Tuesday, February 04, 2014

Deadlines Set Regarding FCC’s Proposed Elimination of Sports Blackout Rules

As announced last month, the Federal Communications Commission (FCC) is proposing to eliminate its “sports blackout rules,” which allow sports teams to demand that cable systems and DBS providers black out imported distant broadcast signals when they are presenting a live telecast of a local sporting event when that event is not being telecast by a local broadcast television of these rules and setting comment and reply comment deadlines has finally been published in the Federal Register. Comments are due February 24, 2014 and reply comments are due March 25.

Background. The cable sports blackout rules were adopted in 1975 to “ensur[e] the overall availability of sports telecasts to the general public.” The Commission’s goal was to give teams or leagues the flexibility to contract with broadcasters and, through those contracts, control the terms on which events are displayed on broadcast television and cable systems. When the rules were initially adopted, gate receipts were a primary source of revenue for sports teams, and so contracts between teams or leagues and broadcasters frequently prohibited the airing of home games in the local market to encourage attendance at the stadium. Such provisions continue to be included in some contracts today. The Commission extended the rules to DBS providers in 2002.

As a practical matter, the sports blackout rules have become fairly meaningless over the years. The number of distant signals that cable operators carry has steadily declined and the availability of local sporting events on non-broadcast regional networks generally has rendered it unnecessary for cable systems to import distant broadcast signals in order to provide subscribers with access to a local contest that is not available on a local broadcast station. In addition, separate and apart from the sports blackout rules, retransmission consent requirements and compulsory license royalty fee obligations present significant hurdles to any cable operator seeking to import a distant telecast of a local sporting event. Nonetheless, because the rule is often associated with the NFL’s largely unrelated practice of blacking out local telecasts of home games that are not sold out in advance, the Commission has been under pressure to eliminate the rule.

Discussion

The Commission adopted this NPRM in response to comments submitted in support of a petition filed by several consumer groups asking for the sports blackout rules to be eliminated. The NPRM seeks comment on the FCC’s authority to repeal the sports blackout rules, whether the Commission’s initial justifications for the rules remain valid, and what potential benefits or harms would result from the elimination of the rules.

The Commission’s tentative conclusion, based on changed economic circumstances in the sports industry and questions about whether the rules in fact help to ensure that sports programming is available to the public, is that the rules should be repealed. However, the Commission also has acknowledged that if it repeals the rules, the effect would be to leave carriage issues, including blackouts, to private negotiations between the sports leagues or teams, broadcasters, and MVPDs and, thus, it is likely that repealing the rules will have little impact on whether local contests will be blacked out and the availability of imported distant signals carrying the blacked out contests.

Finally, it should be noted that, under the Copyright Act, copyright owners may commence a proceeding before the Copyright Royalty Judges to adjust the statutory compulsory copyright royalty fees in the event the sports blackout rules are modified or repealed. While a strong case against such an adjustment can be made based on the fact that the repeal of the rules likely would have no impact on the availability of blacked out sports contests, the outcome of such a proceeding, if held, cannot be predicted.

Seth A. Davidson
Partner
Edwards Wildman, Washington DC
sdavidson@edwardswildman.com

This article originally appeared on the Edwards Wildman website. You can access the original by clicking here.


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