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WSJ Takes on NFL Antitrust exemption. Makes good points.
Posted on 4/3/26 at 8:42 am
Posted on 4/3/26 at 8:42 am
Wall Street Journal editorial yesterday.
quote:
The National Football League owners held their annual meeting in Phoenix this week, and they are masters of all they survey: stellar TV ratings, record revenue and team valuations, and possible international and flag-football expansion. But maybe the billionaires should consider the backlash building against the antitrust exemption they retain from another era.
In a fracturing culture, the NFL is a rare entity that still commands a mass audience. After this year’s Super Bowl, the league boasted that 137.8 million people tuned in during the second quarter, “marking the highest peak viewership in U.S. TV history.”
This popularity explains why team values keep increasing. Forbes rates the Dallas Cowboys as the league’s most valuable franchise, worth $13 billion, with revenue of $1.2 billion. Even the relatively poor Cincinnati Bengals, at the bottom of the list, are estimated to be worth $5.25 billion, with revenue of $573 million.
By any measure the NFL is an entertainment goliath. One reason is that in 1961 Congress passed the Sports Broadcasting Act, granting the league limited antitrust immunity to let the pro teams collectively license “the ‘sponsored telecasts’ of their games to national broadcast networks,” as Utah Sen. Mike Lee recently put it in a letter to the Justice Department and Federal Trade Commission.
But today’s media universe features splintering providers. “The NFL now licenses games simultaneously to subscription streaming platforms, premium cable networks, and technology companies,” Mr. Lee explained. If football games are put behind subscription paywalls, “these arrangements may no longer align with the statutory concept of sponsored telecasting or the consumer-access rationale underlying the antitrust exemption.”
The history is instructive, since Congress passed the legal exemption at a moment of weakness for the NFL and strength for traditional broadcasters. In the early days of TV, the league instituted broadcast “blackout” policies to prevent free games on air from eating into stadium sales. When the government sued under antitrust law, the judge’s 1953 ruling was a mixed outcome. Yet today it reads like a crackling radio dispatch from a quaint age.
“There are always teams in the League which are close to financial failure,” the judge said. “It is both wise and essential that rules be passed to help the weaker clubs in their competition with the stronger ones.” After the NFL received competition from the American Football League, it sought to pool its TV revenue, which the Sports Broadcasting Act blessed for “sponsored telecasting.” The revenue-sharing model has been successful and gives all NFL teams a chance to compete on a relatively even playing field.
Yet today the NFL is the powerful giant while the broadcasters are weak. Commissioner Roger Goodell wants to take advantage of this dominance by renegotiating with the networks. In 2021 the NFL finished a package of broadcast deals, including with CBS, Fox and NBC, that were meant to run through 2033. Rights fee roughly doubled.
Mr. Goodell is using the threat of an early opt-out provision to change the terms only halfway through the deals. The assumption is that he thinks he can get more money from big tech’s streaming services than he can from his long-time TV partners. That would hurt the networks, especially local stations, that rely on the NFL for ad revenue. Live sports are one of the last drivers of large audiences, and the advertising funds local news and reporting.
It would also mean higher prices for football viewers tuning into the NFL, and consumer benefit is one of the lodestars of antitrust law. “To watch every NFL game during this past season,” Sen. Lee says, “football fans spent almost $1,000 on cable and streaming subscriptions.”
***
The NFL may have the power to squeeze the networks, but the question then becomes why the league would deserve an antitrust exemption. The Federal Communications Commission also wants to know. “Live sports and broadcast television have enjoyed a long and mutually beneficial relationship,” the FCC said in a recent request for public comment.
But if the NFL no longer wants that deal, and it would prefer to squeeze fans for more money while broadcasters are hollowed out, then Congress might consider whether that 1961 antitrust exemption has ceased to make sense. Let’s hear the NFL explain why it still deserves it.
4
Posted on 4/3/26 at 8:52 am to prplhze2000
quote:
§1291. Exemption from antitrust laws of agreements covering the telecasting of sports contests and the combining of professional football leagues
quote:
The antitrust laws, as defined in section 1 of the Act of October 15, 1914, as amended (38 Stat. 730) [15 U.S.C. 12], or in the Federal Trade Commission Act, as amended (38 Stat. 717) [15 U.S.C. 41 et seq.], shall not apply to any joint agreement by or among persons engaging in or conducting the organized professional team sports of football, baseball, basketball, or hockey, by which any league of clubs participating in professional football, baseball, basketball, or hockey contests sells or otherwise transfers all or any part of the rights of such league's member clubs in the sponsored telecasting of the games of football, baseball, basketball, or hockey, as the case may be, engaged in or conducted by such clubs. In addition, such laws shall not apply to a joint agreement by which the member clubs of two or more professional football leagues, which are exempt from income tax under section 501(c)(6) of the Internal Revenue Code of 1986 [26 U.S.C. 501(c)(6)], combine their operations in expanded single league so exempt from income tax, if such agreement increases rather than decreases the number of professional football clubs so operating, and the provisions of which are directly relevant thereto.
Lee's argument doesn't seem to work with the text of the statute. Which streaming platform isn't incorporating ads/sponsors to their broadcasts? Amazon's is full of them. Netflix also has sponsors and commercial breaks.
