Monday, April 6, 2009

Why is this league, the National Football League, different from all other leagues? Ask Congress

Why is this league, the National Football League, different from all other leagues? Ask Congress Posted April 6th, 2009 by Evan Weiner
By Evan Weiner
April 6, 2009
7:30 PM EDT
Somebody up on Capitol Hill is upset at the National Football League and that begs the question. Why is this league, the National Football League, different from all other leagues? All the other leagues, Major League Baseball, the National Basketball Association, the National Hockey League, Major League Soccer and the National Collegiate Athletic Association can put games on cable/satellite TV or broadband and not attract scrutiny but the NFL cannot.
All other leagues can have their own networks without Congress poking their collective noses into their networks, but the NFL cannot.
All other leagues can schedule games anytime they want and place the games on TV but the NFL cannot on Friday nights and all day Saturday during the high school and college season.
It was television that made the NFL into the giant it is today because of the Sports Broadcasting Act of 1961 and like Major League Baseball which zealously protects the Antitrust exemption that was given to the American and National Leagues in 1922 by the Supreme Court of the United States, the NFL would like the Sports Broadcast Act of 1961 to remain the law of the land.
It does seem quite unusual that staffers of both the House and Senate Judiciary Committees, at policy session at the National Cable Television Association convention last week in Washington brought up the law which was shepherded through Congress by House Democrat Emanuel Cellar in 1961 and signed into law by President John F. Kennedy on September 30 of that year just days after the NFL extended its partnership with DirecTV for NFL Sunday Ticket and once again denied multiple cable systems operators a chance at the service.
The NFL-DirecTV deal now goes through 2014 and DirecTV is the exclusive NFL Sunday Ticket partner and that doesn't make the cable operators happy nor does the agreement make the Senate jump for joy, particularly Pennsylvania Republican Arlen Specter who has been critical of the NFL since the league decided to put a small number of games, some late season Thursday night and Saturday games on the NFL Network. But the cable operators might eventually be in the Congressional crossfire since the staffers are discussing the removal of games from cable, the ESPN and NFL Network packages, and placing them on over-the-air networks. The NFL has a full slate of Sunday games, more than other sports, and all of the NFL playoff games are available on over-the-air TV which is more than MLB, the NBA and the NHL can say.
Congress and the NFL have been battling one another for a few years over the NFL Network and how most football fans don't have access to those games. Some background is necessary to fully understand why the NFL decided to put that schedule on the NFL Network and not go with Comcast's OLN back in 2005.
There is one theory, which has been floating around for some time, that the NFL decided to keep Versus's promised limited package for the NFL Network not necessarily because the owners wanted to grow their own network, but rather because the owners didn't want to share additional cable television revenues with their players, as the league and players were negotiating a new collective bargaining agreement in late 2005.Cable television and collective bargaining issues involve money: NFL owners feel they are giving too much revenue to the players and are also losing millions of dollars annually because big multiple systems operators (MSOs), such as Comcast (the nation's largest, with 24 million subscribers), Time Warner, and Cablevision, will not add the channel to their basic expanded lineups.
There has been little progress between the MSOs and the NFL since week 17 of the 2007 season. On December 29, the Patriots-Giants contest in East Rutherford, N.J., became a political football, metaphorically speaking, as the game was scheduled to be carried by the NFL Network. At that time, the channel reached only 43 million cable and satellite homes — out of a possible 95 million homes — in the nation. Senator John Kerry of Massachusetts first suggested that the December game (which featured the then-undefeated Patriots) be moved to NBC, possibly as a Sunday night presentation. But the NFL wanted to keep the game on the NFL Network to give the league some leverage in its ongoing talks with cable operators.
Kerry, along with Specter and Senator Patrick Leahy of Vermont, wrote a letter to the commissioner of the NFL, Roger Goodell, in which they threatened to reconsider the limited antitrust exemption that the NFL enjoys (although none of senators was specific as to what the Senate could really do). Following that pressure, the game was shown on CBS and NBC — as well as on the NFL Network.
The NFL wants cable companies to carry its network on a basic expanded tier so that all subscribers get the channel, whether they want it or not. (This is the same arrangement that covers such channels as ESPN, CNN, and the Weather Channel.) But the big MSOs objected to the cost of the NFL Network and questioned whether it was a value to subscribers. League owners and the MSOs have been at odds since the league signed an exclusive deal for its NFL Sunday Ticket package with the satellite system DirecTV. Cable operators will not be able to bid on the NFL Sunday Ticket package until after the 2014 season.
