Rocky's Football Corner #12

by Rick Rockwell

The biggest game of the Thanksgiving weekend has a lot at stake: 52 million homes and at least $36 million, if not more.

Those are just part of the economic stakes in the game between the National Football League (NFL) and the biggest cable TV operators in the U.S.

The first round of this big game is set for kickoff tomorrow night when the Denver Broncos face off against the Kansas City Chiefs. Because when the kickoff happens, as it stands now, 52 million cable homes won’t see the game.

Last week, this column weighed in on this subject too: how the new NFL Network is cablecasting games but not every fan will be able to see them. When the Washington Post tackled this topic this week, writer Lee Carpenter’s story noted 52 million homes would not be able to see the NFL Network’s games. That’s quite a few more million than this column listed as being affected. (The Wall Street Journal has actually been out in front of this story and was cited directly in Congressional hearings last week.)

Nevertheless, this is a story about greed. Plain and simple.

To those who think it is black and white though, think again. It is not as simple as painting the NFL as the bad guys because they want more money from the cable firms. Last year, the NFL received 20 cents per cable subscriber for its NFL Network from cable firms. But this year, with a set of eight Thursday and Saturday games set to be cablecast exclusively on its own network, the NFL jacked up the price to 70 cents per subscriber. Some think that’s extortion.

But hold on. Aren’t the cable companies also holding up consumers for exorbitant rates already? According to the FCC’s latest reports, the average cable bill in markets where cable firms face no local competition is $45.56 per month, that’s a 23 percent increase from where the rate stood in 2001. Consumers Union and other groups have criticized cable firms for raising rates beyond the rate of inflation and beyond what seems like reasonable rates to offset rising programming costs.

The NFL just wants a piece of the cable bonanza.

Who can blame them? The history of broadcasting in the U.S. shows the NFL has considerable weight with the viewing audience. Rupert Murdoch built the FOX network in the 1990s when he outbid CBS for football rights and ended up wooing CBS affiliates away from their network in great numbers. Some credit the decline of NBC’s ratings with the fact it lost its NFL package and didn’t have that key arena to promote new series. Thus NBC fought hard to get its new Sunday night package this year. So the NFL knows its product is worth quite a bit. One cable network bid $400 million for the eight games now reserved on the NFL Network and the league decided it would earn more in the long run if it kept those games and developed a tradition of broadcasting some of its own games on cable.

This is the league adjusting to the new 21st Century viewing pattern where the audience is splintered and not just watching traditional television. The league is already planning for the new reality of internet viewing and video podcasting too. This move with cable operators is just the first step in that modernization.

By setting up its Sunday Ticket service (where viewers can pay to have access to every NFL game) with Murdoch’s DirecTV satellite service, cable television’s only real competitor, the NFL has shown it knows how to leverage the cable giants.

The NFL is banking on the fact that angry fans deprived of games will soon be calling the FCC, their members of Congress, their city hall, anybody, to vent their anger. The cable firms counter with the theory that real football fans make up only 20 percent of that cable viewing public. They want that 20 percent to pay for the NFL Network on a premium basis instead of having it available on a basic tier, which is the NFL’s demand. What the cable firms don’t want is what happened last week: Congress poking its nose into the thorny issue of cable rates and compensation. Because once that happens, Congress could change the rules for a system that rewards the cable companies in very lucrative ways.

By Friday morning, we’ll know if the NFL was right. We will know if angry fans demanded action in any great number or if they were too full of sleep-inducing turkey to care. Round Two coming next week and each subsequent week on Thursdays, and don’t forget the Senate Judiciary Committee is promising more hearings in December.

Can we hope that all fans can see their games in peace without cable rates getting jacked up yet again? Likely, that’s too much of an idealistic dream.

(Rick Rockwell served as an advisor on telecommunications issues to Sen. Maria Cantwell [D-WA] in 2003 and 2004.)

(For another excerpt from the Senate hearings on the NFL’s cable and satellite deals and antitrust law, see below.)



Cable Television
Football
nfl
Anti-trust
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