Live Sports, Video Competition, and Antitrust
TL;DR
Background: The U.S. video-content market has undergone a fundamental shift over the past decade, with more and more live sports events now available to fans willing to pay for them.
But… Some are still unhappy with the cost of access and the number of streaming-service and/or pay-TV subscriptions needed to find all the desired games. During a recent U.S. Senate Commerce Committee hearing, several senators suggested modifying the Sports Broadcasting Act (SBA), which protects the major U.S. sports leagues from antitrust scrutiny in negotiations for distribution with network broadcasters, unless more is done to make games available to fans, particularly on those networks.
However… Regulatory parity would be a better approach, in light of the evolving video marketplace. Either the SBA should be repealed altogether or leagues should be exempt from antitrust scrutiny for negotiations with both streaming services and pay-TV channels, in addition to traditional broadcasters.
KEY TAKEAWAYS
Live Sports Are More Available than Ever to Fans Willing to Pay for Access
At one point, the only way to enjoy live sports was either to have a ticket to watch in-person, or to listen to a local radio broadcast. The advent of television brought sports programming to a much larger audience, but nationally broadcast live sports were limited to a few major “games of the week” and championship series.
The entry of cable and satellite television expanded the sports marketplace much further, especially with the growth of regional sports networks (RSNs) and dedicated sports channels like ESPN and Fox Sports, as well as networks programmed by the major professional leagues and college-sports conferences. Sports fans nonetheless remained limited in accessing live sports events, especially if their favorite team was not local.
By comparison, in addition to all the previous means of access, the move to online streaming has meant that fans can access nearly all live sports for which they are willing to pay. The options include direct-to-consumer platforms like NBA League Pass, NFL Sunday Ticket, MLB.tv, and NHL.tv, as well as streaming services like ESPN+, Netflix, AppleTV+, Amazon Prime Video, Hulu+Live TV, fuboTV, Peacock, and HBO Max.
The battle for exclusive live-sports rights is no longer solely between the broadcast networks and pay-TV channels, as streaming options continue to proliferate. Amazon Prime has broadcast Thursday Night Football since 2022, and Netflix even broadcast Christmas NFL games this past season. According to eMarketer, digital-sports viewers surpassed pay-TV viewers for the first time in 2023, with the gap expected to widen over the next few years.
But this doesn’t mean pay-TV and network television are unable to compete. For instance, the National Basketball Association (NBA) is returning to NBC starting in the 2025-2026 season for many of the nationally televised games that were previously only available through pay-TV on TNT. But the changing market is evident in that case, as well. NBC will also offer games through its Peacock streaming service, and the NBA also struck a deal with Amazon to show games on Prime Video.
Antitrust Law and Sports Leagues
There is a fundamental tension in antitrust law when it comes to sports leagues. Courts have largely looked at sports franchises as independent firms that both coordinate to create a league and compete within it. This has led to various responses to avoid making all league decisions subject to antitrust scrutiny, from the much-maligned baseball exemption, to leagues’ nonstatutory labor exemption for deals resulting from collective bargaining with players’ unions, to statutory exemptions like the Sports Broadcasting Act (SBA), which shields the major sports leagues from antitrust scrutiny when negotiating for “sponsored telecasting.” The SBA defines that term to refer solely to entities who provide free service supported by advertising, like traditional over-the-air network broadcasters.
Over time, as the courts have moved toward examining alleged anticompetitive conduct by sports leagues under the “rule of reason,” distribution agreements between sports leagues and their television (or streaming) partners aren’t necessarily condemned as a restraint of trade. Nonetheless, the recent litigation over NFL Sunday Ticket suggests there remains much uncertainty over these types of deals.
In the In Re: Sunday Ticket Antitrust Litigation case, U.S. District Court Judge Philip Gutierrez initially denied the NFL’s motion for summary judgment, but later granted its motion for judgment as a matter of law after trial. Of particular importance in the case was expert testimony that assumed live games would be made broadly available to consumers without NFL Sunday Ticket. Judge Gutierrez rejected that assumption as an “ipse dixit opinion untethered to an economic analysis.” The court got it right in the end, but not until after the jury found the NFL liable for $4.7 billion of damages (which could be trebled to more than $14 billion).
Regulatory Parity by Repealing or Reforming the SBA
The SBA may have made sense in an era when network broadcasters had significant market power and major sports leagues were seen as at a disadvantage. But given the massive changes in the video-competition marketplace, it no longer does. Amid today’s plethora of both pay-TV and streaming options, the sports leagues enjoy important leverage in negotiating carriage deals. At the very least, it no longer appears beneficial to extend sports leagues’ exemption from antitrust scrutiny solely to deals with network broadcasters.
The SBA’s inherent preference for games to be available for free on over-the-air networks is not the best way to make more live sports available. Competition for the rights to live-sports events from streaming and pay-TV obviously benefits fans as a whole, as they have shown great willingness to pay for access to see more of their favorite teams and players.
The question of how to achieve regulatory parity remains. One option would be to repeal the SBA altogether. Another would be to extend its protections to negotiations not only for the major sports leagues (the NFL, NBA, MLB, and NHL), but others as well (such as the NCAA, UFC, and MLS), and for pay-TV providers and streaming services to be treated the same as broadcast networks.
Antitrust law is designed to protect consumers by promoting competition. The fundamental tension between its goals and the necessary coordination inherent in sports leagues—including negotiating league-wide deals for the rights to broadcast live events—will continue to produce uncertainty, even under rule-of-reason analysis.
Perhaps this is a good thing, as it allows private litigants and antitrust authorities to hold sports leagues and big media companies accountable when they exercise market power in a way that harms consumers. On the other hand, there are potentially tremendous benefits to sports fans when league-wide deals are made for broadcast rights. The potential for massive antitrust liability could end up preventing leagues from trying new avenues to make more games available to consumers.
For more on this issue, see Eric Fruits’ “Video Competition in the United States”; Ben Sperry’s “Dynamic Competition Proves There is No Captive Audience”; and ICLE’s comments to the Federal Communications Commission’s “Delete Delete, Delete” proceeding.