Friday, June 28, 2013

Antitrust, Regulation and the 'New Rules' of Sports Telecasts

Posted by D. Daniel Sokol

Babette Boliek, Pepperdine University School of Law has written on Antitrust, Regulation and the 'New Rules' of Sports Telecasts.

ABSTRACT: Open almost any news source, or simply turn on the program guide of your own television, and the explosive proliferation of sports telecast is quickly evident. The amount paid to sports leagues by exhibitors has reached dizzying heights — in large part due not only to high demand but also to the unique live (unrecorded) nature of sports telecast. Because of these desirable characteristics, sports telecast contracts are central components to the economic viability and competitiveness of leagues and telecasters alike. Although these contracts channel a great deal of benefits to corporations and leagues, embedded within them are restrictions — such as the “black out” rules and exclusive distributorships. These weighty restrictions raise questions as to the ultimate effect such contracts may have on competition and overall consumer welfare. The legal mechanisms that traditionally protect competition in all industries — and consumer welfare in a specific industry — are antitrust law and regulation — this is no less true in the industries of professional sports and communications. The collision of these two industries has resulted in a labyrinth of regulation and, arguably, uneven antitrust enforcement that itself diminishes consumer choice, program diversity and competition.

Some scholars have argued that heightened regulation is necessary because antitrust is not sufficient to provide socially optimal levels of consumer protection in the face of certain joint ventures — such as sports networks. Contrary to that belief, this Article presents a novel and unique quantitative analysis of sports league antitrust jurisprudence to demonstrate empirically that antitrust is not only capable of policing joint ventures, but that joint venture review is recently revitalized by the Supreme Court’s decision in American Needle v. NFL. Based on empirical review of past case law, current antitrust exemptions and relevant regulatory policy, this Article presents several recommendations (i) to rationalize regulatory rules that currently create disparate treatment among leagues and telecasters and (ii) to clear the field for pro-consumer competition in sports telecast.

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