Hollywood shivers as regulators move to unleash TV nets.

When the Federal Communications Commission announced April 1 it was uncaging the three television networks from entering the lucrative syndication market, it touched off a vitriolic, almost hysterical reaction in Hollywood.

There are fears that independent producers are doomed and that there will be a further consolidation of the entertainment business, with movie studios and networks merging.

The FCC will now allow the three major television networks, ABC, CBS and NBC, to own stakes in shows provided by independent production companies and the studios and to share fully in rerun sales when these shows move into syndication, or sale to local stations.

They can also produce and own as many of their prime-time shows as they wish, ending a 40 percent cap on in-house productions.

These almost two-decade-long financial syndication rules still need to be formally lifted or modified by Los Angeles-based U.S. District Judge Robert Kelleher. Observers expect Kelleher to act on the consent decrees later this year.

All FCC financial rules would expire two years after Kelleher lifts the consent decrees. President Bill Clinton will be naming new members to the FCC and this could change the situation because the commission will review its decision after the court rules.

In the meantime there will be pressure and lobbying to maintain the status quo on fin-syn rules. There is hope that the FCC will be reversed in the appeals court and a coalition of 325 producers, directors and independent television stations is spearheading a campaign to overturn the FCC.

Jerry Leider, co-chairman of the Coalition to Preserve the Financial Interest and Syndication Rule, said independent producers such as himself are dead if the rules are dropped.

"They are shoveling dirt on top of the coffin," he said. "The decision by the FCC has the networks dancing in the streets but in reality they are dancing on the graves of the small to medium sized producer. For some 20 years these rules have well served the public; program diversity, independent producers and independent television stations flourished.

"Now the networks can once again flex their unparalleled muscle, unchecked and unimpeded, extracting rights from revenue from creators as a condition for putting a program on the air," Leider said. "The playing field is not level. The networks alone control the airwaves to the mass audience and the atmosphere is ripe for abuse."

The networks have been on the decline for several years, getting squeezed by declining advertising revenues during the recession and the loss of viewers to cable television, videotape cassettes and the fourth network Fox Broadcasting Co.

Entertainment analysts say the FCC syndication changes could provide the networks with a needed financial shot in their bottom lines, but they don't see a stampede of studio-network mergers.

There has been Wall Street speculation that Paramount Communications or Walt Disney Co. would be prime suitors for NBC, and Capital Cities/ABC Inc. would look good on the altar with Paramount. With syndication rules lifting, there would be no regulatory blocks preventing these marriages.

Alan Gould, analyst with brokerage firm Kidder, Peabody & Co., said, "I don't see any big mergers but there could possibly be some joint ventures between the studios and the networks. I don't see Disney or Paramount paying the prices the networks would want."

Gould predicted that networks will now keep their own network-made shows on the air longer, leading to less frenzied scheduling in the future.

The notion that independent producers are headed for extinction is not universal.

David Jacobs, among the most successful television producers ("Knot's Landing" and "Dallas"), said the changes could be beneficial for producers because the networks could crank up production. However, he cautioned the networks would be in strong negotiating position and could extract favorable deals from producers.

Recently networks have cut back their own production schedules and have been buying fewer pilots, especially in the expensive one-hour dramatic series genre. These shows are being churned out by Paramount's and Time Warner's television arms and are doing well in off-network, first-run syndication. The FCC didn't change the rules preventing the networks from getting into first-run syndication, which entails programming made directly for sale to local stations.

Robert Daly, chairman of Warner Bros., has been a leading spokesman against the FCC changes. He said, "We won't stand idly by and let the networks return to their anti-competitive ways of the past. Their practices will be closely scrutinized and monitored and, if necessary, we will do whatever is possible to hold them accountable for their actions."

Network executives have said that not all their wishes were granted by the FCC but they got much of what they wanted. The biggest winner could be the fourth network, Fox Broadcasting Co.

The FCC said Fox is exempt from most restrictions because it is an emerging network. Previously, Fox was going to be restricted by the fin-syn rules once it aired more than 15 hours of prime-time shows weekly.