FCC Proposes Elimination Of Sports Blackout Rule In Victory For Consumers, Sports Fans

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"FCC Proposes Elimination Of Sports Blackout Rule In Victory For Consumers, Sports Fans"

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The Federal Communications Commission on Wednesday proposed eliminating what is known as the “sports blackout rule,” which allows sports teams and leagues to blackout broadcasts in local markets if they don’t sell enough tickets.

That doesn’t mean blackouts will be gone for good. But it is a major symbolic victory against the practice for consumer and fan advocates who have been fighting the blackout rules for years.

The blackout rule is most common in the NFL, where rules state that local broadcasters can only show home games if all tickets are sold 72 hours prior to the game’s beginning. That rule was part of the Sports Broadcasting Act of 1961, ushered through Congress with the help of former NFL commissioner Pete Rozelle. The FCC then expanded the blackout rule to state that if games were blacked out on local broadcasters, pay television companies — i.e. cable and satellite providers — couldn’t provide the broadcast to that audience either. What resulted, particularly in the NFL, was that many fans in local markets couldn’t see their teams play on TV.

The blackout rule aimed, in part, to protect NFL teams, who thought expanded television options would lead to more fans watching games from home and, thus, less revenue from ticket sales and stadium receipts (economists, however, say there has been no such impact). Consumer groups like the Sports Fan Coalition have argued that the original justification for the blackout rule no longer applies, and that the blackout rule now merely represents a federal subsidization of professional sports teams. The FCC now seems to agree:

We propose to eliminate the sports blackout rules. The sports blackout rules were first adopted nearly four decades ago to ensure that the potential loss of gate receipts resulting from cable system importation of distant stations did not lead sports clubs to refuse to sell their rights to sports events to distant stations, which would reduce the overall availability of sports programming to the public. The rules were extended to open video systems and then to satellite carriers to provide parity between cable and newer video distributors. The sports industry has changed dramatically in the last 40 years, however, and the Petitioners argue that the economic rationale underlying the sports blackout rules may no longer be valid. Below we seek comment on whether we have authority to repeal the sports blackout rules. Next, we examine whether the economic considerations that led to adoption of the sports blackout rules continue to justify our intervention in this area. Finally, we propose to eliminate the sports blackout rules and seek comment on the potential benefits and harms of that proposed action on interested parties, including sports leagues, broadcasters, and consumers.

“Our contention was this: the blackout rule is a federal subsidization of anti-consumer, anti-fan behavior,” David Goodfriend, the director of the Sports Fans Coalition, told ThinkProgress. “And the federal government should not be in the business of anti-consumer, anti-fan subsidies.” The Sports Fans Coalition originally petitioned the FCC to change the rule in 2012, and the FCC opened the regulation to public comment. Today’s proposal, Goodfriend said, shows the FCC “is now taking the serious step of putting out a notice of intent” to get rid of the rule. Broadcasters and sports leagues like the NFL will have another chance to comment, but it is evidence that the FCC “is leaning in our direction,” Goodfriend said.

The NFL has argued that eliminating the blackout rules would “undermine the retransmission-consent regime and give cable and satellite operators excessive leverage in retransmission-consent negotiations.” In plainspeak, the NFL and broadcasters say getting rid of the rule would mean more games would end up on pay TV as opposed to broadcast. Goodfriend argued that that was already taking place.

FCC scrutiny alone, Goodfriend said, has changed the NFL’s behavior. For evidence of that, Goodfriend pointed to the 2011 NFL season, when 75 percent of Cincinnati Bengals games, 35 percent of Buffalo Bills games, and 25 percent of San Diego Chargers games were subject to blackout. With the FCC watching closely, there have been zero blackouts during the 2013 season (though a few teams have again come close). The NFL has also relaxed blackout rules to allow teams to avoid them if they sell 85 percent of tickets.

That doesn’t mean this is a total victory for consumers who want blackouts to end. The NFL, other sports leagues, and broadcasters could still try “to steamroll us,” Goodfriend said. And eliminating the FCC rule alone won’t mean the end of the sports blackout. Because of the Sports Broadcasting Act’s original rule, the NFL and other leagues (many of which, like Major League Baseball, have more convoluted blackout policies) will still be able to blackout local games. To do so without opening the possibility that cable and satellite providers could show locally blacked-out feeds through other feeds or methods, however, they would have to negotiate blackout exceptions into their TV deals, which could create a bigger headache than it’s worth — again, look back to the absence of blackouts in 2013. Total abolition of blackouts could take legislation like Sen. John McCain’s (R-AZ) Television Consumer Freedom Act of 2013, which would prohibit leagues and broadcasters from blacking out sporting events conducted in publicly-financed stadiums. “Hooray!” McCain tweeted. “Great victory for sports fans!”

Even if it isn’t total victory, it’s a symbolic win, Goodfriend said, perhaps evidence that blackouts are an “antiquated and unethical practice,” as the Coalition has put it before. “The FCC has made it official that they agree with us,” he said. “That’s big! Think about it. We’re consumers going up against the NFL, Major League Baseball, and major broadcasters. We’re winning against the big boys!”

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