Recent legal efforts have led some consumers to file suit against the National Football League (NFL) and DirecTV to seek viewing access to more football games. Between cable, satellite, streaming, regional sports networks (RSN), and social media there are more options today to watch live sports than ever before. ESPN reports that “In their petition for Supreme Court review, lawyers for the NFL and DirecTV argued that the 9th U.S. Circuit Court of Appeals erred last August when it reopened a class-action suit alleging that the Sunday Ticket package requires consumers to “pay more for games than they want” and violates federal antitrust statutes.” Where the 9th Circuit has sent the case back to the District Court, the plaintiffs are seeking U.S. Supreme Court review.
Three important points regarding this aforementioned litigation that includes a brief review on antitrust law in sports.
1. Baseball is regional, the NFL is national (in terms of distribution)
The reader might be asking, what does the above statement have to do with the price of bread. Baseball is referred to as the National Pastime, but its distribution model is very much a regional game through RSN’s, local broadcasts, and popularity numbers. The NFL is very much a national game through nationwide networks like FOX and CBS and popularity numbers. For example, entire conferences appear on one network (NFC on FOX and AFC on CBS under existing deals). The point here is that despite fans being limited by geography in terms of viewing through DirecTV options (e.g., blackouts and local popularity), the NFL being forced to not blackout games based on the existing geography and popularity model will not guarantee fan satisfaction. DirecTV will still be able to charge to watch games and whoever replaces them will do the same. As long as those prices are not anti-competitive, it will be allowed through existing anti-trust exemptions for sports. The NFL has significant leeway when it comes to distributing their most valuable asset, copyrighted broadcasts of games.
2. Ask the Los Angeles Dodgers
Despite Spectrum winning a lawsuit against another provider for antitrust activity based on pricing and competitor collusion, the status is unchanged as many Dodgers fans are without access to watching the boys in red, white, and blue. Again, Major League Baseball, and more specifically the franchises that control their distribution (versus the national NFL model) have significant leeway when it comes to distributing copyrighted broadcasts of their games. Moreover, existing deals with teams do not necessarily allow for licensing to streaming platforms and streaming platforms are not, significantly, an existing in-house option for many if not most RSNs, cable, and satellite companies (exception: AT&T-Time Warner).
3. Amazon as an example
Amazon as a business has done a wonderful job at disrupting itself. Finding ways to invest, invent, or integrate with existing technology despite losing on initial investment. Zappos, Twitch, Amazon Web Services, and the web-based platform Prime itself all originally disrupted existing Amazon revenues and business lines. However, the five to seven year investment approach is something that sports leagues and teams should consider. Professional sports leagues and teams would be wise to move away from exclusivity deals to reach as many fans (and advertiser dollars) as possible. Developing and utilizing existing technology and platforms to distribute content is both wise and cost effective in the long-run. Wide and non-exclusive access is much more satisfying and rewarding than narrow and exclusive-access for both fans and bottom-lines. In today’s economy, including customers and regulators, are much more attune to seeing access over exclusivity. Whether the courts follow, and whether that matters, is another matter entirely.