The NBA went streaming over 10 years ago. Not a peep. Monday night football has been on ESPN for 20 years
I wonder which network is begging the government to change things. I imagine it's Fox, for obvious reasons.
This post was edited on 4/3/26 at 8:55 am
Posted on 4/3/26 at 8:53 am to prplhze2000
If the 1961 Sports Broadcasting Act is repealed then the NFL can schedule games on Fridays and Saturday evenings. I doubt the NFL would go head to head during the day, but having Saturday during day exclusive for college and Saturday night and Friday Night for NFL could happen.
Posted on 4/3/26 at 9:27 am to prplhze2000
quote:
“To watch every NFL game during this past season,” Sen. Lee says, “football fans spent almost $1,000 on cable and streaming subscriptions.”
Looks like the issue here is the only way to conceivable do this is with a NFL Sunday Ticket & Red Zone package on YTTV; unless I'm missing something. So that would be about $522 for the season
Prime Video is $8.99/month for Thursday night games - $36 for 4 months
Netflix is $8.99 for the Christmas game
Peacock - don't know what games they had exclusive rights to
Closer to $600 for the full season, then again what percentage of the population is really trying to "watch every game"
Posted on 4/3/26 at 9:33 am to Weekend Warrior79
quote:
Looks like the issue here is the only way to conceivable do this is with a NFL Sunday Ticket & Red Zone package on YTTV
Correct. It's a completely dishonest argument.
Who could watch every NFL game in 1970? Literally nobody.
quote:
Peacock - don't know what games they had exclusive rights to
Probably dishonestly ignoring how you can watch SNF on NBC
Posted on 4/3/26 at 9:33 am to SlowFlowPro
I think the argument should be, "The owners accept taxpayer money to build their stadiums; now the owners want to deny those taxpayers the benefit of their payments by eliminating access by free, over-the-air broadcasting."
Posted on 4/3/26 at 10:28 am to SlowFlowPro
quote:
Who could watch every NFL game in 1970? Literally nobody.
This is the part people seem to forget, and you could probably change that to 1993. NFL Sunday Ticket launched in 1994.
Posted on 4/3/26 at 10:30 am to SoFla Tideroller
quote:
I think the argument should be, "The owners accept taxpayer money to build their stadiums; now the owners want to deny those taxpayers the benefit of their payments by eliminating access by free, over-the-air broadcasting."
So, like it was back in the days of local blackouts, if the game was not a sellout?
Posted on 4/3/26 at 12:11 pm to SlowFlowPro
Packers/Ravens on 12/27 was aired only on Peacock. It looks like the local NBC stations aired it in the respective teams area, but the rest of the country needed a subscription for that one.
Posted on 4/3/26 at 1:17 pm to SoFla Tideroller
quote:
I think the argument should be, "The owners accept taxpayer money to build their stadiums; now the owners want to deny those taxpayers the benefit of their payments by eliminating access by free, over-the-air broadcasting."
This argument is not related to antitrust laws. Stadiums are funded by local money. Antitrust laws are federal.
The antitrust laws prevent competitors (like teams competing with each other) from making an agreement that restrains trade or from merging to form a monopoly. Restraints of trade and monopolies are bad for consumers whereas competition reduces prices and increases quality.
The collective (league) broadcast agreements are agreements by competitors to limit the broadcasts of their games in order to drive up prices. Prices are more now than they were before streaming began and the NFL has used its monopoly and the collective of its teams (who are all competitors) to jack up prices. Consumers are suffering because they have to pay more to see games.
In law, when the reason stops so stops the rule. If the reason was to help the NFL because it was powerless compared to the networks, the reason for the rule no longer exists. It may be time for the rule to be amended or repealed.
Posted on 4/3/26 at 1:38 pm to wrlakers
quote:
the collective of its teams (who are all competitors)
Teams compete on the field. Off the field they are business partners
Posted on 4/3/26 at 2:03 pm to wrlakers
Let’s say Congress removes their exemption
What does that actually mean? What actually changes?
What does that actually mean? What actually changes?
Posted on 4/3/26 at 6:46 pm to chalmetteowl
quote:
Teams compete on the field. Off the field they are business partners
They are partners in the revenue sharing agreement, which is only allowed because of the antitrust exemption.
They compete for fans, for market share, for sales of team gear, for ticket sales.
In other industries, competitors cannot make agreements with each other because those agreements tend harm consumers by allowing the competitors to maintain artificially high prices.
Posted on 4/3/26 at 7:22 pm to LSUTIGER in TEXAS
quote:
Let’s say Congress removes their exemption
What does that actually mean? What actually changes?
Posted on 4/3/26 at 7:41 pm to wrlakers
quote:
In other industries, competitors cannot make agreements with each other because those agreements tend harm consumers by allowing the competitors to maintain artificially high prices.
Sports is unique in that (let’s say) the Cowboys can’t realize their maximum value without other teams providing strong competition… a league where they just dominate would kind of suck
Posted on 4/3/26 at 8:01 pm to chalmetteowl
quote:
Sports is unique in that (let’s say) the Cowboys can’t realize their maximum value without other teams providing strong competition… a league where they just dominate would kind of suck
Agreements that have pro-competitive benefits are normally allowed under the rule of reason because they do not restrain trade.
Posted on 4/3/26 at 8:10 pm to prplhze2000
Trump turning the DoJ on the NFL
he'd more than a $1 worth
he'd more than a $1 worth
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