in controversy.”

Posner’s work on behalf of CBS came when he was a professor of law at the U. of Chicago specializing in antitrust law.

Consent decrees

His work involved an eight-page affidavit submitted to Judge Robert Kelleher of the U.S. District Court in Los Angeles in which he argued against proposed antitrust consent decrees that, in part, prevented NBC from taking certain fin-syn interests in TV programming.

At the time, NBC had agreed to enter into the consent decrees to avoid fighting a suit with the Dept. of Justice. The suit stemmed from Justice’s finding that the three TV networks were in violation of antitrust law by having the power to extract syndication profits from Hollywood programmers.

In his affidavit, Posner wrote that the consent decrees were “inconsistent with the public interest” and “will not ensure healthy competition” in the TV program production business. “On the contrary, it is an anti-competitive decree, ” wrote Posner.

Judge Kelleher dismissed Posner’s argument and eventually agreed to the consent decree settlement. Ironically, ABC and CBS also agreed to accept their own consent decrees with the Justice Dept. two years later–with fin-syn restrictions identical to those entered into by NBC.

(In another bit of irony, the networks are now fighting before Judge Kelleher to have the consent decrees eliminated.)

The fin-syn rules, which prohibited the networks from taking an ownership interest in or syndication revenue from all non-web produced shows, were relaxed last year by the FCC.

However, neither Hollywood nor the networks was happy with the rules, and the two sides are now fighting the battle in the Windy City court. The nets argue that the rules are unnecessary in an era of exploding media outlets, while Hollywood claims that without the regs, the networks will have the power to strangle the independent production community.

Posner was appointed to the Chicago bench under President Reagan and is considered a brilliant thinker in the mold of conservative U.S. Supreme Court Justice Antonin Scalia. He is an ardent deregulation advocate, a philosophy that squares with the network argument in favor of abolishing the fin-syn rules.

During the oral arguments, Posner dominated the questioning, suggesting that the FCC had not adequately established a need for continuing the regulations.

Given his past work for CBS, Posner’s decision not to recuse himself from the case is likely to prompt howls of protest in Hollywood, where the fin-syn rules are valued mightily.

Diane Killory, a D.C. lawyer representing Hollywood’s fin-syn coalition, said , “We assume the judge was aware of the affidavit, considered it, and discussed it with the other judges.”

Killory said the Hollywood side “learned only hours before the argument that he (Posner) was on the panel.” She said her group’s “only recourse would have been to ask him to recuse himself. Needless to say, under those circumstances, we didn’t think that would have been a wise course of action.”

No formal action

Killory, who reluctantly discussed the issue, emphasized that the Hollywood coalition had “decided not to take formal action (seeking Posner’s removal) and we have no intention of trying to use the press” to achieve that result.

The fin-syn appeal is being heard in Chi only because the networks went out of their way to find a receptive court. Attorneys for both Hollywood and the networks engaged in what is commonly known as “venue shopping,” in which lawyers seek to find a court that will be sympathetic to their interests.

Hollywood wanted the appeal heard in California, where judges presumably would be more receptive to the interests of TV programmers. The webs filed their appeal in D.C. In addition, a CBS affiliate in South Bend, Ind., filed its appeal in Chicago. The Chi court was then selected in a lottery drawing. A decision from the Chicago court is expected within several months.

Posner, through an aide, declined comment. Reps of CBS couldn’t be reached for comment.

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Biz News from Variety