McCain Introduces Bill To Ban NFL Blackouts, MLB Blackouts Untouched

Senator John McCain introduced a bill in the Senate last week which aims to ban local TV blackouts for sporting events played in publicly-financed stadiums. But don’t get too excited baseball fans. The bill is aimed NFL blackout rules, for the most part. MLB blackouts due to the crazy MLB blackout map won’t change under this proposed legislation. The Fox Game of the Week blackouts on Saturdays may be covered, but those will disappear in 2014 anyway under the new Fox/MLB national TV contract.

Dubbed the Television Consumer Fairness Act of 2013, McCain’s bill proposed legislation has three goals:

  • remove barriers to cable and satellite companies offering a la carte programming;
  • penalize networks that move programs to cable and satellite to avoid  new, commercial-free technologies, like Aereo; and
  • prohibit local TV blackouts when a game is not sold out, if the home team plays in a stadium constructed at least partially with public funds.

Let’s tackle the blackout provision first. Local TV blackouts arise from the Sports Broadcasting Act of 1961. That law allowed teams in a sports league to collectively negotiate TV contracts without running afoul of antitrust laws and made it legal for leagues to blackout home games in the local market. The law is codified at 15 U.S.C. 1292. The Federal Communications Commission later issued regulations extending the blackout rule to cable and satellite operators. As a result, if a game is blacked out locally, a cable or satellite network like ESPN or NFL Network can’t step into the breach to air that game for local fans of the home teams. The FCC is currently reviewing a petition to eliminate its sports blackout rule.

McCain’s proposed legislation side-step the FCC’s review process and eliminate the sports blackout rule for games taking place in stadiums financed, at least in part, by money from the federal, state, or local government. When he introduced the bill, McCain spoke on the Senate floor and said:

When the venues in which these sporting events take place have been the beneficiary of taxpayer funding, it is unconscionable to deny those taxpayers who paid for it the ability to watch the games on television when they would otherwise be available.

Amen, Senator McCain. Good on you. But the Sports Broadcasting Act and the FCC regulations pertain, for the most part, to NFL games. Baseball games aren’t blacked out locally; they are blacked out regionally based on an antiquated and nonsensical blackout map. What can you do for Arizona Diamondbacks fans who live in Utah but can’t watch Diamondbacks games on MLB Extra Innings or MLB.tv because Utah is considered part of the Diamondbacks’ broadcast territory? Or San Diego Padres fans in southern Arizona? What steps are you taking to put an end to this MLB blackout map?

MLBBlackoutMap

I made several calls Senator McCain’s office for comment on MLB blackout issues. I was sent from voicemail to voicemail and never spoke to a staff person. Requests for comment were also made to Sports Fans Coalition, a non-profit advocacy group that says it “fights to make sure that fans have access to games both on television and in the stadium.” Ending the NFL blackout rules has been a priority for Sports Fans Coalition since the group’s founding in 2009. The group’s website doesn’t address MLB blackout issues.

As I wrote in January, a lawsuit challenging MLB’s blackout rules is pending in federal court in New York. The case is well into the “discovery” phase, during which the parties exchange documents and depose key witnesses under oath, in preparation for trial. MLB and the teams that were individually named have filed several motions to dismiss the case or to have it stayed. All have been denied by the court.

McCain’s bill won’t change MLB’s blackout policy, but it might very well change the economic underpinnings of the sports rights-fee bubble. The bill would eliminate regulatory barriers to a la carte programming by cable and satellite operators and create incentives for networks to unbundle their programming. What does that mean? Here’s the example Senator McCain used: Disney owns ABC, Disney Network and ESPN. If a cable or satellite operator wants to offer ESPN to its customers, it must purchase and pay for all Disney-related programming, and vice versa. The cable or satellite company then has no choice but to offer ESPN and Disney Network as a bundle, even if some customers only want ESPN and others only want Disney. McCain’s proposed legislation would change that.

ESPN charges cable and satellite companies $4.69 each month to carry the network. When some consumers want ESPN and others want Disney, the cable or satellite company has no choice but to pay the $4.69 for ESPN and whatever the carriage fee is for Disney, and pass those costs onto their customers. If a la carte programming takes hold, then cable and satellite companies will purchase ESPN only for those customers who want the World Wide Leader. That means less money to ESPN in the short term. And it may force ESPN to raise its industry-leading carriage fee even higher. That may cause additional consumers to fall away, based on cost. In other words, unbundled programming will test how elastic the demand is for ESPN and other sports networks.

