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Court Strikes Broadcast Flag

Federal judges Friday struck down FCC
rules aimed at preventing broadcast-TV programming from being illegally
duplicated over the Internet and other computer networks.

The U.S. Court of Appeals in
Washington ruled that the FCC overstepped its authority when it required
manufacturers of digital TVs to include “broadcast-flag” technology to
protect programming content from piracy.

Broadcasters and Hollywood, who must now plead their case in Congress,
say a strong safeguard against illegal copying must be in place if TV stations
are going to be allowed to air digital versions of the latest movies and other
valuable programming.

The court agreed with petitions from the American Library Association, Public Knowledge and others that the flag rules are not
authorized by the FCC's right to regulate interstate radio
communications.

The FCC has the right to govern how TV signals are received but not
what is done with them after reception of the signal is complete.

The flag is a code embedded in broadcast programming that signals the
receiver to block the illegal retransmission of the broadcast over computer
networks and other devices. Broadcasters argue that, without that protection,
the switch to digital is fraught with dangers from digital pirates.

The court said there is “no statutory foundation for the
broadcast-flag rules.” Saying the commission acted outside its scope of
authority, the court found that “Congress never conferred authority on the
FCC to regulate consumers' use of television-received apparatus after the
completion of broadcast transmissions.”

Fox News Wants To Double Fees

Cable operators are already bracing for tough negotiations to renew
Fox News Channel, but News Corp. is signaling just how tough.

The network is looking to at least double the license fee it charges
DBS and cable systems to carry the network. Currently, Fox News' fee averages
around 25¢ per month per subscriber.

On News Corp.'s earnings conference call May 3, President
Peter Chernin said he is looking at another
25¢ per month, at least. “Trust me, we think we're worth a hell of a
lot more than that,” he said.

Since Fox News reaches more than 80 million subscribers, that increase
“its worth $250 million to the bottom line.”

Fox News launched in 1996, so its 10-year carriage deals start
expiring next September.

The network's average license fee is 37% less than the 40¢ that
rival CNN has managed to secure for its two
networks (CNN and Headline News), growing the
price gradually over 25 years.

But Fox has eclipsed CNN in the Nielsen ratings and wants to leapfrog the network's
license fees as well. “We invested a lot of money and worked really hard to
achieve this over the 10 years,” Chernin says, “and we believe we should
get an appropriate payback.”

He has a tough road ahead. Cable and DBS operators are already
fiercely fighting increases in programming costs. Moreover, a major reason Fox
News' fees are even as high as 25¢ is the massive upfront payments the
network offered operators to launch the channel. They exceeded $300 million,
including payments of about $12 per subscriber to then-top operator,
Tele-Communications Inc.—J.M.H.

Sony, Tribune Team On First-Run

Tribune Co.'s 26 TV stations, its
syndication arm Tribune Entertainment, and
Sony Pictures Television (SPT) have agreed to
develop and produce a first-run syndicated program, with the joint venture
working on a daytime program for the Tribune group starting in fall 2006.

The announcement failed to mention specific projects. It appears
likely that a talk show with Howard Stern
sidekick Robin Quivers, which failed to gain
traction for this September, will be among those that Sony and Tribune consider
for fall 2006.—J.B.

Apollo Panel To Launch

Arbitron and Nielsen parent VNU are
creating a panel of 6,000-plus households to test Project
Apollo
, a new service to integrate viewership with
product-purchasing information.

The service, which is based on Arbitron's portable people meters, is
intended to give advertisers a better gauge of the effectiveness of their ads
by relating exposures across multiple platforms to shopping behaviors. Each
person will get a portable people meter, which records exposure to various
media sources, broadcast and cable.—J.E.

Peacock Keeps Old Kentucky Home

NBC has finalized a deal to keep TV
rights for two of the three jewels in horse racing's Triple Crown, the
Kentucky Derby and Preakness, for another five years. The deal thwarts an
attempt by ESPN to snag Preakness rights away
and pair the race with ABC's carriage of the
Belmont Stakes. NBC will carry the Derby and
Preakness through 2010.—J.M.H.

'Grey's Anatomy' Healthy

ABC has officially picked up its new
hit midseason medical drama, Grey's Anatomy, for next season with an
order for 13 episodes.

The Touchstone series has been a
surprise hit in its 10 p.m. Sunday time period after Desperate Housewives,
retaining more of its powerhouse lead-in than Boston Legal , which it
displaced.

Boston Legal is also coming back
next season with a full, 22-episode season order (plus the five episodes left
from this season).—J.B.

House Defeats VNR Disclosure Bill

The House last week voted down an
amendment to a Vocational Ed bill that would have prevented use of funds for
paid commentators or video news releases (VNRs) unless both clearly disclosed
that they were provided by the government.

Rep. George Miller (D-Calif.),
ranking Democrat on the education and workforce subcommittee and a leading
congressional opponent of unsourced VNRs, had proposed the amendment, saying,
“The Bush administration has refused to end the deceptive, wasteful and
illegal practice of producing fake news.” After its defeat, he said the House
had “failed to adopt a commonsense measure to do something about it.”

