Just as you’re unlikely to be the recipient of good news if your phone rings at three in the morning, an official communiqué from a government agency that unexpectedly lands on your desk is usually not a harbinger of glad tidings. Thus, it’s perfectly understandable if the commissioners of the Big Four pro sports leagues experienced a bit of a psychic elevator plunge this week upon receiving a summons to chat with members of the House Judiciary Committee about the Sports Broadcasting Act of 1961.
On Monday morning, league bosses Roger Goodell, Adam Silver, Rob Manfred, and Gary Bettman were asked to participate in a briefing on matters related to the sports broadcasting market, including those having to do with blackout exemptions. The letters were signed by HJC chairman Rep. Jim Jordan (R-OH) and Rep. Scott Fitzgerald (R-WI), the latter of whom chairs the subcommittee on the administrative state, regulatory reform and antitrust. It’s that last item on Fitzgerald’s plate that may prove to be particularly worrisome for the heads of the professional sports outfits.
Jordan’s letter to Goodell opens with the assertion that the House intends to look under the hood of the ‘61 SBA, which effectively created the antitrust exemption that allows pro sports leagues to collectively negotiate and sell their TV rights directly to the networks, rather than sending each individual team out into the marketplace to hammer out its own deals. The letter goes on to suggest that the committee’s pending examination of the “sufficiency of federal law related to the ‘[p]rotection of trade and commerce against unlawful restraints and monopolies'” could lead to the undoing of the exemption.
“Under the Sports Broadcasting Act, major sports leagues receive broad immunity from antitrust liability for agreements related to the broadcasting of their games on network television,” Jordan wrote. “However, the sports broadcasting market has changed significantly since the SBA was enacted, and recent antitrust cases have raised important questions about whether the SBA should be modified or repealed as a result.”
In 1961, an IBM mainframe computer took up as much as 10,000 square feet of space, a footprint sufficiently vast that six of them would cover an entire football field. Streaming was something that only rivers did, and your two options as a fan boiled down to radio and a black-and-white TV set. Hence the committee’s interest in examining the “sufficiency” of that 64-year-old law: As much as technology has radically changed the means by which Americans consume their favorite sports, the rules of engagement haven’t evolved in kind.
Now, it’s worth noting that Jordan overstates the scale of streaming, and to such an extent that it perhaps undermines the stated urgency of his investigation. On page 2 of his letter to Goodell, Jordan makes an assertion that doesn’t conform with observable reality, noting, “In 2023, digital sports viewership surpassed traditional television viewership for the first time, and that trend is expected to continue in the future.” A footnote cites a brief November 2024 story published by the market research firm Emarketer, which erroneously states, “digital live sports viewers have surpassed traditional TV viewers in the U.S.,” a conclusion based on the analysis of “survey and web traffic data.”
Setting aside the usual caveats about the staggering inutility of sentiment surveys, the claim has no basis in verifiable fact. At present, the ratio is more in keeping with a 90/10 split in favor of linear TV. For example, the biggest draw in primetime, Sunday Night Football, last season averaged 19.4 million viewers per game via the NBC flagship network, while approximately 2.2 million fans streamed the games on Peacock and various other legitimate digital outlets. TV’s share: 89.8%. While the extravagantly well-funded streaming disruptors are increasingly muscling their way into live sports, the HJC’s assessment of where things stand on the distribution front seems to have been informed by substandard intel.
(A subsequent assertion in the Goodell letter-“the majority of sports viewership now occurs outside of traditional network broadcasting”-is similarly off-base, and the citation refers back to another sentiment survey.)
Unfortunately for the leagues, a little shoddy research on the part of some House interns doesn’t invalidate the HJC’s concerns. At issue here isn’t a law that was enacted under President Kennedy; in some respects, it may be argued that the SBA serves as a smokescreen for the Big Four. “The leagues have used the cover of the SBA to finesse a mode of distribution that the SBA doesn’t explicitly cover,” Ethan Litwin, a partner at the boutique antitrust firm Shinder Cantor Lerner, said in an interview. “It really only covers free broadcast television, not ESPN or Sunday Ticket or any of those other platforms.”
While the leagues may have good reason to fear a full-scale investigation by Jordan and his team-the HRC’s outreach comes hot on the heels of Sen. Ted Cruz’s (R-TX) warning that the NFL had “tiptoed up to” the proscribed limits of the exemption during a May Senate hearing-Litwin suggests that a scenario in which teams would be forced to revert to negotiating their own rights deals is unlikely.
“If I had to say what’s behind all of this, it’s the aggressive enforcement of the local blackout rules,” Litwin said. “I think if there’s going to be a deal done here, it’s going to be on multilateral blackouts.” Which is to say, restricted access is problematic when the conditions of those restrictions aren’t in accord with U.S. antitrust law.
Under the law, a proprietor has the right to determine the optimum means of distribution of a given product or service, which in turn allows team owners to take the necessary steps to inhibit the erosion of on-site attendance by way of local TV blackouts. As Litwin sees it, the practice of restricting fans from accessing games outside their markets when the local club is simultaneously playing at home is considerably more dicey.
For what it’s worth, antitrust violations and downstream limitations on consumer choice were at the heart of the NFL Sunday Ticket litigation, and while a jury awarded plaintiffs $4.7 billion in damages, the verdict was subsequently overturned by the presiding judge. The case is currently under review at the Ninth Circuit Court of Appeals.
The deadline for the leagues to respond to the HJC’s request is Aug. 25, and while the NFL elected to not participate in Cruz’s cross-examination, non-compliance does not appear to be a viable option in this case.
“There’s always a chance that some of this could be for show, but the reality is that the Republican party is looking for some signature antitrust enforcement priorities that will resonate with the voting population,” Litwin said. “If this gains traction and political support, I wouldn’t be surprised if they open an investigation.”
For their part, Beltway lobbyists say that Jordan is an exemplar of the “everything’s on the table” school, even if lawmakers historically have stayed out of antitrust matters as related to the world of sports. As such, league officials would be wise to approach the matter with all the gravity of fielding a 3 a.m. phone call.
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