Another drawback of antitrust regulation

by Russ Roberts on December 27, 2007

in Regulation, Sports

The NFL this year has put some games exclusively on the NFL Network, a cable offering that most fans don’t have. The New England Patriots are playing the New York Giants this Saturday night on the NFL Network. The Patriots have a chance to go 16-0 with a victory, so interest in the game has become rather intense. So a lot of fans (outside of Boston and New York who can watch the game on local TV) are disappointed. They either have to sign up for NFL Network, go to a bar carrying the game or do without. Now, the NFL has changed its mind and will simulcast the game on the NFL Network, CBS, and NBC:

"We have taken this extraordinary step because it is in the best interest
of our fans," commissioner Roger Goodell said in a statement after the league
announced it was reversing course.

Touching, but a bit weird. It punishes the people who signed up for NFL Network not just to miss this game. And of course, there’s more to the story:

Last week, two prominent members of the Senate Judiciary Committee sent a
letter to Goodell threatening to reconsider the league’s antitrust exemption.

Sen. Patrick Leahy, D-Vt., who co-wrote the letter with Sen. Arlen Specter,
R-Pa., said he was "delighted" by the NFL’s concession.

"I think it was a smart move on their part," he said in a phone interview.

Leahy expected to speak with Goodell again next month about the ongoing
question of how many fans will be able to see games on the channel. Saturday’s
matchup wraps up the NFL Network’s second season of airing live contests, with
eight per year. This one and a key Thursday night game between Green Bay and
Dallas last month drew widespread complaints about the lack of availability.

"I never completely gave up hope, but I was getting a little discouraged
Christmas afternoon when we still had not gotten a positive answer," said
Leahy, who added that his staff members were talking with NFL officials during
the holiday.

So much for the rule of law. When I told my 12-year old son what had happened, he said, "But they don’t have the right."

Well, they shouldn’t have the right. But they do have the right. And even though, as a cable-free Patriots fan since 1962, I am happy to be able to watch the game, I wish it weren’t so.

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{ 11 comments }

Chris December 27, 2007 at 10:22 am

This isn't really a drawback of antitrust law; it's a drawback of a meddlesome Congress. Leahy could have just as easily said "if you don't reconsider, we'll impose a special excise tax on NFL ticket receipts, ban beer advertising during football games, or ban ownership of cable channels by football leagues." It doesn't really have anything to do with antitrust.

David R. Henderson December 27, 2007 at 12:56 pm

Good point, Russ. This is one in a long line of government using antitrust laws as a stick to get people in line. I remember the late economics professor, Ben Rogge, of Wabash College, telling a similar story in a talk he gave at my undergraduate school, the University of Winnipeg, in 1969.
After JFK had messed up with the Bay of Pigs, there were hundreds of prisoners whom Castro wanted to hold for ransom. The U.S. government refused to pay, but some of the antitrust boys called up various major companies to shake them down for "contributions" to Castro.

tw December 27, 2007 at 1:26 pm

I wonder if the reaction of the politicians would have been the same had the NFL offered the game on a pay-per-view basis to non-subscribers of the NFL Network. After all, they would have been making the game available to the general public…only for, say, $4.95 a pop.

Rob Dawg December 27, 2007 at 2:52 pm

I'm not so sure. The NFL seems more than willing to have government pass and enforce draconian copyright protections. And their cable network? Seems that enjoys all kinds of meddlesome interference to their benefit as well. Lie with dogs, expect fleas.

There's also the distinct possibility that the NFL is dipping twice using the Judiciary Committee bluster as cover for a chunk of likely very very lucrative broadcast revenue. Any bets that the broadcast includes several very juicy commercial spots for the NFL Network?

NFLN was asking $200k per spot when in network. This particular game has got at AFC NFC championship interest. That was $956k last year.

Pleeeeze Brer Judiciary don' go throwin' this poor network in that briar patch.

Chris Meisenzahl December 27, 2007 at 4:00 pm

Thanks Dr. Roberts, my wife and I are big NFL fans and have the NFL Network via DishNetwork.

I'm also disappointed to learn that your a Pats fan, we're big Bills fans here in Western, NY! ;-)

Kent Gatewood December 27, 2007 at 9:34 pm

Last year I watched some cable NFL games on the internet through a really poor site in China. This year there have been opportunities to see cable games free through all kinds of internet work arounds. Is the internet going to trump cable?

Ed December 27, 2007 at 11:04 pm

Mr. Roberts strangely says that this resolution "punishes the people who signed up for NFL Network not just to miss this game. "

What?

The background is that the NFL set up the NFL Network and put some exclusive games on it to pressure cable companies to add NFL Network to the regular cable network (at what they no doubt view as the exorbitant cost of 60 cents per subscriber for just that one channel).

The cable companies have generally said no (while DirectTV and others have added NFL network to at least some of their packages), so NFL network is not widely carried. The NFL caved because they did not want to hurt their brand by angering fans who would miss this historic game. (The NFL has held firm on other NFL network exclusive games during the season).

NFL network even has a whole website set up to help people pressure their local cable companies to carry the network.

This had zero to do with bloviating from Congress. It was a decision by the NFL to protect its brand from consumer anger by 'giving away' this special game. The market worked flawlessly. Nobody was 'punished'. What an odd comment.

vidyohs December 28, 2007 at 10:12 am

I dunno Ed, from down here in America's belly, it looked to me like the NFL was standing firm until Jerry Jones went to Austin to pressure the state legislature, and on the national scene powerful members of congress made direct contact with the NFL management and brought the change on. It is not pure market force when such doings is doing.

But, the view from my front porch again is that for the "bread and circus" concept to work on our socialist nation, the leaders had to assure that the "circus" is seen. People need access to that circus to be distracted from the real world.
FOOTBALL IS IMPORTANT FOR GOD'S SAKE!!!!!

Don't you all know that?

GeorgeNYC December 28, 2007 at 4:52 pm

How do the actions of two industries who are specifically exempt from anti-trust regulation show anything about the perils of anti-trust regulation.

Did the people buying the NFL Network actually purchase it because of the fact that it meant that others were excluded from watching it? I think not. They purchased it because they ha no other option given the battles raging between the two monopolists of the cable provider and the NFL.

Imagine if the same thing happened with say…milk or clean water or a million other things that could be monopolized without regulation.

You live in some idealized world where unregulated markets will somehow solve everything. However, please show me just ONE example of a market that works without ANY government assistance.

Marie December 29, 2007 at 12:58 pm

Football has always been something to watch at home or at sportsbars.
to have to purchase a specific package to watch it is not right nor should it be legal.
We pay enough for things already why not call this PAY AS YOU GO America instead of Home of the brave and land of the free..
It just upsets me to think that as much money as the networks and the teams are making they are still trying to be so greedy.

Vinny The Sports Maniac December 30, 2007 at 1:57 pm

I enjoyed the plugs for the nfl network during the cbs broadcast. iwantthenflnetwork was shown to nfl fans all over the country. Smart move for the NFL.

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