Wednesday, August 9, 2006 - The Progress & Freedom Foundation Blog

Another Case of "Rights Inflation": Sports on Cable TV

It never ceases to amaze me what some people think they have a "right" to in this country. The latest example comes from the field of cable television where "rights inflation" has been spiraling out of control for years. Consider some of the things that people have claimed that they have "a right" to in the context of cable and satellite television over the past 20 years:

* In the 1980s and 90s, a great number of people claimed they had a right to cheap cable TV programming. As a result, the Cable Act of 1992 was passed imposing price controls on basic cable.

* During that same period, it was also argued that certain broadcast channels should have a right to reserve capacity on cable networks to distribute their programming. Consequently, "must carry" mandates were formally enshrined into law requiring it.

* More recently, a number of people are saying they have a right to cable television on any terms they wish including on a channel-by-channel, or "a la carte" basis, instead of as part of pre-packaged bundle of programming. Despite the fact that it could destroy the wonderful diversity of programming we see on TV today, Big Government liberals promote a la carte regulation under the guise of "consumer choice" while Big Government conservatives hail it as a worthy effort to "clean up cable." The end result is an unholy alliance that seeks to create a new "right" to unbundled couch-potato fare.

* Not satisfied that the push for a la carte regulation will go far enough (or perhaps fearing that it will not be passed into law), the "let's-have-government-sanitize-cable TV" crowd has also pushed for a right to "family-friendly tiers" of programming. Cable operators started "voluntarily" adopting such tiers late last year.

* Importantly, the reason the industry "voluntarily" adopted those family-friendly tiers was because they were threatened by far more serious censorship proposals from those who feel that have the right not to be offended by anything they see on pay TV. Proposals to extend broadcast indecency speech standards to cable and satellite systems have been seriously debated in the halls of Congress this session.

Could rights inflation get any more absurd? You better believe it. This summer, the Federal Communications Commission (FCC) has gotten all worked up over consumers' "right" to sports programming!

For example, the agency has determined that DC-area consumers have the right to see Washington Nationals baseball games on their local cable systems. Specifically, regulators recently pushed Comcast to settle a lengthy dispute with the Peter Angelos-owned Mid-Atlantic Sports Network (MASN) and strike a deal to carry Nationals games on local Comcast cable systems. I'm a big Nats fan and certainly understand why others want to see the games, but does that give any of us (or the government) "the right" to demand that these guys cut a deal to show baseball games?

But wait, it gets even more absurd. Just this week, the FCC has decided to step in and referee a contractual dispute between Time Warner (TW) and the National Football League (NFL) over carriage of the NFL-owned NFL Network. Actually, let me rephrase that. The FCC isn't really refereeing the game as much as they are rigging it for one side to win. Regulators have demanded that Time Warner reinstate the NFL Network on all its systems after TWC decided to pull it off their systems without providing 30-days notice to subscribers. [In one of its decisions this week, the agency actually argued that consumers would be "significantly and irreparably harm[ed]" if they were forced to live without the NFL Network's coverage of training camps and pre-season games!] No word yet what the FCC will do once the 30-day window has passed if Time Warner and the NFL still can't come to an agreement.

Not surprisingly, the dispute between TW and the NFL basically comes down to money. Citing escalating expenses, TW wants to put the NFL Network on an all-sports tier to keep the cost of other tiers down. The NFL wants more money for its increasingly valuable network, but they also want to keep as many eyeballs glued to their channel as possible. That's why the NFL has gone to the FCC and made a fuss. They want their channel to be kept on all Time Warner systems and just have Time Warner spread the rising cost of the channel across all other subscribers.

Now don't get me wrong; I am absolutely obsessed with football and love the NFL Network and would want to see it on the channel guide if I was a Time Warner subscriber. But does that give me or anyone else "the right" to demand that an all-football network be in a cable system's channel lineup?

This gets to the heart of my beef with all this rights inflation: By what right does anyone in government decide how cable or satellite television services -- which remain a luxury item and not a birthright entitlement -- get priced or packaged in this country? After all, here's the key thing about cable and satellite television: No one is putting a gun to your head and telling you to subscribe! You voluntarily pay to bring it into your home.

Indeed, a whopping 85 percent of U.S. households choose to fork over roughly $50 a month to get at least basic cable, and many of us pay much more than that to receive premium tiers or specialty channels. In other words, we Americans love our cable TV. Not surprisingly, therefore, some of us can get pretty worked up when our favorite channel disappears. Of course, if you don't like Time Warner's move, you can always switch to a satellite provider like DirecTV or EchoStar, which both carry the NFL Network and are available everywhere in the contiguous United States. Or, you can petition your local telecom provider to rollout TV services like Verizon has in my neighborhood that even provide the high-definition version of the NFL Network. Or, you can always just get online and get your daily football fix on the Internet. (Indeed, if you really want the best training camp updates, you should be spending more time on the excellent website, not watching the NFL Network).

Bottom line: If enough people react negatively to Time Warner's move, the company will respond. TW knows that a lot of their sports-obsessed male viewers will scream bloody murder if they don't get their full serving of NFL red meat. But the company also understands that many of their other subscribers will protest just as vociferously if overall rates escalate due to the inclusion of a sports channel that only a handful of viewers demand.

This episode illustrates how rights inflation is not costless. When some people manage to concoct a new right to something, it means that other people end up footing the bill. There is no free lunch. Your "right" to cable TV on any terms means someone else ends up paying the cost in terms of higher prices, decreased quality or less diversity. These things do not get created by magic, after all. Information and entertainment (especially sports programming) can be extraordinarily expense commodities to produce and distribute. In the sports context, it's especially expensive because a big chunk of that change eventually goes toward paying the athletes and their escalating salaries.

Beyond economics, there is the question of law. If you really want to talk about rights, then let's talk about First and Fifth Amendment rights. Time Warner, as the owner of cable distribution system, is broadcasting media content to the nation. It owns that soapbox and what it chooses to say on that soapbox -- or who else it allows to speak on that soapbox -- is their decision alone. No one in government should have the right to tell them how to use that soapbox. When the FCC starts intervening in private contractual disputes over channel carriage, it is interfering with the editorial function played by cable programmers. It is tantamount to forced speech and it is offensive to the First Amendment.

And then there's the Fifth Amendment, which protects private property against unjust takings by government. Again, Time Warner owns their distribution platforms. They built it or they bought it. As a result, they should get to make the call about how it is utilized, not the government. If the government wants to make use of it for an alternative purpose, or allow others to do so, then the government needs to figure out how it is going to foot the bill when it unjustly usurps private property in the name of serving "the public interest." (And God only knows what "the public interest" is in this case. Even though the FCC repeatedly claims that their actions in the NFL-Time Warner dispute are "in the public interest" they clearly aren't talking to the millions of Americans who hate sports and don't want to be paying a dime for any of that content! So who's "public interest" is really being defended here?)

In conclusion, I'd like to propose a moratorium on any new "rights" in the pay TV context. If you want something bad enough, then you should pay for it. Period. Don't demand that the government confiscate it on your behalf. Enough of this free lunch fanaticism and endless rights inflation.

posted by Adam Thierer @ 2:56 PM | A La Carte , Cable , Economics , Free Speech , Generic Rant , Mass Media , Sports