Senate Judiciary Takes On Sports Blackouts

Long-delayed hearing focuses on bill that would limit sports league antitrust exemption
Author:
Publish date:
Social count:
0
Capitol-Senate.JPG

The Senate Judiciary Committee Thursday began what looks to be a lengthy conversation on whether to ban blackouts of sports broadcasts, either blackouts during retrans impasses or in league contracts protecting stadium ticket sales.

That came in a Senate Judiciary Committee hearing on the FANS Act, which would eliminate the antitrust exemptions the four major sports leagues enjoy when negotiating their billion-dollar broadcast rights contracts if they continue to enforce blackouts.

The hearing had been postponed twice since October, and was a follow-up to the FCC's unanimous vote in September to eliminate its Sports Blackout Rules, which prevented MVPDs from airing games blacked out on broadcast TV due to league contracts, particularly the NFL.

The act is backed by Sens. Richard Blumenthal (D-Conn.) and John McCain (R-Ariz.), who together were big backers of eliminating the FCC rules, which essentially backstopped the NFL contractual blackouts.

Now they want the leagues to actually eliminate their contractual blackout policies, and to insure that access to sports is not used as leverage in retrans impasses.

At the hearing, Blumenthal said that he knew the bill could not pass in this lame duck session, but planned to reintroduce it in the next Congress.

He said that the leagues were not being forced to eliminate the blackouts, but if they choose not to, they will no longer get that antitrust exemption—established in the Sports Broadcasting Act (SBA) back in the 1960s, and would no longer be able to "fix" prices for league-wide contracts.

McCain said the blackouts only serve to benefit leagues and teams at the expense of hardworking fans. He cited near blackouts last year of wild card games featuring the Colts, Bengals and Packers, prevented only when local businesses bought up tickets at the last minute.

Both McCain and Blumenthal pointed to the benefits the leages get beyond just the antitrust exemption, including government help with transportation and stadium subsidies.

Blumenthal suggested it should be a two-way street, and that for that special treatment, the leagues had a special obligation to fans and they were not holding up their end of the bargain.

Representing the NFL, witness Gerry Waldron, said the FANS Act would hurt, not help, fans by undermining the "complex" business and legal structure that allows the league to offer games at no charge (as in over-the-air).

Blumenthal early on in the hearing said he wanted games to continue to be seen on free TV. "The bill would create tremendous uncertainty about the ability of sports leagues to enter into nationwide broadcast arrangements," said Waldron.

When asked directly by Blumenthal whether the NFL was considering eliminating blackouts on its own initiative, Waldron said the owners had agreed to talk about the issue in the wake of the FCC decision, but had no update. Blumenthal said the leagues could look like heroes if they did eliminate them.

As to requiring MVPDs to continue to carry sports broadcasts during retrans disputes. Waldron said that would "raise serious First Amendment issues by requiring sports leagues to provide broadcast content to cable and satellite companies during contract disputes."

Waldron pointed out that blackouts were at an all-time low, but that the blackout policy—not a rule, he pointed out—benefitted fans by "engaging fans on television and promoting a high-quality stadium experience."

Sen. Charles Grassley (R-Iowa) said he welcomed the conversation, and said nobody liked blackouts, but also said he was concerned about the government determining private contract language. "There is no question that blackouts are an exasperating experience and disfavored," Grassley said. "The question is how best to minimize blackouts and thereby maximize the benefits to consumers, while also respecting the rights of private parties to negotiate with each other at arms-length."

FCC witness Media Bureau chief Bill Lake said the commission was taking no position on the bill.

Sen. Al Franken (D-Minn.) took advantage of the hearing to renew his call for nixing the Comcast/Time Warner Cable deal, pointing out that the combined company would be an even bigger force in sports programming.  That was seconded by David Goodfriend, who heads the Sports Fan Coalition.

During the hearing, Goodfriend challenged the notion that to the degree the NFL was trying to keep games on broadcast TV, it was out of the goodness of its heart. He said broadcasting still drew the big ratings and advertising dollars, and if that changed, the NFL would change that model.

Franken also used the hearing to put in a plug for changing the name of the Washington football team (he did not say "Redskins"). He said that he had met with tribal leaders in Minnesota who fould it offensive, as did he. He asked what the NFL was doing about it. Waldron said that was not his area of expertise, but would get back to the senator.

Goodfriend said the blackouts wound up being a tax on local businesses, like TV stations and grocery stores, who have to scramble to buy up tickets to prevent blackouts.

He also reiterated the coalition's allegation that the NFL had pressured broadcasters into buying up tickets to prevent the blackouts.

Waldron did not comment, and no Senator asked him to.

Related