ESPN has banked on the bundled programming — and the resulting steady stream of carriage fees — to cut increasingly lucrative deals with sports leagues and individual teams. Last August, ESPN agreed to pay MLB $700 million a year for the 2014 through 2021 seasons. ESPN will broadcast up to 90 games regular season games, any tie-breaker games, and one of the two Wild Card games. And that’s just MLB. ESPN has similar deals with the NFL, NBA, and NASCAR, among others. If ESPN’s viewership drops with a la carte programming, you have to wonder if we’ll continue to see these kinds of megadeals in the future.

Recent history with regional sports networks gives us some indication of how this might play out. RSNs have handed out billion dollar deals to the Texas Rangers, Los Angeles Angels, Houston Astros, San Diego Padres, and Los Angeles Dodgers. That’s resulted in the RSNs seeking higher carriage fees from cable and satellite operators. In Houston and San Diego, some cable and satellite companies have refused to pay the higher fees. There’s no bundle of sports programming that forces them to accept the higher rates. They simply don’t offer CSN Houston and Fox Sports San Diego, respectively. Sixty percent of cable and satellite customers in Houston, and 40% in San Diego, don’t have access to their home team’s games. It’s not a black out. CSN Houston and Fox Sports San Diego are broadcasting the games in those markets. It’s just that many fans can’t see the games because of a dispute over carriage fees.

As with all proposed legislation, Senator McCain’s bill was referred to a committee (Commerce), and will be the subject of hearings and debate. Networks will undoubtedly be lined up against it. Consumer advocates will lobby for it. The bill is unlikely to be passed in its current form, because that’s not how Washington works. However it plays out, we’ll cover the issue, so check back often for updates.




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Wendy writes about sports and the business of sports. She's been published most recently by Vice Sports, Deadspin and NewYorker.com. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.


40 Responses to “McCain Introduces Bill To Ban NFL Blackouts, MLB Blackouts Untouched”

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  1. Anthony says:

    the blackout map misses one of the most nonsensical territory areas where San Francisco/Oakland blackout are extends all the way across the Pacific to Hawaii.

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    • omar little says:

      Just as ridiculous as having Blue Jays games blacked out all across Canada.

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    • Drakos says:

      I like the “No data available” area of Florida.

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      • Tim says:

        You go tell the alligators they can’t watch whatever baseball game they want. I’ll watch from over here.

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    • atoms says:

      Simple solution: Hawaiians could just root for the Dodgers :)

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    • Dan says:

      Agreed that Hawaii is one of the most nonsensical territory areas. But it’s even worse than that. They consider ALL west coast games as being in the Hawaii territory. So no Mariners, Oakland, San Francisco, Dodgers, LAA, or Padres home games. Thankfully I checked my zip code with MLB before spending $100 on an mlb.tv subscription that would have been pretty spotty.

      If you have cable you do get Dodgers and LAA games via Fox Sports, so it’s something at least.

      I understand the original spirit of the legislation, trying to get fans to go to games. But sheesh 2500 miles over open ocean is a bit far (and difficult) to drive for a baseball game =).

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      • Jay29 says:

        That is absurd. I understand the difficulty in getting changes made through Congress, but hopefully they can at least find a way to make the blackouts more local to the stadium. It makes no sense to black out any part of the country (Hawaii, northern Maine, the giant black hole of non-baseball covering Idaho/Utah/Nevada/Oregon/Montana) where it’s completely impractical to travel to a baseball game.

        Do they black out Alaska when the Mariners or Blue Jays don’t sell out, too??

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      • cass says:

        That’s not why the blackout exists. It exists to protect the cable companies broadcasting “local” games. Nothing at all to do with attendance. The teams like it because they can get more money for their “local” tv rights.

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  2. jojo says:

    Those poor souls in Iowa….
    #BudSeligHatesIowans

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    • Jay29 says:

      Wow, blacked out for 5 teams. That’s what they get for being *only ~300 miles* from four major cities.

      “C’mon, kids, the Cardinals are blacked out tonight. It’s only a 5 and a half hour drive to Busch. We can be there in time for the 7th inning stretch, but only if you skip band practice, Suzie.”

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      • Iowa Braves says:

        To match Dan’s Hawaiian lament above (and now I see, echo Dave’s below): I live in eastern Iowa and last year went from being blacked out for four teams on mlb.tv to six: Royals, Twins, ChiSox, Cubs, Cards, & Brewers. The closest of these stadiums is 3.5 hrs away; several are 6 hrs away. I can’t afford to go more than once or twice a year anyway. Pretty absurd that on an average night, 40% of mlb games are blacked out.

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        • Brad says:

          It’s absurd that there are any blackouts AT ALL when you pay for the Extra Innings or mlb.tv package. Just rebroadcast whatever the local feed is; people are willing to pay for it. It’s one of the stupidest examples of ignoring business economics 101: never block a transaction between two willing participants.

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    • Tom says:

      I live in Iowa and have the MLBtv pacakage. I’m a Red Sox fan, but I have SIX teams blacked out: White Sox, Cubs, Cards, Royals, Twins and Brewers.

