No company wants its business to be on the radar screen of the federal government. Recently, the NFL’s longstanding broadcast antitrust exemption has begun to blip loudly.
It’s coming from the FCC, where chairman Brendan Carr has warned the league that the proliferation of streaming could cause the exemption to “collapse.”
It’s coming from Congress, on both sides of the aisle. Last month, Senator Mike Lee (R-Utah) urged the Department of Justice and the Federal Trade Commission to examine the issue: “To the extent collectively licensed game packages are placed behind subscription paywalls, these arrangements may no longer align with the statutory concept of sponsored telecasting or the consumer-access rationale underlying the antitrust exemption.”
On Tuesday, Senator Elizabeth Warren (D-Mass.) and Senator Pat Ryan (D-N.Y.) sent a letter to Carr regarding the rising cost of watching live sports, as more events land on streaming services.
The antitrust question seems to be fueled in part by the NFL’s current effort to get the networks to pay much more for the remaining four years of their current deals. Amid suspicions that Fox owner Rupert Murdoch is instigating an assault on the broadcast antitrust exemption, Murdoch’s Wall Street Journal published an editorial directly attacking it.
If the exemption were to evaporate, the NFL would be required to market TV rights on a team-by-team basis. That would result in widely varying deals, with the Cowboys getting the most and teams like the Jaguars and Cardinals getting the least. It becomes much harder to justify sharing the revenue (doing so could possibly be an antitrust violation), and it would make a league-wide salary cap (and floor) impossible to operate.
With all teams selling their own rights and not sharing the revenue, the cap (and floor) would reduce if not devour the profit margin for the teams having less valuable TV rights. Ultimately, the NFL could fracture into two leagues, with the really popular teams in one and the less popular teams in another.
For now, it’s impossible to know whether and to what extent Congress and/or the FCC will successfully end the exemption. The mere fact that the issue is being discussed is reason enough for the NFL to feel anxious about where it could go from here.
