Regulating Cable Sports Programming Isn’t A La Carte, Specter Says
Letting cable operators offer sports programming like the NFL Network on a premium sports tier doesn’t amount to full-blown a la carte, Senate Judiciary Committee Chmn. Arlen Specter (R-Pa.) said at a hearing Tues.: “We're not talking about going a la carte all the way. We're talking about 2 tiers.” Specter brought officials from the NFL, DirecTV and Time Warner Cable, plus a Stanford U. economist, to discuss whether Congress needs to intervene as the NFL Network and similar sources charge more for sports programming. Specter asked why the NFL Network insists on expanded-basic carriage in its negotiations with cable operators and why DirecTV’s NFL Sunday Ticket has never been open to competitive bidding.
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A la carte advocates see their cause gaining momentum on the Hill as cable customers realize prices are rising due to sports programming costs, Parents TV Council Dir. Corporate & Govt. Affairs Dan Isett said: “The more these issues are at the fore, and the more these guys hear from their constituents about what’s really going on in the cable industry the better it is for us.”
Retransmission consent wasn’t mentioned at the hearing, though most NFL programming airs on broadcast networks and the issue is a topic of pending antitrust litigation (CD Oct 17 p6). Time Warner COO Landel Hobbs, the only cable official to testify, didn’t raise the issue because he wanted to stay focused on Specter’s questions, he told us after the hearing. Paying for the NFL Network is different than paying for local CBS stations, which carry more NFL games than the NFL Network does, he said: “The NFL Network is very myopic. It is a different decision when you talk about general market programming versus myopic programming.” Specter’s staff will look into the issue, Specter said after the hearing. He scheduled a followup hearing Dec. 7 to discuss regional sports network ownership structures, many owned by cable operators.
New rules won’t help solve sports programming problems, Hobbs testified: “Let’s let the marketplace handle that question.” Time Warner doesn’t want to carry the NFL Network because it’s too expensive and unwatched, he said: “This would be in the top five in terms of expense… with ratings that aren’t even in the top 30.” NFL recently sued Comcast for trying to put its network on a sports tier. In the suit, filed under seal in N.Y., the NFL claims its contract with Comcast bars Comcast from putting its network on a sports tier, said NFL Exec. Vp-Gen. Counsel Jeffrey Pash during the hearing. Comcast disagrees, said Exec. Vp David Cohen in a written statement. On such a tier, “diehard NFL fans will have the opportunity to see this limited package of eight out-of-market games, while the rest of our customers will not be forced to pay year round for expensive programming they have no interest in receiving,” he said.
Cable operators don’t have to raise their rates when they carry the NFL Network, they simply can absorb the costs, said Pash. He pointed to Cox, DirecTV and EchoStar as companies that carry the network but haven’t raised rates. That claim drew a chuckle Stanford Economics Prof. Roger Noll. “There is a strong correlation between costs and price,” he said.
One solution: sunset the 1961 Sports Bcstg. Act in 2011, Noll said. That would give legislators time to deal with the sports programming problems while forcing them to confront them soon, he said. The law, which gave antitrust exemption to leagues in national broadcast rights negotiations, was “a mistake to begin with,” Noll said. It eliminated competitive pricing of national sports programming and without the law in place, “the whole issue of exclusivity would be much less important,” and teams would have to compete for broadcast rights,” he said.