      We don’t play these teams too often, but still…

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  3. okra says:

    Many thanks to Wendy and fangraphs for covering this type of story. Let’s hope this passes.

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  4. Steve says:

    McCain doing something right for once. Gotta love it.

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    • lowcountryjoe says:

      Doing something right? What? Making a “federal case” out of this is doing something right? Doesn’t the legislative branch have more important things to tackle like, I don’t know, repealing stupid laws that would best be stupid at a more local level of government? If the stadium wasn’t funded with federal money, the house and Senate have no business getting involved.

      Now, McCain as a presidential candidate in 2007 or 2008 told a Michigan crowd that the automotive jobs that had been lost – lost to right-to-work states – were not coming back. Not only was that the right thing to do, it took a lot of balls to say it. He was right then and maybe a couple of other times, too. This wasn’t one of those times.

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      • Bill says:

        This whole situations seems like a situation where government can’t get out of it’s own way. McCain is pushing a law to repeal an FCC rule that’s a broad application of a 50 year old law. Really, I think the responsibility should, to some degree, fall on the states that are funding the stadiums. If state tax dollars are used to fund a stadium, games should not be blacked out in the state. As an aside, how does MLB.com decide what region I’m in? If it’s based on my IP, can I go through a VNC out of the country? Or, do they base it on my billing address?

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    • Jordan says:

      This is standard McCain. Fight for something that sounds good but in the end is completely worthless and isn’t something a US Senator should be wasting his time with. It is all about power with these people.

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  5. Mitch says:

    No way will ala carte pricing lead to lower average bills; instead of paying $45/month for 100 channels, you’ll pay $45/month and get 10 channels. Yes, some people don’t want ESPN, but others don’t want Disney, Food Network, and Lifetime. Today, Disney watchers subsidize ESPN watchers and vice versa (many viewers place a value lower than $4.50 on ESPN and many viewers place a value of $0.00 on Disney, but both pay). In aggregate, though, both consumers value their package of programming at $45/month (or higher); if they didn’t, they wouldn’t subscribe. The price for both Disney and ESPN will rise, though ESPN’s will probably rise less since it is currently being priced more closely to the value derived by the marginal consumer. The average viewer values Disney at a lower price; many viewers, though, would place a very high value on Disney, and these viewers will then become the marginal subscriber, bidding up the price but significantly lowering the quantity.

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    • Adam M says:

      I tend to agree, but it depends on the user. For some users who don’t like sports at all, I think their bill could be a lot less. If you just wanted your local channels and some of the more basic cable entertainment or educational channels, it would be less.

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      • cass says:

        And some people only watch their local baseball team and virtually no other sports.

        There’s no reason for the cable industry to exist anymore. All content providers could sell their content to individuals over the Internet. All consumers should ever need is an ISP and they can make their own deals with content providers. If someone in Houston wants to watch the Astros, they should be able to just pay the Astros. Likewise, if someone else in Houston just wants to watch Game of Thrones and doesn’t like baseball, they should be able to just by HBO without buying any sports channels.

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        • David says:

          This brings us to the point of corporations owning the infrastructure to carry the data. Since they own it, and have invested significantly in it in the past, companies like AT&T and Verizon dont want to stop using their telephone/cable lines (hence double and triple play deals) if the infrastructure was publicly owned (like railroads) then there would be some measure to make it more efficient (i.e. not having separate track systems for passenger rail and freight) and all data transmission would be moved to the fastest possible system. The government could then lease the infrastructure to the corporations so they didn’t have to deal with providing service, and voila, we all have 100GB internet and can watch whatever shows we want, whenever we want. Only drawback is the government would still be responsible for fixing the lines, and while they are good at conducting great works, they are not so good at keeping them going… It also wouldn’t be great for telecom companies…

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    • Dave says:

      While the average cost per channel may go up the overall bill will go down for many. Speaking for myself, I only ever watch 4-5 of the 100 or so channels that I get. This would allow me to lower my overall bill by just paying for those 5 channels. Networks would still be able to offer the bundles to consumers to encourage them to order all the channels they offer. For example, in a la carte maybe ESPN costs $6.50 and Disney costs $2.50. But Disney offers a bundle to buy both channels for $7. This would encourage consumers to buy the extra channel even if they would rarely watch it. Consumers who really want ESPN may be willing to pay the extra .50 for Disney. Personally I never watch ESPN so I would probably benefit from not having to pay the high fees for the channel.

