The FCC has retired its sports blackout rules. At its September 30, 2014 meeting, the FCC unanimously adopted an Order repealing the rules, which prohibit cable and satellite providers from carrying a sports event that is blacked out on a local broadcast station. The rules are most often associated with the National Football League, which precludes a broadcast station in a home team’s market from broadcasting a game if ticket sales do not reach a certain percentage of available seats at least 72 hours prior to kickoff. Although very few NFL games are actually blacked out, the league narrowly avoided having to blackout three playoff games in January when corporate sponsors purchased the remaining unsold seats.
The Order acknowledges that elimination of the sports blackout rules does not necessarily alter business as usual for local broadcasters “because the NFL and other sports leagues may choose to continue their private blackout policies,” which are the subject of broadcast rights agreements. Where the FCC rules historically have come in is to clearly prohibit cable and satellite providers from importing a distant broadcast station carrying a locally blacked out sporting event. In describing today’s action, Commissioner Jessica Rosenworcel stated that the agency “should not support policies that prevent fans from watching their hometown teams on television.” Commissioner Ajit Pai added, “With this decision, the FCC is officially out of the sports blackout business.” In the absence of an FCC rule, however, cable and satellite providers still would need to obtain the necessary rights to import a sporting event from an alternate source.
Although the NFL had argued that the Commission should examine the network non-duplication, syndicated exclusivity, and sports blackout rules together, the FCC rejected that approach and stressed that nothing in today’s Order “prejudges the outcome of the pending exclusivity proceeding.” Nevertheless, some MVPD interests have aggressively lobbied for the repeal or substantial modification of the network non-duplication and syndicated exclusivity rules and can be expected to continue their assault.
There are, however, several differences between the outgoing sports blackout rules and the longstanding network non-duplication and syndicated exclusivity rules. First and foremost, the sports blackout rules mostly benefit the sports leagues, not any FCC regulated parties. Local broadcasters almost certainly would prefer to televise the most-desirable games in their markets. Second, the broadcast exclusivity rules are part of a carefully balanced mosaic of inter-related rights, which include the Congressionally-mandated compulsory copyright and retransmission consent regimes. Finally, changes to the network non-duplication or syndicated exclusivity rules could have more profound effects on the broadcast distribution marketplace than the Commission anticipates will result from the repeal of the sports blackout rule.
In their statements, several Commissioners recognized the value of private negotiations, with Commissioner Pai stating that it “is not the place of the federal government to intervene in the private marketplace” and Commissioner Mignon Clyburn observing that the “resolution of future blackout will be left to the parties through their private contractual arrangements, not the FCC.” Because the network non-duplication and syndicated exclusivity rules preserve marketplace negotiations and counteract federal involvement through the compulsory copyright, these sentiments suggest that the FCC might take a knee rather than adopt major changes to its existing retrans policies. Still, this issue remains very much “in play,” and we will continue to follow it closely.