NFL is the bad guy in cable dispute

Wisconsin lawmakers are scheduled on Thursday to consider legislation that would regulate cable TV programming. Such regulation may appeal to subscribers dissatisfied with the current lineup. But state government interference in programming decisions would prove costly and unconstitutional, and should be rejected.

The primary proponent of the legislation, Senate Bill 343, is the National Football League, which claims that cable companies aren’t being "fair" in negotiating the terms and conditions for broadcasting its NFL Network. Specifically, the NFL wants government to force cable service providers into binding arbitration – in place of private negotiation – in hopes of fattening team owners’ broadcast revenues.

This would be laughable were it not so serious. The NFL already enjoys an enormous advantage in negotiating broadcast rights by virtue of its exemption from anti-trust law. Under the Sports Broadcasting Act of 1961, all 32 teams are permitted to negotiate as a single block for both over-the-air and cable TV contracts, which vastly increases their leverage.

Cable companies such as Comcast, Charter and Time Warner have so far rejected the League’s demand that the pricey NFL Network be offered as part of a basic tier of service, believing that subscribers simply don’t want to absorb a rate hike for an additional eight live games this season. (The rest of the network lineup consists of replays, news and features.) The cable service providers are offering instead to air the NFL Network on a sports tier for which subscribers are willing to pay a premium.

The team owners insist that fans are thus "being held hostage" by the cable companies. But to claim that more government muscle is necessary to settle the dispute is both an invitation to higher cable rates and an insult to both the First and Fifth Amendments of the U.S. Constitution.

Cable networks are private property, plain and simple. If the cable companies are misjudging their subscribers’ preferences, they will be duly punished by a loss of market share. Indeed, never before have viewers enjoyed so many choices in video services at such affordable rates.

Wisconsin consumers, in particular, will reap even greater benefits from video competition should Gov. James Doyle sign the cable franchise reform legislation recently approved by the Legislature.

If NFL officials believe there remains unmet market demand, they can either shop their programs to other video service providers or build their own network.

As it is, the NFL will rake in $24 billion from long-term contracts with ESPN, CBS, Fox and NBC to broadcast a total of 248 games each season. There’s also a $700 million annual deal with DirecTV satellite service for the exclusive rights to a series of Sunday games. All of which translates into about $120 million annually in TV revenue for each NFL team.

These broadcast revenues will exceed those collected by the National Basketball Association, the National Hockey League, Major League Baseball and NASCAR combined, according to The Wall Street Journal.
So broadly is SB 343 written that virtually any producer could trigger the arbitration mandate. The bill states: "If a video programmer believes that a multichannel video programming distributor has not treated the video programmer in a fair, reasonable, and nondiscriminatory manner concerning the amount proposed to be paid by the multichannel video programming distributor for the addition or renewal of a video channel that is owned by the video programmer, the video programmer may request arbitration regarding that treatment."

But existing law does not permit state regulation of cable programming, which falls under the exclusive purview of federal statute. Nor does the Federal Communications Commission have the authority to intervene, as the NFL has sought, simply because the team owners aren’t getting their way. There’s been no violation of law, and thus FCC involvement would be prohibited.

Perhaps the team owners may be forgiven their impulse to seek government favors. After all, along with the anti-trust exemption, the majority of teams – including the Green Bay Packers – play in stadiums that have been partially or fully financed by the public. But Wisconsin consumers would be forced to sacrifice a great deal more if the Legislature concedes to the NFL’s self-indulgent pleas for yet more special favors.


Diane Katz is director of science, environment and technology for the Mackinac Center for Public Policy, a Michigan-based research and education institute. She serves on the Telecommunications and Information Technology task force of the American Legislative Exchange Council and has testified on cable issues before the Wisconsin Legislature.

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