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    • Ron says:

      If ala carte programing is offered at the consumer level then it will probably result in higher bills and less options. Some cable networks will cease to exist. I wonder how this will end up. Will cost for equipment be higher? Will cable have an option say pick ten channels for 40 bucks? If so will people go to a combination over the air/cable for TV? If there is an option of pick ten channels for cable you can bet that ESPN will not be one of them.
      Also most people rent DVRs from the cable company or pay for a subscription service. It is rare for people to use a computer or DVD burner or standalone DVR for recording shows. I find it amazing that we used to have piles of VHS tapes but now we have moved to a better technology that technology has become in many ways more expensive and has many disadvantages. There are many advantages as well but the monthly fee is the worst part.

      All this shows that the cost of watching will go up. Still I expect at some point the networks will open up the blackouts to include a paying option (it will not be cheap) for watching blacked out teams on mlb.tv. If ala carte were to become a thing I bet the option to buy on mlb.tv would be more than the cost of the channel.

      There are so many issues with this but the main thing to remember is that no matter what it will not get cheaper, technology and entertainment historically don’t get cheaper and the cable companies and networks will find a way to make it cost.

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      • Jason says:

        You really have no clue what you are talking about. Almost every sentence contained an error of some kind.

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  6. Wendy, thanks for following up on this story – even more thoroughly than I could have asked for. Pretty fascinating stuff.

    I’m personally excited by the idea of a la carte, since I watch only approx. 10 channels, but can see some of the downsides implied (e.g. rising costs of each individual channel) and don’t believe it stands a chance of passing.

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  7. Adam M says:

    I was recently staying in southeastern New Mexico on business, and when I opened up the iPad to watch some games, I was amazed to find that the D-Backs, Rockies, Rangers and Astros were all blacked out there, despite the fact that you can only get the D-Backs games on local television (but not in my hotel). So of the the 15 games on that night, I couldn’t get 4 of them (none of those teams were playing each other). That region is currently flooded with oil field workers from Texas, and none of them can get the Rangers or Astros on TV or over the internet (at least not legally). That’s terrible for baseball. But there doesn’t seem to be enough of a financial incentive to change it.

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    • Dave says:

      I’m an Iowa resident so I feel this on a daily basis. We are blacked out from Cubs, White Sox, Cardinals, Royals, Twins, and Brewers. The local cable company only offers Fox Sports Midwest and WGN so I can only watch Cardinals and a select few Cubs and White Sox games. I have no ability to watch the Twins, Royals, or Brewers. Not to mention the fact that Minneapolis is a good 4 hours away, Milwaukee is 6 hours away, and KC is 3 hours away. It’s not like I can just get in the car and go see a game since it isn’t on TV.

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      • cass says:

        Even for people who live right next to a ballpark, half the games are played in other cities!

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  8. Blackouts suck says:

    If you change your IP Address/Proxy settings to one in Germany or any other country without blackouts you can watch any game you want.

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  9. Lovetron says:

    In Oregon, I have no fewer than four teams blacked out on MLB.tv. To me, that’s just ludicrous. The worst part of that is that, being on the West Coast and working a 50-hour week, I typically can’t catch games that start before 7pm PST. The blackout rules severely inhibit my ability to enjoy the sport.

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    • fergie348 says:

      A MLB.tv premium subscription plus a high speed VPN provider that can place you out of the country to the IP filter rules and you’re golden – watch the games whenever you want.

      $130 for the yearly MLB.tv subscription and about $5 a month for VPN service like unblock-us provides. It works on my laptop and on the Roku when properly set up. Mobile is harder, so you may have to stick to devices without a network carrier signal and GPS.

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      • Keith says:

        Would you happen to know how to set it up on the Roku? I’ve got rid of cable and purchased a Roku and mlb.tv only to find out my Reds games are still blacked out…

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  10. Ruki Motomiya says:

    I’d love to see an end to NFL and MLB blackouts!

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  11. Maverick Squad says:

    Ah, the joy of living outside US- in Australia- I get to watch every game I want. Though it does make it hard to actually go see a game live at the stadium.

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  12. zzz says:

    Buffalo is blacked out for the Pirates, Indians, Jays, Yanks, and Mets. Two of those teams are eight hours away. I could understand a Jays blackout, I guess; that’s 80 minutes. Maybe even Cleveland (3 hours). I could drive to either of those cities for a day game and return the same day if I wanted to. But if teams that are 4-5 hours (Pirates) or 8 hours (Yanks, Mets) away can designate Buffalo as part of their protected markets, why not LA or Seattle? The MLB rules are byzantine and should just be gone.

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  13. cr says:

    time has come to do something,fact is talk is cheap start herehttp://www.change.org/petitions/congress-to-remove-baseball-s-antitrust-exemption-stop-blackouts-in-baseball

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  14. cr says:

    mlb.com is the biggest ripoff they dont tell you that ALL your teams games are blacked out.unless you live 1000 miles away and more in hawaii’s case!!!!!!!!!!

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