The 9th U.S. Circuit Court of Appeals reversed the a U.S. District Court’s dismissal of an antitrust action brought against the NFL and DirecTV for its Sunday Ticket television package on Aug. 13.
In 1994, the NFL and DirecTV entered into an agreement making Sunday Ticket the exclusive provider of live NFL game telecasts that would otherwise be unavailable on customers’ local networks. Although the availability and offerings have slightly changed since the initial agreement, Sunday Ticket is still the only provider of live telecasted out-of-market NFL games.
On Sunday, 12 NFL football games will be played in the afternoon. Sunday Ticket customers have the option to watch any of these games. Those without Sunday Ticket will watch the select few games CBS and Fox decide to broadcast.
Those who purchase Sunday Ticket this year will pay $293, which breaks down to about $17 a week. For a die-hard NFL fan, Sunday Ticket is likely viewed as a worthy investment. However, there are many NFL fans that only want to watch their favorite team play.
If a San Francisco 49ers’ fan living in Chicago wants to watch the 49ers play on Sundays, the fan will have to purchase Sunday Ticket or hope the 49ers game will be locally broadcast.
The reason the 49ers fan has only limited options is due to Article X of the NFL bylaws. Article X requires all NFL teams to abstain from telecasting its game in another team’s local market when that team is playing. This is the underlying issue in the antitrust suit.
Sunday Ticket subscribers, i.e. the plaintiffs in the instant suit, allege that the NFL’s and DirecTV’s interlocking agreements work together to suppress competition for the sale of NFL game telecasts, and therefore, are in violation of Sections 1 and 2 of the Sherman Antitrust Act. Specifically, the plaintiffs claim that absent the NFL-DirecTV Agreement, each NFL team could make its own arrangements with competing or new network channels to telecast their games.
The plaintiffs contend this would create competition, and therefore, increase the accessibility and decrease the price for consumers wanting to view out-of-market NFL telecasts.
NFL and DirecTV posit that their agreement does not actually injure competition. Instead, they argue that Sunday Ticket has increased the supply of NFL telecasts. Specifically, the NFL and DirecTV contend that without Sunday Ticket, NFL fans would have far less access to NFL game telecasts.
In a 2-1 decision, the 9th Circuit held that the plaintiffs adequately stated a claim under Sections 1 and 2 of the Sherman Act. The revival of this suit can tremendously impact the NFL as well as other professional sports leagues in the U.S.
With the dismissal overturned, the parties will now begin the pretrial discovery period. This means the NFL, a private organization, will have to provide the plaintiffs with documents and depositions. This potential obligation may lead the parties to settle.
Other professional sports leagues likely prefer this suit to be settled as well since most leagues have packages with similar characteristics to Sunday Ticket and the chance of an unfavorable precedent may result from this suit.
Major League Baseball offers up to 80 out-of-market MLB games a week through MLB Extra Innings. MLB Extra Innings and Sunday Ticket have very similar agreements and business structures.
However, MLB also offers MLB.tv, a stand-alone streaming service. MLB.tv has two options: an all-league package and a single-team package. With the single-team package, a customer can stream their favorite out-of-market team for roughly $25 less than MLB.tv all-team access.
The National Basketball Association gives customers the ability stream up to 40 out-of-market NBA games a week through NBA League Pass. Like MLB.tv, the NBA also offers NBA Team Pass. NBA Team Pass provides fans an option to choose one out-of-market team for $80 less.
The National Hockey League, like the NBA League Pass, allows customers to stream up to 40 out-of-market games a week through NHL Center Ice. The NHL also offers a single-team option for $29 less.
Compared to the other packages, Sunday Ticket has two major differences. First, despite the NFL having the shortest season, Sunday Ticket is the most expensive package. And second, the NFL is the only major professional sports league in the U.S. to not offer a single-team option for out-of-market customers.
Nonetheless, the root of this issue may be attributed to the Sports Broadcasting Act. In 1961, the act was enacted by Congress. The act specifically excludes application of Section 1 of the Sherman Act for the NFL, NBA, MLB and NHL when a league negotiates a national TV contract with networks that provide sponsored telecasting (CBS, Fox, NBC, etc.).
Although this was considered a mutually beneficial exemption for both NFL teams and the league in 1961, the overall success of the NFL has potentially changed their feelings here.
For example, the Dallas Cowboys are worth an estimated $5 billion. Thus, the Cowboys likely have the capital and resources necessary to develop their own television network.
However, because the NFL owners agreed to take advantage of the Sports Broadcasting Act exemption, NFL teams split television broadcasting revenue equally. Thus, NFL teams are mostly concerned with the revenue amount and not how the revenue is accumulated.
The Sunday Ticket antitrust suit is convoluted. The NFL wants to maintain the status quo, many NFL fans want change and NFL teams are somewhere in between.
Fans should take note that when this case is finally resolved, NFL television broadcasts’ accessibility may drastically change.