Sports television and streaming blackouts may finally be coming to an end. Blackout policies have long prevented fans from watching their favorite teams due to their market location on platforms including television networks and internet streams.
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The Sports Broadcasting Act of 1961 (SBA) exempted professional sports leagues from federal antitrust laws so that leagues could pool the individual team’s rights to telecast games. These licensing agreements—including television, radio, and digital—provide networks with the rights to broadcast games, and are a major revenue source for sports leagues. Sports leagues’ exemption from antitrust laws is not intended to detract from a fan’s experience, but rather its purpose is to protect the leagues; unfortunately, it does in fact hinder the fan’s experience by preventing them from viewing games at all.
Legislation to end these blackouts has been introduced by Senators John McCain (R-Ariz.) and Richard Blumenthal (D-Conn.). The Furthering Access and Networks for Sports (FANS) Act aims to ensure that these games are broadcast in some way to fans in all market areas, otherwise the sports leagues would not be able to retain their antitrust law exemptions. Games that are not locally broadcast would have to be available for streaming online, for example. Senator McCain said that leagues would have to meet “basic obligations” in order to continue to enjoy their antitrust exemptions.
The FANS Act would remove the language from the SBA that grants the leagues the ability to force local broadcasters to blackout home games when that team fails to sell most of their tickets. Currently, leagues can opt to blackout games in a home team’s market seventy-two hours prior to a game. Originally this policy helped drive ticket sales, but there is no current data that suggests this is still the case.
Additionally, the FANS Act would prohibit blackouts resulting from contract disputes between cable distributors and broadcasters. The FANS Act would also require leagues to make games available for online streaming (for a fee if the league so chooses) when it is not broadcast on television. Finally, the FANS Act would make Major League Baseball subject to antitrust laws, since the MLB is the only league that is broadly exempt from antitrust laws due to a 1922 Supreme Court decision.
Blumenthal explained why this legislation is critical for sports fans, saying that “[s]pecial breaks should be stopped for professional sports leagues that impose anti-consumer blackout policies leaving their fans in the dark. Leagues that enjoy antitrust exemptions and billions of dollars in subsidies and other benefits should give their fans fair access to their favorite teams on TV. This legislation would protect fans who now get the short end of the stick from leagues that treat the public with contempt while continuing to enjoy public benefits. Fans deserve to be put first – or at least treated fairly.”
Although the NFL has suspended local blackout rules for the 2015-2016 season, the NFL can, according to Blumenthal, “choose to reverse course at any time, and fans still face blackouts in baseball, hockey and basketball.”
Interestingly enough, discussions about blackouts reemerged prior to the introduction of the FANS Act after both NHL and MLB fans sued the leagues for local market blackouts.
Two weeks after the United States Court of Appeals for the Ninth Circuit ruled that the Oakland A’s cannot build a stadium in, and move the team to, San Jose because it is within the San Francisco Giants’ exclusive territory—which only exists due to the MLB’s antitrust exemption—a federal judge in New York declined to apply the exemption to broadcast blackouts in home teams’ territories.
MLB and MLB Advanced Media (MLBAM) operate baseball’s streaming services, MLB.tv, and their Extra Innings packages. Most MLB games are broadcast on regional sports networks (RSNs) in addition to the games broadcast on national television. Unfortunately, MLB’s subscription services blackout local market games that are shown on that market’s RSN. The fans suing MLB claimed there were negative consequences of the league’s broadcast monopoly:
According to plaintiffs, the ultimate consequence of this arrangement is that a Yankees fan living in Iowa who wants full access to a season’s worth of Yankees games has to buy an “out-of-market package” (“OMP”) — a bundle of all out-of-market games, from every team — instead of simply buying the YES Network. In plaintiffs’ view, this restraint is unnatural and anticompetitive. In its absence, RSNs would distribute their content nationwide in a la carte form, and an Iowa-based Yankees fan (for instance) would be able to choose between (1) buying the YES Network by itself, or (2) buying an OMP. Furthermore, the competition between these options would also push the price of the OMP down. First, out-of-market fans would have more options for watching the games of their preferred teams. Second, all fans, whether they primarily follow their home teams or out-of-market teams, would be able to pay less for the OMP.
The plaintiff’s motion to certify class-action status for the lawsuit against the MLB and NHL was granted by U.S. District Court Judge Shira Scheindlin in May 2015: “Every class member has suffered an injury, because every class member, as a consumer in the market for baseball or hockey broadcasting, has been deprived of an option–a la carte channels–that would have been available absent the territorial restraints.”
In June 2015, after disgruntled NHL fans sued the league for breaching antitrust law by blacking out local market games for NHL Center Ice and NHL Gamecenter Live subscribers, the NHL proposed a settlement that lowered the price of NHL streaming by offering a $105 single-team package, rather than limiting subscribers to what was the $159 league package, which has since been lowered to $131.49. Single-team packages would appease fans who lived outside of a team’s exclusive market, like a Nashville Predators fan who lives in New York, rather than forcing them to purchase a service for all NHL teams. However, the settlement did not actually remedy the core issue in this case, since blackouts would be applied when that team plays against the fan’s local market team.
While Judge Scheindlin agreed with the plaintiffs that this blackout policy violated federal antitrust law, the plaintiffs settled with the NHL without actually achieving their original goal; this could be in part due to the plaintiffs’ inability to recover monetary damages from this lawsuit.
Months later, the MLB and their fans are on the road to settlement as well. On the eve of trial, it was announced that the case has been settled. Recent filings indicate that the MLB’s recent introduction of single-team packages, similar to those introduced by the NHL, may have played a significant part. These packages are in addition to the $109.99 (the price was reduced from $129.99) entire league out-of-market package that is already available. Starting next season, fans can purchase streams for a specific team, game, or series, some including in-market games, without being required to purchase a league package.
Single-team packages will be offered by MLB for $84.99. Fans who already have cable subscriptions from Comcast, DirecTV, or 21st Century Fox will not face in-market blackouts of their digital streams—so cord-cutters looking to watch in-market games without a cable subscription will unfortunately still face in-market blackouts.
Although the NHL and MLB seem to have settled their class action lawsuits regarding potential violations of antitrust law with their broadcast arrangements, both leagues should be wary since, in addition to the FANS Act potentially passing, other courts could still determine that local market blackouts are a violation of federal antitrust law—which could jeopardize the business models of league subscription services.