Disney, Fox Clash Over Children’s TV Programming

In a nasty dispute between two entertainment giants, Walt Disney Co. filed an antitrust suit accusing units of Fox Inc. and 129 affiliated television stations of trying to monopolize the children’s TV market.

Separately, Disney asked the Federal Communications Commission to deny Fox’s request for a waiver of rules limiting growth of the fast-expanding Fox Broadcasting Co. television network.

The dispute marked a new stage in worsening relations among Hollywood companies, which have repeatedly crossed each other as they pursue aggressive expansion. A company affiliated with Fox had sued Disney for $1.5 billion less than a year ago in a fight over a British satellite co-venture, but that fight was quickly settled out of court.

In the latest battle, Disney accused Fox of trying to block it from selling “The Disney Afternoon”--a daily, two-hour block of animated programming--to Fox affiliates.

The affiliates are forming a cooperative venture called the “Fox Children’s Network,” which will develop programs for the same time block, between 3 and 5 p.m. Monday through Friday.

In its lawsuit, filed with the U.S. District Court in Los Angeles, Disney said Fox and its affiliates illegally conspired to keep Fox stations from buying the Disney cartoons and pressured some stations to rescind agreements with Disney.

In its FCC filing, Disney specifically accused Fox of threatening to strip KPCQ-TV, a Fox affiliate in Seattle, of its association with Fox unless the station backed out of an agreement to carry the Disney shows, which include “Duck Tales” and “Chip ‘n Dale’s Rescue Rangers.”

The lawsuit asked punitive damages, but didn’t specify an amount.

KPCQ-TV owner Bob Kelly didn’t return a call seeking comment on his role in the dispute.

Kevin O’Brien, general manager of KTVU-TV in Oakland and president of the Fox Children’s Network oversight committee, said: “This is nothing but an effort on the part of Disney to chill program diversity by the Fox affiliates.”

O’Brien accused Disney of trying to scare the Fox affiliates into backing away from their decision to form the children’s network. Affiliates are only now in the process of signing up with the new entity, which wouldn’t be owned by Fox, and so presumably could distribute additional hours of programming to Fox stations without violating the FCC’s rules that currently limit Fox to 15 hours a week.

A Fox spokesman said it was the company’s policy not to comment on pending litigation.

One Fox executive, however, privately complained that Disney hadn’t tried to work out problems between the companies before filing suit, and had used intimidation tactics of its own against the Fox affiliates.

“They’ve told (our) affiliates, if you don’t do what they want, they’re going to break them. As usual, Disney has opened a bad can of peas here,” the Fox executive said.

Randy Reiss, a Disney television executive, said his company had talked “extensively” with Fox affiliates before filing the suit, but didn’t deal directly with Fox or its parent, Australian-based News Corp., because those companies don’t have legal authority to dictate what programs the affiliates may carry.

In an interview, Reiss further complained that Fox had tried to “confuse the viewers” by promising to develop a Peter Pan TV show for affiliates. Peter Pan, he noted, is closely associated with Disney because of that company’s animated film based on the character, even though parts of the Peter Pan story are in the public domain.

Disney’s assault on Fox’s request for an FCC waiver appeared to be the first such step by any of the Hollywood studios. One studio chief, who declined to be identified, said he believed that other studios would file similar objections with the commission, and that he wasn’t aware of any major studio that would support Fox before the commission.

The big studios have traditionally supported the so-called “financial interest and syndication rules,” which limit the ability of TV networks such as ABC, CBS and NBC to own the programs they carry.

Fox and its chairman, Barry Diller, shook the studios’ solidarity last month when it asked for a review of the rules and a temporary waiver that would let its fledgling TV network expand programming without falling subject to the limitations.

In opposing the Fox position, Disney told the FCC: “Fox seeks to paint itself as a beleaguered David bravely battling the Gargantuan power of the Goliaths of the television industry. The Commission should not be misled. In fact, as Fox’s consistent pattern of anti-competitive behavior proves, it is very much part of the problem, not the solution.”

Disney is widely rumored to have discussed a possible acquisition of CBS Inc., but its support for the rules appear to point away from any such move, since a network acquisition would quickly place the studio in a dilemma similar to that of Fox.

Reiss said the established networks hadn’t engaged in practices similar to Fox’s, and had particularly avoided what he described as an illegal Fox tactic of program “optioning,” or trying to clear air time for future, unspecified programs.

According to Reiss, “The Disney Afternoon” package has already been sold to stations covering 90% of the country by next fall. But he said his company feared the cartoons’ success would be impaired if Fox stations began backing out of agreements.

Reiss said a number of Fox stations signed contracts to carry the cartoons, but he declined to be more specific.

KTVU’s O’Brien said it was unprecedented for a TV programmer such as Disney to insist on a contiguous, two-hour block of time for its shows, and that Disney had permitted stations to break up the cartoons until Fox announced its intention to form the children’s network. He said Disney’s attempt to block the children’s venture raised more antitrust questions than any action by Fox.

In a similar conflict several months ago, Paramount Communications and MCA Inc. ran afoul of Fox when they solicited Fox affiliates for a planned network that would show programming distributed by their studios. The two companies apparently dropped the plan.