Antitrust, Regulation and the 'New' Rules of Sports Telecasts

Abstract

Open almost any news source, or simply turn on the program guide of your own television, and the explosive proliferation of sports telecasts is quickly evident. The amount exhibitors pay to sports leagues has reached dizzying heights, in large part due to high demand and the unique, unrecorded nature of sports telecast. These desirable characteristics arguably make sports telecast contracts essential to the economic viability and competitiveness of leagues and telecasters alike. Although these contracts provide many benefits to corporations and leagues, embedded within them are weighty restrictions such as the “black out” rules and exclusive distributorships. These restrictions raise questions as to the ultimate effect such contracts have on competition and overall consumer welfare. The two legal mechanisms that traditionally protect industry-wide competition and consumer welfare are antitrust law and regulation. This is no less true in the professional sports and telecast industries. The collision of these two industries has resulted in a labyrinth of regulation and, arguably, uneven antitrust enforcement that diminishes consumer choice, program diversity and competition.

This Article presents a novel, quantitative analysis of sports league antitrust jurisprudence to present a counter to cries for increased regulatory scrutiny of these joint ventures. The results demonstrate that antitrust is not only capable of policing joint ventures, but that such review is recently revitalized by the Supreme Court’s decision in American Needle v. NFL. Based on empirical review of past case law, current antitrust exemptions and relevant regulatory policy, this Article presents several recommendations to both: (i) rationalize regulatory rules that currently create disparate treatment among leagues and telecasters; and (ii) clear the field for pro-consumer competition in sports telecast.

Keywords: antitrust, American Needle, NFL, NHL, MLB, NBA, blackout rule, sports broadcast act, Areeda, Hovenkamp, empirical, cable program access, non duplication rules, regional sports network

JEL Classification: A12, A19, D12, H10, K12, K23, L11, L12, L13, L40, L42, L51