NFL Ends Blackouts in Age of Streaming
NFL owners voted to suspend the league's highly criticized blackout policy for one season, which many commentators and lawmakers say was due to mounting political pressure. Don't bet on it. When Commissioner Roger Goodell and his friends make a major change, it's almost always to help the bottom line.
To recap: The Federal Communications Commission has voted twice in the last two years to end NFL teams' practice of blocking local broadcasts of games that haven't sold out. The first vote came in December 2013, with the second vote last September solidifying the proposal. As I wrote at the time, the votes seemed like posturing; rather than preventing the NFL from using blackouts, the FCC simply removed the federal restriction on broadcasters from airing the games. The league was still free to privately negotiate contracts with networks that included blackout provisions.
In addition, a bipartisan bill introduced in November 2013 seeks to eliminate the antitrust exemption under which the NFL may black out games. The senators who backed the legislation, known as the Furthering Access and Networks for Sports Act, or FANS Act, believe they are directly responsible for the NFL's decision:
Well, maybe. The league could very well have been responding to the growing scrutiny of its monopolistic practices, which are enabled by Washington lawmakers. But this is the NFL we're talking about, a league that only ever institutes meaningful change when it serves its business and image interests. And while political pressure might influence the latter, money has always taken primacy in the NFL's decision-making. It's very possible, for instance, that the league simply threw the FCC and Senate a bone to get the government off its back and prevent lawmakers from going after its other federal gifts, such as its favorable tax status.
Also, the decision to end blackouts on an experimental basis -- the change will be reviewed after next season -- could simply show the league's shifting business strategy toward digital streaming. The NFL's recent media deals hinge on mobile. Verizon has exclusive smartphone streaming rights through 2017 in a deal that's worth $1 billion but notably excludes viewing on tablets and computers. In October, the league extended its exclusive deal for the Sunday Ticket package with DirecTV, just as the satellite company was negotiating a $48.5 billion merger with AT&T, now under federal review. As cable and satellite subscriptions continue to decline, the merger would allow the NFL and DirecTV to target a mobile audience on tablets, computers and gaming consoles.
Perhaps most telling in Monday's decision was the announcement that one game next season will be nationally aired exclusively on a digital platform. The Oct. 25 match-up between the Buffalo Bills and the Jacksonville Jaguars -- two teams that have been at risk of blackouts in recent years -- will be televised traditionally in the home markets and streamed elsewhere. The game will be up for bidding; insiders speculate that potential suitors could be Google's YouTube, Netflix, Apple, Facebook, Yahoo and Microsoft, a marketing partner of the NFL.
Then again, ending blackouts might just be the NFL's acknowledgement that the restriction is unnecessary. Teams in danger of not meeting the sellout threshold often buy their own tickets to avoid being blacked out. There were no blackouts last season, and only two the season before. Furthermore, as a group of sports economists told the FCC, "Local television blackouts have little or no effect on ticket sales or attendance for the game that is being televised. Local blackouts of home games harm consumers without producing a significant financial benefit to teams."
All this begs the question why the NFL chose now to start caring about a policy that for decades has hurt fans without reaping rewards. Blackouts don't help bottom lines but they do create public and political backlash, deter fans from consuming the product, obstruct the league's digital strategy, and draw unwanted attention to the special treatment the it receives compared to other businesses. If you're wondering "Why now?" the answer is likely all of the above.
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