NBA, NHL Join NFL, MLB in Support of Maintaining Sports Blackout Rule, While MVPDs Want Elimination

Proponents of eliminating the FCC sports blackout rule (SBR) pointed to the Communications Act of 1996 and the Satellite Home Viewer Improvement Act (SHVIA) to show that the agency can do away with the rule, in replies due Tuesday in docket 12-3. NFL, the Office of the Commissioner of Baseball and other sports leagues said the FCC doesn’t have authority to end the rule. Then-acting chairwoman Mignon Clyburn on her last business day before Tom Wheeler became chairman circulated a rulemaking notice to ask about ending the rule.

The Communications Act and SHVIA make clear that the FCC has the authority to repeal the sports blackout rule, said Sports Fans Coalition, which petitioned the commission to embark on the current proceeding about nixing the decades-old rule. Congress didn’t direct the FCC to adopt the original rule for cable, the coalition said (http://bit.ly/1o1rEew). Rather, the FCC adopted the rule for cable “and later was instructed by Congress to extend whatever policy exists for cable to OVS [open video systems] and DBS [direct broadcast satellite] services,” it said. The group’s backers include a former Dish Network executive.

"The commission may, on its own volition, eliminate the rules for cable, OVS [online video service], and DBS at its discretion, as it proposes to do here.” Because Congress didn’t explicitly direct the FCC how to achieve sports blackout rule parity among these competing systems, “the commission has the discretion to amend and repeal the SBR as long as the equitable treatment among all three platforms, as required by statute, is maintained,” the coalition said. The NFL’s position that the commission has the authority to repeal the sports blackout rule for cable systems but not for OVS and DBS “could lead to uneven treatment between the systems and would contradict Congress’ intent,” it said.

DirecTV said “no statute requires the commission to impose a sports blackout rule on cable operators” (http://bit.ly/1m6HkbA). Through SHVIA, Congress mandated the extension of the cable rule to satellite, DirecTV said. The FCC can’t continue “to apply the cable sports blackout rule to satellite if the rule no longer exists,” it said. “The legislative history confirms Congress’ intent to treat satellite and cable comparably.”

The NFL said the FCC has no authority to repeal the rule and the rule prevents circumvention of local blackouts “on the rare occasions when they occur” (http://bit.ly/OV5OJR). Proponents of ending the rule “fail to provide a scintilla of evidence that the rule causes any harm to even a single sports fan,” it said. The claim by the Sports Fans Coalition (CD Feb 26 p7) that the NFL coerced broadcast networks into buying unsold tickets to games in 2013 is devoid of fact, it said. The coalition’s “deliberately vague and unfounded claim moreover asserts no violation of any commission rule, since no rule has been violated,” it said. The NFL’s broadcast and multichannel video programming distributor partners “have no incentive to renegotiate their contracts with the league to add provisions that would accomplish the purposes of the blackout rule,” NFL said. FCC action will be held invalid under the Administrative Procedure Act, it said. Because of the requirement that FCC action be supported by the evidence, “even if the commission had the authority to repeal the blackout rule ... such a decision made in the absence of credible evidence that the blackout rule is no longer necessary would be an arbitrary and capricious exercise of the commission’s rulemaking power and thus invalid,” NFL said. The Communications Act and SHVIA say the FCC “shall” enact the sports blackout rule, NFL said. The commission isn’t permitted “to ignore this clear congressional mandate that the commission enact the sports blackout rule for DBS and OVS providers,” it said.

The Office of the Commissioner of Baseball agreed the FCC doesn’t have authority to eliminate the rule and that the sports blackout rule is necessary to ensure the continued supply of sports programming. The rule should be strengthened by preventing MVPDs from destroying exclusive rights licensed to a TV station, as well as a cable network, it said (http://bit.ly/1haRirU). The office rejected claims of Sports Fans Coalition, Public Knowledge and others that the rule has no economic basis. The economic basis underlying the rule is “preserving exclusive distribution agreements and thereby promoting the supply of programming,” it said. The rule doesn’t deprive Major League Baseball fans of the ability to view a game televised by a local rightsholder, it said. It prevents an MVPD from importing a second telecast of that game “in derogation of the exclusive rights licensed to the local telecaster,” the office said. The public interest doesn’t mandate access to two telecasts of the same game, “particularly when the effect of doing so would inevitably lead to a reduction in overall sports programming,” it said.

The NBA and NHL support local exclusive contracts negotiated “with the full awareness of contracts with Regional Sports Networks and national contracts with broadcast or cable network,” they said (http://bit.ly/QgMBDt). The leagues also support “maintaining the protection of those local contracts through the continuation of the current sports rules,” they said.

Changes in the TV industry underscore the need for the sports blackout rule to remain in place, NAB said (http://bit.ly/NV90Ef). At about 95 million households, more people subscribing to pay TV today than when the rule was established in 1975, it said. The figures demonstrate “that importing a distant signal into a local market would have a much larger negative impact on local TV stations, particularly their ability to sell advertising, than it would have when the SBR was first adopted,” NAB said. That gate receipts aren’t the primary source of revenue for the NFL or other leagues doesn’t render the rule obsolete, NAB said. If leagues determine that blackouts are important to their economic health, “it is not the commission’s role to sort through financial statements of non-licensees to determine the validity of that decision,” NAB said.