Every so often politicians recognize that laws empowering government bureaucrats to interfere with the free market produce unintended consequences. One example of this recognition is the 1961 Sports Broadcasting Act. This law exempts professional sports teams from being held liable under federal antitrust laws when they combine for purposes of negotiating deals with media companies. Without the Sports Broadcasting Act, networks would have to negotiate separate contracts with each team in a league. This would create chaos as different teams would have different contracts with different networks.
The Sports Broadcasting Act was written at a time when viewing options were limited to the three national networks, local sports programming, and radio broadcasts. Today, the rise of streaming services like Netflix, Disney Plus, HBO Max, and even YouTube offer the opportunity to view live sporting events from our flatscreen TVs, laptops, iPads, or mobile phones.
However, concerns have been raised that sports leagues are taking advantage of the rise of streaming to move content away from free TV towards paid streaming services. The leagues have also started offering different games on different platforms, meaning that someone wanting to view every NFL game played in a season would have to spend at least $1,000 on a combination of streaming services and premium cable channels.
Federal Communications Commission (FCC) Chair Brendan Carr has issued a request for comment on the “fragmentation” of sports broadcasting between broadcast networks and streaming services. The FCC is considering how consumers are harmed by the increased movement of sports from broadcast and cable to streaming.
Carr is not the only one with these concerns. In February, Utah Senator Mike Lee, who chairs the Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy, and Consumer Rights, wrote to Federal Trade Commissioner Andrew Ferguson and acting head of the Department of Justice’s Antitrust Division Omeed Assefi, requesting the federal government’s antitrust enforcers to explain how they are enforcing the Sports Broadcasting Act in the age of Netflix.
Senator Lee wrote that, “the modern distribution environment differs substantially from the conditions that precipitated this exemption. Instead of a small number of free broadcast networks, the NFL now licenses games simultaneously to subscription streaming platforms, premium cable networks, and technology companies operating under different business models. To the extent collectively licensed game packages are placed 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.”
Lee is correct that today’s market does not align with the vision of those who wrote the Sports Broadcasting Act more than 60 years ago. Those who wrote the act could not foresee the rise of cable TV, much less the internet. The real question is: do consumers still benefit from the law?
A look at how streaming has changed the market by expanding options available for consumers shows that the Sports Broadcasting Act still helps consumers. It is true that it is expensive to subscribe to enough platforms to view all NFL games. However, in the pre-internet era, it was virtually impossible to watch all football games or even to choose to watch specific games. That choice was made for you by networks, local network affiliates, and the NFL itself.
Today, football fans (and fans of other sports) can choose which games to watch and when to watch them. The combination of technology—along with a law that enables streaming services and professional sports leagues to air sporting events on various platforms—is a win for consumers. The worst thing that could happen to sports fans is for politicians like Senator Lee and regulators like Ferguson, Carr, and Assefi to increase government intervention in the relationship between sports leagues, online platforms, and sports fans.
The 1961 Sports Broadcasting Act is one of the few parts of federal antirust law that remains as important to consumers in today’s world of online streaming services as it was in the era of limited network, local, and cable TV broadcasting. For sports fans, protecting this law would be a home run.
