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Friday, November 7, 2008

The NFL's Anti-Consumer, Anti-Free Market Bullying Should Stop

NFL Commissioner Roger Goodell apparently sent a letter on Halloween to Senator Arlen Specter in yet another attempt to have the government intervene in its market negotiations with cable companies over the carriage of the league-owned NFL Network. Such anti-consumer, anti-free market bullying should stop.

By now the dispute is familiar. The NFL has taken a handful of games from free broadcast television and moved them to exclusive distribution by the NFL Network. The NFL Network, however, is not free to cable companies. Those that might want to carry it have a choice: they can carry it on a special sports tier for which sports fans would pay an extra monthly fee, or they can carry it on the basic tier and spread the costs of the programming over the entire subscriber base, i.e., make all subscribers pay for the NFL Network programming.

The economics of the dispute are not very complicated. The owner of the programming (the NFL) will not distribute it on a platform free to viewers, so the question is whether it is to be paid for by all cable customers or only those who value sports programming. Now, it is understandable that the NFL would prefer to have the network carried on the basic tier. By spreading the costs of the programming over a larger number of subscribers, the per-subscriber retail price for the programming would be lower. In addition, if the programming is on the basic tier, there would be opportunities for viewers to surf to it who might not otherwise subscribe to a special sports tier, thereby enhancing the value of the network to potential advertisers.

From a consumer perspective, however, requiring non-sports fans to pay for the NFL Network, and thereby subsidize the viewing preferences of sports fans, is indefensible. That perspective is reflected though market mechanisms in the carriage negotiations between cable operators and the network. Under pressure to restrain retail cable rates, cable companies would prefer not to raise cable rates generally for specialized programming, but rather impose the costs of that programming on those who would demand it.

Continue reading The NFL's Anti-Consumer, Anti-Free Market Bullying Should Stop . . .

posted by W. Kenneth Ferree @ 9:02 AM | Cable, Sports

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Tuesday, October 21, 2008

The King Can Do No Wrong, Or Do As I Say, Not As I Do

Although it is true that a foolish consistency is the hobgoblin of simple minds, a foolish inconsistency is worse. The FCC is guilty of the latter.

For years the cable industry has been subjected to regulatory assault in detail because it has steadfastly refused to adopt formal a la carte pricing models. As your correspondent has said before, one can argue about whether or not a la carte pricing might reduce cable rates for some class of customer (i.e., extremely light users or those who abstain from high cost services such as sports and movies), but there is no doubt that it would reduce programming diversity and diminish investment in programming services. Nonetheless, there is an appeal to the populist notion that consumers should not have to pay for programming channels they don't watch and don't want.

Why then, though, when the NFL Network -- another high cost sports programming service owned by the millionaires club known as the NFL -- asks the FCC to intervene in its carriage negotiations, would the FCC side with the programmer seeking to force itself onto the basic programming tier and thereby into the living rooms and onto the cable bills of millions of unwilling subscribers? What is it about the NFL Network that has the FCC spinning on its heels to add the cost of that service to the basic cable bill? Is it, like AIG, "too big to fail"? One might think that, so long as the FCC is interested in trading programming diversity for potentially lower cable prices, programmers seeking to use the regulatory machinery to compel basic tier carriage would be told to pound sand.

Oddly, the NFL Network probably is not even at risk should it not gain basic tier carriage. While many niche services no doubt would be unsustainable if sold on an a la carte basis - resulting in a thinner, less robust cable programming menu - services like the NFL Network with a large, dedicated viewer base likely will survive whether or not it is included within the basic tier. That is, this is not a case in which the FCC must trade off some loss in diversity to help control basic cable rates. Whatever the underlying rationale for the FCC's sympathy toward the NFL Network, it appears to be completely upside-down.

Continue reading The King Can Do No Wrong, Or Do As I Say, Not As I Do . . .

posted by W. Kenneth Ferree @ 12:49 PM | A La Carte, Sports, The FCC

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Thursday, March 6, 2008

Sports Programming Hearing

Yesterday, PFF President Ken Ferree was a witness at a star-studded House Telecommunications and Internet Subcommittee hearing on competition in sports programming. The impressive witness list also included NFL Commissioner Roger Goodell, ESPN President George Bodenheimer, Time Warner President and CEO Glenn Britt, DIRECTV Executive VP Derek Chang and Mark Cooper from the Consumer Federation of America

In his testimony, Ken stated that programming carriage arrangements are best handled by negotiations, not government intervention. Ken was not alone in this assertion. No witness or Committee member seemed to be sympathetic to Commissioner Goodell's claim that distributors were discriminating against the NFL network in favor of their own sports programming.

An archived webcast (which includes Ken being chastised by Rep. Eshoo for an un-related paper we released recently) and written testimony can be found here.

posted by Amy Smorodin @ 11:26 AM | Mass Media, Sports

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Thursday, January 3, 2008

Suits With Their Hands Out

Who would Patriot fans have to blame if their cable operator did not carry the final game of the New England team's undefeated regular season? Look no further than the NFL offices.

The NFL is the most financially successful league in the world. NFL franchises are worth, on average, about a billion dollars each, and five of them are worth quite a bit more than that. One might imagine that a league whose aggregate value exceeds the GDP of Iceland and Jordan combined would be content. One would be wrong.

