Key Points
- Network TV affiliates urged the FCC to narrow the Sports Broadcasting Act to apply only to broadcast and traditional pay TV, blocking exclusive streaming deals for live sports.
- Affiliates argue that streaming platforms’ exclusive sports rights deals force fans to pay for games previously available free on broadcast TV and reduce networks’ investment in local news.
- The NFL and other leagues have increasingly signed multi-billion dollar deals with Netflix, Amazon and other streamers for exclusive game access, shifting sports away from traditional broadcasters.
Representatives of the four major network television affiliate groups have filed a letter with the Federal Communications Commission (FCC) urging the agency to view a federal antitrust exemption favoring the National Football League (NFL) and other sports leagues through a narrower scope so that it applies only to traditional TV broadcasting.
In the letter filed this week, the affiliate groups representing independently-owned TV stations that carry programming from ABC, CBS, Fox and NBC said the Sports Broadcasting Act of 1969 should only apply to live sports events that are carried on broadcast TV and traditional pay TV platforms like cable and satellite.
The call to action comes as the FCC weighs whether professional sports leagues have exploited certain federal antitrust exemptions to forge exclusive agreements with streaming services that charge sports fans to access live games that were previously offered on free broadcast TV and cable.
The NFL and other sports leagues have experimented with distribution their games on streaming platforms like Netflix, Google, Amazon’s Prime Video and Disney’s ESPN Plus over the past decade. That experiment has evolved into multi-billion dollar rights deals that allow some of those apps to carry NFL games and events from other sports leagues on an exclusive basis, with the games available to paying subscribers of their streaming services.
The NFL contends that, even when games are available on a streaming service, those same events are still available on free broadcast TV in the home markets of the two teams playing in any given week.
But the broadcasters say that arrangement doesn’t go far enough, because fans feel they are still upcharged for games that were previously available for free. They also complain that free broadcast TV networks helped build up professional sports leagues into the profitable businesses that they are today, only to be charged more in rights fees for fewer games as the leagues pursue more deals with streaming platforms.
“It is no exaggeration to say that the success of America’s major professional and collegiate sports leagues has been built on the broadcast platform provided by local television stations,” the affiliate groups wrote in their letter. “For most of their history, stations affiliated with the major Networks have been the exclusive local showcase for marquee national professional and collegiate sporting events because the Big 4 networks traditionally were the only programmers with the financial capacity to afford national programming contracts with the major sports leagues; and those leagues treasured the unmatched reach of local broadcast distribution through their local network affiliates.”
Live sports can make or break a local broadcast network and its affiliated stations. With entertainment programming largely viewed on streaming services, sports offers one of the last collective viewing experiences on TV — live games are appointment-viewing TV, where fans must watch at the same time, on the same channels, for fear of missing out.
Several broadcasters, including the E. W. Scripps Company and Gray Media, have forged local broadcast rights agreements with a few Major League Baseball (MLB), National Basketball Association (NBA) and National Hockey League (NHL) teams over the past two years, seizing on the downfall of FanDuel Sports Network and other regional sports networks.
The NFL, which commands the largest sports TV audience of any league, prefers agreements that involve a mixture of coast-to-coast and regional carriage of games. On CBS and Fox, NFL games are available in select regions, with football fans asked to pay over $400 per year for the NFL Sunday Ticket if they want access to all games played on Sunday afternoons. The NFL Sunday Ticket is exclusive to YouTube.
The NFL has agreements with ESPN and NBC that allow those networks to carry games on a national basis, and carve-out deals that allow both networks to offer a handful of regular-season and playoff games on their premium streaming services. The league also has one-off deals with Netflix, Prime Video and YouTube to offer a few games each season on those platforms.
The FCC’s probe in the matter comes amid reports that the NFL is looking to trigger a clause in its current rights agreement that allows it to renegotiate some of its media rights deals. Paramount and Fox Corporation, the parent companies of CBS and Fox, are preparing to pay more for the privilege of carrying games on their networks, the reports claim.
The league’s interest in triggering the clause reportedly comes after executives noted that rights agreements involving Comcast and Amazon squeezed more cash out of the NBA and MLB over the past few years.
For fans, the various rights agreements have created a complicated structure where viewers feel pressure to sign up for multiple services simply to watch their favorite teams, and have to juggle different channels and apps accordingly.
“The pressure that streaming platforms place on the local broadcast ecosystem goes beyond confusing customers, fracturing audiences and raising consumer prices,” the affiliates noted. “The willingness and virtually unlimited financial capacity of non-local streaming platforms to bid up the price of sports rights has the perverse effect of forcing local television stations to curtail local news and information services.”
In other words, if more sports rights go to streaming platforms, local TV broadcasters will have less money to invest in local news and community-oriented programming, the affiliates complain.
The reason? As streamers pay big money for limited sports rights, the Big Four networks are shelling out more cash to maintain their smaller sports packages. Those costs are passed on to independent broadcast TV station owners through their affiliate agreements, putting pressure on broadcasters to choose between shelling out for network programming or investing their profits in local news.
“Since these affiliation fees grow more quickly than local station revenue, local affiliates have no choice but to cut costs and reduce local service,” the affiliates said. “Marquee sporting events must remain on local broadcast television to sustain important, but costly, local news operations, but the more sports rights cost and the higher affiliation fees rise, the less local news and fewer jobs will remain.”
It isn’t clear what authority the FCC has to reign in sports leagues who want to execute deals with streaming services, but the affiliates say Congress can get involved by carving out specific terms that exempt the sports leagues from antitrust laws only as it applies to their deals with licensed TV stations or broadcast networks.