In this specific battle, the league and Comcast have been feuding since 2005, when the league pulled out of an agreement to allow the Versus network (owned by Comcast) to carry a limited Thursday-Saturday package. In an about-face, the NFL then assigned the package to its NFL Network in 2006. Had Comcast gotten the NFL package, it could have set up Versus as a serious threat to ESPN's dominance, as the network had already landed an American NHL cable contract and was negotiating with MLB for a limited package of games. The NFL deal would have greatly accelerated the introduction of Versus to MSOs.
In 2008, the NFL failed miserably to get the support of lawmakers to put the NFL Network on basic expanded tiers. On May 6, the NFL Network filed a complaint with the FCC, accusing Comcast of discriminating against the league-owned sports channel in violation of equal treatment requirements under the 1992 Cable Act. Lawyers for the NFL think Comcast is violating the law because Versus receives wider distribution on Comcast cable systems. NFL lawyers also think that Versus ended up with the Pac-10/Big 12 conference football games contract because Versus has more subscribers than the NFL Network. But on May 8, the chairman of the FCC, Kevin Martin, essentially told the NFL not to expect relief from the commission, saying he would not try to adopt rules that could help the NFL Network get carriage on Comcast systems across America.
Only one million Comcast subscribers have purchased the NFL Network. If the NFL is charging a dollar per subscriber per month, the NFL has lost a quarter of a billion dollars annually in its dispute with Comcast.
The NFL might disappear from Comcast entirely on May 1 if the league and the cable giant do not come up with a new agreement.
Nearly 48 years after the passage of the Sports Broadcast Act of 1961, Ivy Johnson, a Republican staffer on the Senate Commerce Committee, has opined that when the act was passed because the NFL's had a commitment to offer games on free, over-the-air TV.
Here's a bulletin for Johnson and other staffers like Stewart Jeffries and Christal Sheppard and others from both sides of the aisle. Learn your history before you sprout off opinions.
It might enlighten you.
There was no cable or satellite TV back in 1961. The NFL sought an antitrust exemption because the rival football league, the American Football League, signed a five-year deal with the then rather small American Broadcasting Company to air most of the new league's games including the AFL Championship in 1960. The AFL borrowed a page from Branch Rickey's proposed Continental Baseball League that included a planned TV revenue share between Continental Baseball League franchises which called for the fledgling league to bundle the franchises and sell the TV rights as one entity. Major League Baseball had an antitrust exemption and routinely signed a national deal with the National Broadcasting Company with those revenues going to fund the players pension plan. Both American and National League franchises cut local deals and kept the money from games seen in the home team market. The NBA, NHL and NCAA were non factors in those days.
It is very unlikely that the NFL could get billions of dollars annual if the 1960 rules were re-established. Here is a flash of Capital Hill staffers, in the old days, TV stations literally printed money but that is not the case today. George Preston Marshall could not replicate the old Washington Redskins network which consisted of the old Confederacy. The market that Marshall had included Jacksonville, Miami, Tampa, New Orleans, Charlotte, Dallas and Houston, all NFL cities today. The New York Giants network was all of New England along with New York and New Jersey. Green Bay had a poor network and it took quite a bit of pressure from NFL Commissioner Pete Rozelle to convince his owners in 1960 and 1961 to break up profitable networks for the New York Giants, Chicago Bears and Los Angeles Rams.
Over-the-air TV cannot compete for sports rights with regional cable networks or ESPN as cable networks get both licensing fees from cable subscribers and advertising. Over-the-air networks make money strictly from commercials.In virtually every American city with a sports franchise, owners have sold TV rights to cable companies like ESPN, Turner and the regional cable networks. The Sports Broadcasting Act of 1961 made the National Football League into the juggernaut it is today. If Congress wants to repeal the Sports Broadcast Act of 1961, the NFL might resemble baseball with rich teams in the big markets and struggling franchises in Kansas City, Buffalo, Green Bay, Jacksonville, Nashville, Charlotte and St. Louis.
Congress, if the representatives really feel like messing around with the NFL, can go with the nuclear option. Both chambers could blow up the 1966 legislation which allowed the merger of the NFL and AFL. They could create two, three or four football leagues where players could sell their services to different teams instead of the one franchise that selected them in the draft. That would create a different American football structure and end the Super Bowl as it is played today.
The NFL's success has been built in Washington, on Capital Hill. Perhaps Congressional staffers ought to look at 1960s era legislation instead of opining and understanding those pieces of legislation. The next decade will feature massive changes in technology in TV, radio, cell phones, broadband and computers. The staffers may look very foolish in the next decade when the changes come.

No comments: