Update (originally published on 8/25): Apparently the Sunday Ticket will not be “widely available” as originally reported. DirectTV will offer the web-based Sunday Ticket only to those fans who live in areas in which DirectTV is not an option. At first glance, it appeared that the NFL was embracing a rapidly growing form of media consumption in streaming; however, to me, this makes it increasingly clear that the NFL’s decision to offer a web-based service is largely an attempt to preempt a potential antitrust challenge to the exclusivity license granted to DirectTV for the rights to the Sunday Ticket.
Word is out that the NFL will now make the popular Sunday Ticket, which gives viewers access to all televised NFL games each week and the RedZone Channel, broadly available through the Internet for $350 per season. According to the New York Times, “That is $50 more than first-time buyers of the service on DirecTV (NYSE: DTV) are paying to watch the out-of-market games and $30 more than existing customers are being charged.”
The NFL had come under attack for how it contracted out broad viewership rights to one means of distribution–DirectTV–when that particular means is not an option to many. While DirectTV, unlike local cable providers, is a national brand, satellite television is simply not an option for many households for various reasons. The Sports Broadcasting Act of 1961 granted the NFL an antitrust exemption to negotiate a television package for the league at large; however, the league cannot limit the availability of telecasts beyond certain specific geographical locations. Typically in the US, separate entities, as NFL teams are, could not collude and act as a cartel, in an oligarchical manner, when negotiating contracts; however, considering the unique nature of sports leagues as national entities Congress explicitly granted an exemption for television rights.
This decision for the NFL to make the Sunday Ticket broadly available comes on the heels of a significant blow to the league’s antitrust exemption argument. The US Supreme Court in the past had held that “the clubs that make up a professional sports league are not completely independent economic competitors, as they depend upon a degree of cooperation for economic survival” (Brown v. Pro Football) and therefore leagues were granted significant leeway in colluding to reach uniform contracts. Teams in various sports leagues used this exemption to build up league-wide merchandising arms, as well as centralized systems of league and team web pages. However, just last year in American Needle v. National Football League, the Supreme Court issued an opinion which raised significant questions about the NFL’s practice of pursuing contracts in a cartel/oligarchical manner.
American Needle dealt specifically with the rights of individual teams to pursue their own licensing arrangements for apparel. Yet, the timing of the NFL to broaden the scope of availability for the NFL Sunday Ticket does seem to have at least something to do with this recent case. In 2006, Senator Arlen Specter, then chairman of the Senate Judiciary Committee raised questions about the league granting exclusivity for the popular Sunday Ticket product to just DirectTV. At that time, Gregg Easterbrook (whose brother is a prominent judge in his own right, Frank Easterbrook) offered the following observation and advice for the NFL:
Today the Senate Judiciary Committee holds a hearing on whether the DirecTV monopoly on Sunday Ticket is anti-consumer and constitutes restraint of trade. Finally, Congress has noticed this issue! TMQ’s prediction: The NFL, which seriously does not want Congress rethinking the antitrust exemption granted to the league in 1961 over its television contracts, better move pronto to make Sunday Ticket available to all cable carriers. The 1961 agreement with Congress specifies that in exchange for an antitrust exemption, the NFL will make its broadcasts available to everyone. Instead, the Sunday Ticket broadcast operates under a monopoly structure. Congress is already in a foul mood about the NCAA’s tax-exempt status for profitable D-I football. The new Congress will want to differentiate itself from the last by being pro-consumer. The NFL’s television contracts are worth nearly $4 billion a year; the league would be foolish to run any risk with that sum. Roger Goodell, change your deal with DirecTV before Congress changes it for you.
With the league’s practices called into question with regard to apparel, it appears that the powers that be smartened up in order to preempt what could have become another strong legal challenge to the NFL’s ability to negotiate contracts as a single entity. Television rights are the only Congressional anti-trust exemption granted to the league, and as such, it is a prudent business move for the league to do anything in its power to avoid a potential challenge to that element of the league’s business, especially in an uncapped year with upcoming collective bargaining negotiations with the NFL Players Association.