No, the NFL is not making enough, apparently, merely filling stadiums (many of which were built with taxpayer subsidies), hawking team wares, and marketing TV rights to broadcast and cable networks. Now the NFL would like to wring a few more golden eggs from the goose by forcing non-fans to pay for televised games. Even those accustomed to the rich getting richer must find the inherent unfairness of the NFL’s power sweep offensive.

Continue reading Suits With Their Hands Out . . .

posted by W. Kenneth Ferree @ 9:45 AM | Cable, Sports

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Wednesday, September 27, 2006

Sports and Fetishes

Last week, we hosted another successful CEO luncheon featuring Comcast CEO Brian Roberts and Senate Commerce Committee Chairman Ted Stevens. Discussion at the event, now available as a webcast here, managed to cover topics ranging from the COPE bill to customer service. Below is, for me, some of the more memorable moments.

Continue reading Sports and Fetishes . . .

posted by Amy Smorodin @ 4:27 PM | Broadband, Cable, Communications, Events, Internet, Local Franchising, Net Neutrality, Sports, VoIP

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Wednesday, August 9, 2006

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!

Continue reading Another Case of "Rights Inflation": Sports on Cable TV . . .

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

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Friday, May 26, 2006

Sensenbrenner Bill and Antitrust

Congressman Sensenbrenner's bill amending the Clayton Act to impose net neutrality obligations is a travesty in many respects. Importantly, it departs from the very important principle that antitrust law apply generally across the economy, and not be applied in special ways with special rules to specific industries. James Gattuso captures the Congressman's confused intellectual defense of his bill quite well.

More important than this, everyone knows that only baseball should receive special treatment under the antitrust laws. Polluting this hallowed principle special antitrust consideration is nearly unforgivable. As payback, someone should amend the bill to repeal the basebal exemption, but only as to Sensenbrenner's home-state Brewers.

posted by Ray Gifford @ 1:04 PM | Antitrust & Competition Policy, Internet, Net Neutrality, Sports

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Friday, August 5, 2005

Kovacic and Swindle Exactly Right for The FTC

Todd Zywicki gets it exactly right on the incoming and departing FTC commissioners, Bill Kovacic and Orson Swindle, respectively.

This should not be taken as an endorsement of Commissioner Swindle's unfortunate affection for the Atlanta Braves, a great team whose fans don't deserve their consistent, machine-like excellence and success. As for Zywicki's revelation that the rest of The FTC is full of Yankees fans, that has caused me to reconsider my assessment of it as a "model agency." My new position is the FTC should be abolished to end this embrace with an organization which so vigorously embraces and typifies "unfair competition," the very statutory charge the FTC is given to root out.

posted by Ray Gifford @ 3:19 PM | Sports, The FTC

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Tuesday, April 19, 2005

Rising Suns

Given the not-infrequent references to sports on this blog, as an Arizonan I feel I must congratulate the Phoenix Suns on securing the best record in the NBA and home court throughout the playoffs. San Antonio gave them the top seed by losing last night, but Phoenix won anyway by crushing the otherwise red-hot Denver Nuggets (sorry, Ray and Adam). The Suns are the same age as me, and neither of us have ever won an NBA championship. I can't do anything about my shortcoming, but the Suns can address theirs by keeping it up in the playoffs, and exorcising the ghosts of close calls in 1976 and 1993. Beat L.A.! (Sorry, the Lakers aren't in the playoffs this year, but that is a habitual Suns fan chant. Also, my apologies for the title of this post -- I can't tell you how many "cute" Suns headlines I've seen over the years involving rising, falling, scorching, burning, and unfortunately, extinguishing.)

posted by Patrick Ross @ 10:49 AM | Sports

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Tuesday, April 5, 2005

Baseball Optimism

Lynne Kiesling's baseball optimism is touching, particularly when she can get excited by Rockies cast-off Jeromy Burnitz. The Cubs hopes for a perfect 162-0 season remain intact, and this season they have moved forward their normal cry: "Just wait until we get Prior and Wood back!" Since the last Cubs World Series was in 1908, since their founding my beloved Rockies have until 2090 to match the Cubs' current streak of futility -- but no one can say Rocks aren't trying!

posted by Ray Gifford @ 11:09 PM | Sports

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Friday, March 25, 2005

Special K

posted by Randolph May @ 5:35 PM | Sports

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Sunday, March 13, 2005

The Devils' Playground

posted by Randolph May @ 9:07 PM | Sports

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Friday, March 11, 2005

On and Off Tobacco Roads

posted by Randolph May @ 2:23 PM | Sports

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Thursday, January 13, 2005

Reprise on the Baseball "Ownership" Scandal

posted by @ 10:36 PM | Sports, Supreme Court

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Sunday, January 9, 2005

Does "Finders Keepers" Help the Catchers?

posted by Ray Gifford @ 11:47 PM | Sports

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MLB's "Open Platform" for Balls Causes Uproar

posted by @ 11:35 PM | Sports

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Tuesday, January 4, 2005

Manifest Injustice

posted by Ray Gifford @ 4:56 PM | Sports

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  The NFL's Anti-Consumer, Anti-Free Market Bullying Should Stop
The King Can Do No Wrong, Or Do As I Say, Not As I Do
Sports Programming Hearing
Suits With Their Hands Out
Sports and Fetishes
Another Case of "Rights Inflation": Sports on Cable TV
Sensenbrenner Bill and Antitrust
Kovacic and Swindle Exactly Right for The FTC
Rising Suns
Baseball Optimism
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