Cable Sports Deals Draw U.S. Senate Attention

Published January 1, 2007

Congress is taking aim at the trend on the part of sports leagues to negotiate exclusive arrangements with cable, direct broadcast satellite (DBS), and other video service providers.

Sen. Arlen Specter (R-PA), outgoing chairman of the Senate Judiciary Committee, introduced legislation in early December to repeal the Sports Broadcasting Act of 1961, a law that exempts the National Football League, Major League Baseball, and other leagues from antitrust laws and allows them to negotiate TV rights with broadcast and cable networks on behalf of all teams.

The Judiciary Committee held hearings in November on whether the growing migration of sports programming to cable networks, as well as exclusive arrangements–such as DirecTV’s “NFL Sunday Ticket” package, an all-game package available only to DirecTV customers–is harming consumers.

The hearings were sparked by this year’s shift of Monday Night Football, an ABC broadcast staple for 30 years, to ESPN, the cable sports network owned by ABC’s parent, Disney. In addition, in November the National Football League began live broadcasts of regular season games over its own cable network, the NFL Network–which, as of early December, had not reached agreements with Time Warner Cable systems or Cablevision, the primary cable service provider in the New York City area.

During the November 14 hearing in Washington, Landel Hobbs, chief operating officer for Time Warner Cable, said the increasing “fragmentation” of sports rights among numerous parties, as exemplified by the NFL Network’s decision to broadcast games previously available under larger network packages, was raising service provider costs.

Nonetheless, Hobbs called for a light regulatory hand, but he asked the committee to make sure antitrust exemptions that have been granted to sports leagues are not reducing competition or contributing to higher prices.

The antitrust exemptions also were raised by Dr. Roger Noll, professor of economics at Stanford University and a leading expert in sports economics. Noll’s testimony was not available at press time, but he did comment by e-mail.

Many of the problems that Congress, sports leagues, and cable companies are addressing now stem from the 1961 Sports Broadcasting Act, which was enacted when cable and satellite services did not exist.

“I believe that antitrust policies ought to apply to sports, and that if they did (with no exemptions) there would be no need for further regulation,” Noll explained. “In this case, we have a classic example of regulations arising to try to reduce the damage from an ill-conceived antitrust exemption.

“In the context of the antitrust exemption,” Noll continued, “exclusive distribution causes one artificial monopoly (the league as rights seller) to be transmitted to another (the single multichannel video distributor that gets the rights). I oppose allowing antitrust exemptions to be passed on to downstream industries by monopolizing them as well. But if the Sports Broadcasting Act is repealed or is adjudicated not to apply to pay-TV, then exclusive sale of one rights package is not a problem.”

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.