Gary Roberts Analyzes FCC’s Decision to Eliminate Blackout Rules and What It Could Mean
Gary R. Roberts, the sports industry’s leading expert on antitrust law and the Dean Emeritus & Gerald L. Bepko Professor of Law at the Robert H. McKinney School of Law at Indiana University, shared his insights with Sports Litigation Alert this week about the impact of the FCC’s decision to eliminate blackout rules.
“What this FCC action does — if I understand the scope of the decision — is now allow cable companies or independent TV stations to import the broadcast signals of games that are being televised in distant markets and show those games to viewers in a market that heretofore would have been ‘blacked out’ from that game.
“It’s hard to predict how this will play out. I don’t know if local cable companies or independent TV stations will now be able and willing to import distant signals at the last minute, because they won’t know until just a couple of days before the game if it is going to be blacked out on the local network station that would ordinarily televise it.
“In a city where someone will import and show the distant signal, it may be possible that some teams will now have trouble selling those last tickets to games that previously some local business or a few fans would buy up so that the blackout could be lifted. If that starts to happen in any significant way in more than a few markets, the NFL may consider changing how games are delivered to consumers. It might decide that any game that is not sold out will not be televised on a free over-the-air network but rather on a pay-per-view or subscription basis. If the NFL did that, you can be certain there would be a lot of political backlash, and Congress would jump into the fray. Whether Congress — the most dysfunctional entity in the history of the planet — would do anything is unpredictable. So the bottom line is that how this all plays out is anybody’s guess right now. And how it might impact other sports leagues or sporting events, like the Indianapolis 500 that has always been blacked out in Indianapolis, is also unclear. So stay tuned.”
What Are the Copyright Issues?
And what about “the copyright implications of some local station in, for example, Indianapolis picking up a signal of a game being televised in, say, St. Louis and showing that signal in Indianapolis? Would that local station displaying a copyrighted TV signal for which the NFL has not given it a license violate the copyright laws? That will be an interesting question.”
Roberts elaborated further on the copyright issue.
“I suspect that a cable company importing a distant signal and showing it in an otherwise blacked out market would be able to claim that it can do so under the compulsory copyright license law that has allowed cable companies all over the country to pick up superstations (WTBS in Atlanta; WOR in New York; WGN in Chicago) and include them in their package of channels sold to subscribers, and for which they have to pay a statutorily prescribed royalty into a pot that is distributed by the Copyright Royalty Tribunal — or whatever it’s called now — among the copyright holders of the various programs being shown.
“That law creates an efficient way for cable companies to get these superstations, which actually want to be shown nationally. But it has created headaches for the NBA and MLB who have tried to prevent or limit superstation telecasts (see the famous Chicago Bulls litigation) or charge teams shown on the superstations a fee for getting national audience rights fee (see MLB’s charge against the Atlanta Braves and the two Chicago teams). But I am not certain whether that regime would apply to a local cable company importing an NFL game’s distant signal. I suspect it would, but it would create a difficult issue. Now cable companies carrying superstations and other cable channels do so on a constant basis. So the royalty can easily be calculated. How to assess the royalty — assuming the right exists — on an ad hoc one-time broadcast from a distant TV station of a CBS or FOX game broadcast is something that I think would be less simple. So this area too will be interesting to watch as this moves forward, assuming some cable companies do import those distant game signals. Remember, only 2 out of 256 games last year were blacked out, although that number might increase if less tickets are sold because the blackout might no longer apply.”
