The Federal Communications Commission is seeking comment on whether it has the authority to eliminate its sports black out rules. These rules prevent cable companies, satellite companies, and open video network companies (typically local exchange companies) from importing a signal carrying a live sport event from a broadcaster located outside a local viewing area where the very same live sporting event is taking place not being carried by the local station. The rule was first applied to cable companies forty years ago and has been extended to satellite companies and open video networks over the subsequent three decades.
The NFL initiated black outs of local games to protect the gate receipts of the local team. In order to not have a local game see a fall off in gate receipts due to another game being broadcast in its local area, local television stations and later cable companies were prohibited from carrying those games. The FCC decided to supplement the NFL’s policy by instituting the black out rules basing its rationale on a consumer welfare theory that “to ensure to the greatest extent possible the continued availability of sports telecasts to the public.”
That rationale is pretty suspect, in my opinion. The FCC was concerned that the NFL and other professional sports associations would extend their black outs to all distant broadcasters just to protect the revenues at the gates. Question is, why should the state, in the form of the FCC, care about viewer access to a sporting event where the viewer is more than 35 miles away from venue where the live game is being played? If they want to see the game that bad, then pay a premium on the ticket and drive or fly to the city where the game is being played. The FCC will vehemently deny that it ws subsidizing ticket sales at the gate with this supplemental policy but that appears to be the result.
In 2017, a fan of Atlanta Braves baseball living in Douglas County, Georgia will be able to watch a game on her tablet, iPad, lap top, desk top (if she is brave enough to admit she still has one), or smart phone. She may not want to or be able to afford to drive to Cobb County to watch them play or even be able to afford a ticket, but at a fraction of the cost, can afford to watch via a broadband connection. Should the Braves and the MLB prevent a transmission of the game to her if the Braves fail to sell out their new stadium? Yes, they should. Would it make good business sense? No, it wouldn’t. Should the state in the form of the FCC care either way? No, it shouldn’t.
If anything, given its social policy of encouraging the use of broadband by all Americans, the FCC might be expected to prohibit black outs where viewing a game via a broadband connection would be discouraged, but even in promoting broadband adoption, the FCC would encroach on the business judgment of the Braves and the MLB, robbing them of their economic liberty to make a choice to sell or not to sell viewing time.
In addition, Public Knowledge and the Media Access Project do make a solid point that the FCC’s rules on black outs are anti-consumer. They do not expand consumer welfare. They work to diminish the value the consumer has in using alternative means to view content. This rationale, however, should not be extended to reach to the business judgment of the content provider, in this case professional sports. Any fall off in viewership should be punishment enough.