Sports Leagues vs. Cable Cos.
You're not going to find a much bigger sports fan than me. Much to my wife's chagrin, I hog the family computer most nights to play fantasy sports. Baseball, football, basketball, it hardly matters. But as the NFL lines up to tackle the country's largest cable companies, even I am starting to wonder whether in their chase for the greatest trophy of all—the almighty TV dollar—the world may have suddenly gone into sports overload.
At the moment you have two of the most powerful—and wealthiest—sports leagues on the planet squaring off against cable TV companies. The Big Ten Network, a channel owned 51% by the universities that currently make up the Big Ten sports conference and 49% by Fox Sports, is pressuring Time Warner (TWX), Comcast (CMCSA), and others to carry its games by lobbying state legislators to rein in the cable giants and taking out ads encouraging sport-rabid Big Ten fans to switch to satellite. The NFL also is taking on cable companies but is mostly zeroing in on Comcast, the nation's largest cable operator, with a full-scale lobbying blitz in Washington. The NFL is especially upset that Comcast took the NFL Channel off its digital tier service and shipped it instead to the much smaller sports tier where folks have to pay $6.99 a month extra to get it.
In both cases, Comcast says it's being held up by the leagues, which are asking a hefty sum for programming that only a few diehards really want. Sorry, jocks, I have to agree with Comcast. With all its money, the sports guys can wage all-out war on the cable companies, and they've done just that. In Wisconsin, a plan is moving ahead to deregulate the cable industry so that competitors like phone companies can come in. The idea is that the newer rivals would carry the sports programming as part of their basic service, forcing the cable guys to do the same. In Washington, the NFL was able to stoke an outcry among legislators that very nearly convinced the Federal Communications Commission to order arbitration between the NFL and Comcast. (The FCC put off consideration of the matter until Feb. 27.)
It seems as if the sports leagues are just too greedy. Where is it written that my dad in Florida, who is retired and doesn't much care for sports, should be asked to pay the 70¢ a month his local cable operator will almost certainly find a way to pass through to him, should his cable company carry the NFL Network. How many folks like him are going to tune into the NFL Network, which broadcasts eight Thursday or Saturday night games as well as wall-to-wall coverage of the teams, injuries, and matchups that only us sports junkies really want.
As for the Big Ten, it's asking cable companies to pay up to $1 a month per subscriber in regions where Big Ten teams play. Cable operators have largely refused, and you have to wonder just how many non-football-loving Midwesterners would have been hosed if they hadn't.
There is no God Given Right to catch NFL football on Sundays or Big Ten games. The NFL already gets $3.1 billion a year from Fox, CBS, NBC, and ESPN to air just about every game on its schedule. And having just visited my 18-year-old daughter at the University of Michigan, and attended one of their games in the overflowing, 107,000 seat "Big House," I have a feeling no president of a Big Ten school is clipping coupons.
This is a pure, naked grab for more bucks by reselling what had been more or less free to consumers in the first place and packaging it as a new cable channel that someone has to reach into their pockets yet again to carry. By the way, the really good games like this month's Michigan-Ohio State game aren't even on the Big Ten channel, with the schools taking the even bigger bucks they get from ABC to show it.
A Tier-ful Solution
The idea of a sports tier, which Comcast is promoting, makes tons of sense. If I'm sitting out here in LA and want to watch my onetime home team, the Washington Redskins, I should have a way to do it. But I should not have the rest of my neighbors pay for that right.
Frankly, NFL executives know this better than most. Even as NFL Commissioner Roger Goodell went on the offensive, telling reporters on a conference call on Nov. 20 that a freely obtainable NFL Network was "in the best interest of the fans at the end of the day," NFL owners were raking it in from their own version of a sports tier on DirecTV (DTV). It's called the NFL Sunday Ticket, an all-you-can eat menu of football games offered only by satellite operator DirecTV Group that pays the NFL around $700 million a year. For as much as $279 a year, more than 1.5 million folks already are getting football on their own version of a sports tier from DirecTV.
Clearly, the NFL already has accepted a sports tier of sorts, despite their protests to the contrary. O.K., maybe I am being a little harsh on the sports guys. They do have ever rising costs. And the NFL has former ESPN (DIS) Chairman Steve Bornstein, one of the smartest TV executives, calling plays as they sign those outrageous TV contracts. He has managed to very cleverly pit the networks against one another, making NFL ownership a license to print money.
I get the feeling that Comcast has its back up with the NFL in large part due to the damaged feelings left when Bornstein engineered the Sunday Ticket deal in 2004. Comcast wanted to bid on that as well, according to Goodell, but didn't submit a bid in time. Not all sports are played on fields with lines on them.
While we're at it, Comcast is no saint in this sports battle. The cable giant plays fast and loose with its own sports properties. While consigning the NFL Network to its sport-lovers tier, it places its own sports channels, namely its all-sports channel Versus, in a prominent place on its basic service for anyone to get. Versus costs cable operators roughly 25¢ a month, a smaller amount but still one that a ton of nonsports lovers are subsidizing.
This is the time of year when sports starts to count: College rivalries litter the sports pages, pro football teams are making their final runs to the playoffs. In fact, the NFL Network has the exclusive rights to carry one of the year's biggies, the contest on Nov. 29 between the Dallas Cowboys and Green Bay Packers. Both teams are 10-1, and Brett Favre is having the best year of his future Hall of Fame career.
It's a game that most of the country would love to watch, but can't. That's a shame. And it should be a conundrum for the NFL: Do the fans really win while the league is holding the game hostage to pursue an even larger share of an already incredible pile of money they get from the TV networks? As I see it, that's an easy call.