A spokesman for Miller says he will take every opportunity to
reintroduce the measure on subsequent spending bills. Senate Commerce Committee
Chairman Ted Stevens (R-Alaska) has scheduled
a May 12 hearing on a bill mandating disclosure of government VNRs.

The hearing had originally been scheduled for April 28 but was
postponed when the bill had not been introduced at least 48 hours before the
scheduled hearing.—J.E.

Comedy Central Halts 'Chappelle's Show'
Production

In a terse, three-line statement, Comedy Central
said it is "optimistic" that production will resume "in the near future" on the
third season of Chappelle's
Show
, which was scheduled to premiere May 31.

No word on the reason for the abrupt move only one day after the
channel buoyantly pitched its shows to advertisers.

Dave Chappelle re-upped for two more
seasons (a total of four) last August, with a lucrative deal that has been
pegged at $30 million-$50 million and was based on projections of DVD and other
backend sales through the end of the fourth season.

In 2004, when season two aired, the show averaged 3.1 million total
viewers (2.2 million in 18-49s), which made it one of the channel's top-rated
shows.

Season one DVD sales were 2.8 million units. In its most recent
financial statement, Viacom pointed to a 30% increase in
ancillary revenue, singling out Chappelle's Show for
special mention.—A.B.

CBS' Summer Reality Check

CBS will air three new reality series
this summer. Fire Me,
Please
, airing Tuesdays at 9 starting June 7, is a
seeming spoof on The Apprentice. It gives
two contestants until 3 p.m. to get fired from a new job. First one out wins.
On The Cut,
beginning Thursday, June 9, designers vie to launch their own label for Tommy
Hilfiger. The winner in Rock
Star: INXS
becomes the new lead singer in the group.
Another hook: The contestants live together. It debuts July 11, with three
airings a week. Survivor executive producer
Mark Burnett cooked this one up, too. (See
page 9.)

Murphy Leaves 'Nightline'

George Murphy is out at
ABC News' Nightline, although it is not clear if he was
fired or will be allowed to resign.

The Nightline senior director has
not been at work for several weeks since ABC learned that he was endorsing the
Sony Vegas editing system, including during a
planned appearance at the NAB convention in
Las Vegas last month.

ABC had just signed a big deal for Avid editing equipment, which was announced at the
convention. The network also has a written policy against product endorsements
of any kind.

ABC had no comment.—J.E.

AT&T, Comcast Settle @Home

On the eve of trial, AT&T has
agreed to settle several claims tied to its control of failed high-speed online
service Excite@Home.

The telephone company says the settlement is a $340 million payment to
Excite@Home bondholders and a company pursuing a patent-infringement claim.
Comcast says it will cover half the settlement
because it bought AT&T's cable division two years ago. However, the
settlement does not resolve all the claims directly against Comcast or against
Excite@Home's other major shareholder, Cox
Communications
.

Excite@Home was formed to create a national data backbone and other
services for most of the major cable operators in the late 1990s as the
industry was beginning to offer high-speed Internet services.

Like many dotcoms of the era, Excite@Home got swamped in losses and
shut down. Comcast and Cox managed to sell out to AT&T at a huge price $3
billion before the fall.—J.M.H.

Armstrong To Head Johns Hopkins Medicine

Michael Armstrong, the former
chairman of AT&T and Comcast Corp., has been elected chairman of the board
for Baltimore-based Johns Hopkins Medicine,
effective July 1. Armstrong, 66, will head a board that oversees a $3 billion
clinical and medical research enterprise that includes the university's
medical school and health system. —J.E.

Brockman Promoted, Binford Out at ABC

Kevin Brockman, a seven-year veteran
at ABC, has been named senior VP, communications, for the Disney-ABC Television Group; he had been senior VP of
entertainment communications. The network also announced that
Sue Binford resigned her position as senior
VP, corporate communications.—P.J.B.

Bad 'Idol', Big Ratings

A new American
Idol
controversy hit the right note with viewers last
week on two networks. Fox's reality powerhouse soared in the
ratings last week despite a steamy exposé by ABC
newsmagazine Primetime
Live
about an alleged affair between a former contestant
and a judge and claims of preferential treatment.

The May 3 and 4 installments of American Idol
collected 49.8 million viewers combined, and the show's
Nielsen marks are up over last season. ABC's
Idol-themed special, which came on an hour after the Fox
show, nabbed 13.7 million viewers and a 6.1 rating/16 share among adults 18-49,
more than double the newsmagazine's season average. In a rare ratings coup for
ABC, the network beat out workhorse dramas CSI:
NY
and Law &
Order
in viewers and adults 18-49.

On the ABC special, former Idol wannabe
Corey Clark alleges he and judge Paula
Abdul
carried on a secret affair two seasons ago and she aided him
in the competition.

Abdul has denied the charges, and Fox says it will investigate any
legitimate complaints of favoritism. Fox and Idol producers said the special was filled with "rumor,
speculation and assertions from a disqualified contestant who admitted during
the special to telling lies." Clark was removed from the show for not revealing
charges he assaulted his sister and resisted
arrest.—A.R.

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