NFL, Time Warner Cable Scrimmage on Capitol Hill
House Telecommunications & Internet Subcommittee Holds Hearing on Competition in Sports Programming
By John Eggerton -- Broadcasting & Cable, 3/5/2008 9:03:00 AM
The National Football League and cable operator Time Warner Cable squared off Wednesday over the issue of control of sports programming generally and their carriage dispute in particular.
That came at a House Telecommunications & Internet Subcommittee hearing on competition in sports programming chaired by sports fan Ed Markey (D-Mass.).
NFL commissioner Roger Goodell argued that Time Warner and Comcast use their "bottleneck power" to control access to programming and discriminate against independents like his NFL Network. Time Warner does not carry the network, saying that the price is too high.
The commissioner added that the cable operators’ "anticompetitive practices" stifle independent programming like NFL Network and drive up the price for independent programming.
Goodell also charged Comcast with using its market power to favor its own sports and other programming, while shunting NFL Network to a lesser-viewed sports tier to try to pump up that tier with the NFL's high-value content.
He added that said he was not looking for legislation, but he did want Congress to make sure the Federal Communications Commission revised its program-access-complaint procedures -- he avoided the term arbitration -- so that his network could compete on a level playing field with networks owned by Comcast and Time Warner, the top two cable operators.
"Dominant cable operators have the motive and the means to discriminate against independent programmers," Goodell testified. "History demonstrates that they have done so and continue to do so. Congress should ensure that the law it has already passed to curb this abuse is implemented effectively. Accordingly, we urge that Congress remind the FCC that cable-carriage complaints are to be handled expeditiously, fairly and in a manner that ensures that consumers are able to enjoy nondiscriminatory access to independent programming."
Comcast was not represented, but Time Warner president Glenn Britt was on hand and called the NFL "especially disingenuous" in appealing for the government "to compel distributors to carry one of their services, NFL Network, on broadly distributed tiers while simultaneously defending its right to limit distribution of its more appealing service -- the NFL Sunday Ticket package -- to a single distributor, DirecTV."
Glenn pointed out that except for a minority interest in a New York Mets Major League Baseball channel in New York, SportsNet New York, Time Warner didn't have sports networks it would favor instead of the NFL, adding that the decision of where to carry any network was a combination of factors including attractiveness and price.
Also weighing in was the Consumer Federation of America's Mark Cooper, who proposed a carry-one, carry-all solution for sports programming, saying that if a cable operator put one sports channel on a separate tier, it should put all of them there. Or, alternately, if it carried its own sports channels on the more broadly viewed basic tier, it should put all of them there. But the best solution, Cooper argued, was to let consumers buy only the channels they choose.
That did not fly with Ken Ferree of the Progress and Freedom Foundation and former Media Bureau Chief at the FCC. He said a la carte was good in theory but a disaster in practice and it would lead to higher prices and less choice. Ferree added that the marketplace was working and that government didn't need to intervene.
He conceded that he was partly to blame for the current state of sports-programming regulatory affairs, calling it a "Frankenstein's monster we created." While at the FCC, he helped to come up with programming-access conditions for News Corp.'s purchase of DirecTV -- conditions essentially preserved in the FCC's recent approval of the sale of DirecTV to Liberty Media.
But he said those conditions were narrow and specific to a deal in which the vertically integrated News Corp./DirecTV had the means and short-term incentive to deny cable operators access to Fox regional sports networks to drive subscribers to satellite. He added that the current situation is not analogous and that these were free-market negotiations that the government shouldn't get involved in, calling the NFL's suggestion that it needed the help "a farce if it weren't so pathetic."
Not surprisingly, ESPN president George Bodenheimer took exception to Cooper's suggestion that all sports channels should be put in a separate tier.
The hearing looked not only at the issue of tussles between cable programmers and operators over access to RSNs, but the migration of sports from free to pay TV, a one-time hot-button issue on Capitol Hill that seemed to cool as more sports -- all-star games, Major League Baseball playoffs, Monday Night Football, golf -- moved to pay platforms.
When Rep. Lee Terry (R-Neb.) asked about the "slippery slope" from free to pay TV, citing, albeit obliquely, the move of MNF to ESPN, Goodell assured the legislators that "the basis of the NFL's policy is to stay on free broadcast TV,” although he appeared to find a little wiggle room by pointing out that the ESPN games remained on broadcast TV in the two markets of the teams playing. He called NFL Network a complement to that strategy to meet the desire for NFL football year-round.
Markey said Congress and the FCC were essentially the referees of the program-access fight and while they would prefer to let the players play, they also needed to be ready to step in "when unfair play is perceived."
Rep. Cliff Stearns (R-Fla.) and other Republicans were in no hurry to step in, saying that there was more competition now than ever from satellite, telephone companies and the Internet and pointing out that of the 500 channels now on cable, only 15% were owned by cable operators, down from 50% when Congress passed the 1992 Cable Act mandating nondiscriminatory access to programming.
Access to sports has been a key issue under FCC chairman Kevin Martin, who has expressed concern about cable operators' control over must-have programming. The FCC put sports-programming conditions on Comcast’s and Time Warner's purchase of Adelphia Communications cable systems and is currently considering unbundling cable programming at the wholesale level.
The issue has also been much on the mind of Markey, including access to Boston Red Sox MLB games, which involved DirecTV, and New England Patriots NFL games, which involved both Time Warner and the NFL and their carriage battle over NFL Network.
