Kategoriler: Business

NFL Sunday Ticket Lawsuit: Why TV Deals Are So Valuable


A pillar of the N.F.L.’s meteoric rise over the past six decades has been its strategy of making nearly all games available mostly free to fans on national networks. The league has stuck to this approach even as Major League Baseball, the N.B.A. and other leagues moved more of their games onto cable and satellite broadcasters and subscription streaming services.

The strategy has paid off: Ninety-three of the 100 most-watched programs on television last year were N.F.L. games, according to Nielsen.

Yet N.F.L. games are not cheap and ubiquitous enough for all fans. This month, the league has been in federal court in Los Angeles fending off a class-action suit brought by millions of customers who paid for Sunday Ticket, the subscription service on DirecTV that showed all out-of-market games on Sundays.

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The plaintiffs claim that the N.F.L. colluded with CBS and Fox to artificially inflate the price of the service, which cost roughly $300 a season, because the networks viewed Sunday Ticket as competition. The plaintiffs argue that the N.F.L. dismissed offers to create cheaper services that would have let fans buy games based on teams. They are seeking damages of $7 billion, which could be tripled under antitrust statutes. That could take a significant bite out the league’s annual media rights, which are now worth more than $10 billion a year.

Some businesses might have settled for far less to avoid the risk of going to trial and facing an unpredictable jury. But the N.F.L. has taken its chances in court because it wants — indeed needs — to preserve the right to cut exclusive media deals on behalf of all 32 of its teams. Congress granted the N.F.L. an exemption to do so in 1961, and it has fueled the league’s growth ever since.

The N.F.L. is now a $20 billion business, and its success is due in part to the sharing of its rights deals, which are split evenly among all 32 teams. This formula helps teams in small media markets, like the Kansas City Chiefs, compete for players with New York teams.

“This case cuts to the center of sports,” said Robert Boland, who teaches sports law at Seton Hall University. “The N.F.L. did so well under its antitrust protection that the case is a testament to how powerful the N.F.L. has become.”

The case, which has featured testimony by Commissioner Roger Goodell and the Dallas Cowboys owner Jerry Jones, is likely to be handed over to the jury this week. Repeatedly, the case has not gone well for the plaintiffs. Last week, Judge Philip Gutierrez, in a rare display, admonished them for wasting time and complicating what he said should have been a straightforward case.

“The way you have tried this is far from simple,” Gutierrez said last Tuesday. “This case has turned into 25 hours of depositions and gobbledygook.”

The jury, of course, may see it differently. If the N.F.L. loses the case, it is likely to appeal, which would only prolong a case that began nearly a decade ago. At the time, Sunday Ticket aired on DirecTV, which broadcast the service for nearly 30 years. It moved to YouTube TV last year.

However the case goes, its existence says a lot about not just the dominance of the N.F.L. — by far the biggest sports league in annual revenue — but also how fans’ expectations have changed. We live in a world of instant gratification, where viewers seek to watch whatever they want, whenever they want it, and often for little or nothing.

As millions of viewers have ditched cable and satellite TV, and subscribed to Netflix and Hulu ad hoc, the league has tried to meet fans where they are, something the streaming services also crave. A handful of games now appear exclusively on Peacock, Amazon Prime and other platforms each season. The response has been largely negative, partly because fans don’t want to have to subscribe to so many streaming services just to get games.

“This is a day and age when everyone says, ‘I want my things on my time, whenever I want it,’” said Phil de Picciotto, the president and founder of Octagon, a sports marketing firm. “But that’s impossible for businesses to deliver,” he said. “Low cost comes with mass products.”

The N.F.L. was not shy in court about defending Sunday Ticket’s premium pricing. The league, Goodell said, did not want to hurt CBS and Fox, which were each paying billions of dollars for their rights to show the Sunday games that were also fed to DirecTV.

“Well, it’s a premium product, I think, primarily because you have access to additional games,” Goodell said on the stand last week. “And that access — you know, it can impact negatively on our broadcast networks, so broadcast networks are very concerned about the impact on them in reaching the broader audience. But I think it’s a premium product because I think it’s incredible content.”

The plaintiffs produced evidence that ESPN had proposed cutting the price of Sunday Ticket to $70 and selling single-team packages. Goodell said on the stand that the league had passed on the offer because ESPN would have combined its own content with the N.F.L. games, not simply shown the games as DirecTV did.

In some ways, the business of broadcasting games has moved on from the details at question in this case. YouTube TV is entirely online, and the networks are still able to broadcast their games over the air.

Then again, YouTube has to recoup its investment, too, so consumers aren’t necessarily going to get supercheap subscriptions. The plan now costs $350 a year, on top of the subscription to YouTube TV.


Source: nytimes.com

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