Keeping Fans in the Dark: Sports Event Blackout Regulations
By Shibumi Raje
In broadcasting parlance, the term “blackout” refers to limitation placed on the broadcasters to televise a certain event in certain regions and/or on certain television channels at a given time. Although blackout restrictions can apply to any event, more often than not, it is sporting events that are targeted, possibly because of their time sensitive nature. Blackout restrictions may prevent transmission of sports programming on local broadcast networks and/or non-broadcast platforms such as cable and satellite television.
The purported principle behind the application of blackout restrictions is that the organisers of sporting events are able to generate more revenue, as local fans/spectators in the host city/region are unable to watch the event on television and are obliged to buy tickets to the event.
As a general rule, blackouts of sporting events are the result of contractual agreements between the content owners (i.e. sports event organisers) and the programming distributors (i.e. broadcasters, cable and satellite television channels and systems) as opposed to statutory regulations. Each sports event organiser has different rules about when a televised event is blacked out, and those rules are part of the contracts signed with television distributors. In most cases, the blackout results when a sports event organiser prohibits an event from being televised locally if the event did not sell out all its tickets beforehand.
Although various jurisdictions across the world deal with blackout restrictions in some form or the other, instances of blackout restrictions and regulations are most common in the United States of America (“US”), and its major professional sports leagues.
This article seeks to examine the existing framework on blackout regulations in various jurisdictions and expound on the implications of a proposed legislation on the subject in the United States of America.
The proposed ‘Television Consumer Freedom Act of 2013’
In May 2013, Senator John McCain of the United States Congress introduced a bill in the United States Senate, dubbed as the Television Consumer Freedom Act of 2013 (“TCF Act”), which proposes to eliminate broadcast blackouts of sports coverage when the sporting event is conducted in a publicly financed stadium. Senator McCain, in this respect, stated, “when the venues in which these sporting events take place has been the beneficiary of taxpayer funding, it is unconscionable to deny those taxpayers who paid for it the ability to watch the games on television when they would otherwise be available. Therefore, the bill proposes to repeal the sports blackout rules insofar as they apply to events taking place in publicly financed venues and/or involve a publicly financed local sports team”.
If the proposed TCF Act is voted on and passed in the US Senate, and goes on to become law, there will be significant implications on the current blackout regulations as well as on all related stakeholders.
United States of America
Blackouts of sporting events are common in the US. There are different categories of blackouts such as regional blackouts, national blackouts and event-specific blackouts.
Under normal circumstances, sporting leagues selling collective broadcasting rights would attract anti-trust sanctions in most jurisdictions. However, the Sports Broadcasting Act, 1961 permits professional football, basketball, hockey, and basketball to collectively pool and sell their rights in sponsored telecasts of games, exempting them from the purview of the Sherman Antitrust Act of 1890. This antitrust exemption is important because it facilitates the bundling of broadcast rights, which provide the majority of the league revenues.
As previously mentioned, these blackout restrictions are not uniform, but the result of each contract negotiated between the event organiser and programming distributor. The major US sport leagues all impose blackout restrictions, most significantly the National Football League (“NFL”), National Basketball Association (“NBA”) and Major League Baseball (“MLB”).
National Football League
A consistent reduction in the number of spectators at NFL games inspired NFL’s blackout policy in the 1950s when Mr. Bert Bell, the then NFL Commissioner urged teams to blackout home games in an effort to encourage fans to support teams in stadiums for home games instead of in front of the television. This policy was challenged in 1953, but was upheld by Judge Alan Grim in U.S. v. NFL (116 F.Supp. at 319), and remained in effect till 1973.
Originally, all NFL games were blacked out for up to seventy five (75) miles of the city hosting a home game of the NFL. However, this practice of blacking out all nationally televised games in the locality in which the game was played was unpopular. Thus, in 1973, the US Congress responded by amending the Sports Broadcasting Act of 1961 to permit a three-year experiment in which games could be blacked out locally only if they were not sold out seventy two (72) hours before the start of play. Although these amendments were not renewed, the NFL continued to follow this blackout policy rather than reverting to its prior policy of blacking out all games in the local television market of the home team. In June 2012, the NFL further relaxed its blackout policy by allowing its teams the option of selling only 85% of the seats to avoid a blackout, as opposed to the previous requirement of selling out all available seats.
National Basketball Association
NBA blackout restrictions apply when a game is being televised by a national or local broadcaster. Private distributors must necessarily blackout NBA games in the local coverage area to protect the interests of the local television rights holder of each game in both participating teams’ local markets. Unlike the NFL, NBA blackouts are not dependent on ticket sales.
Major League Baseball
The MLB blackout restrictions are similar to the NBA regulations and are not based on the attendance of spectators at games, but are devised and implemented with a view to protect the broadcasters’ contractual rights to televise live games. For instance, under the current MLB agreement with FOX Sports, MLB games during a specific time period on Saturdays are only televised over the FOX network and blacked out in the home team’sterritory. Therefore, if consumers in the home team’s territory have not subscribed to FOX Sports, they will be unable to access a live feed of the MLB game. Additionally, under the MLB regulations, unless a national broadcaster has been granted exclusive rights to televise a certain game, the local broadcaster of a game has priority over a national broadcaster. Thus, the national broadcaster’s feed is blacked out in markets where a local broadcaster is televising a certain game.
Federal Communications Commission
The Federal Communications Commission (“FCC”) also imposes a separate blackout rule for cable and satellite TV, based on a concern that sports leagues would refuse to sell the rights to their local games to television stations serving distant markets due to their fear of losing gate receipts if the local cable system imported the local sporting event carried on the distant station.
This rule prevents the duplicate carriage on any network, so that the sport leagues and broadcasters may protect their contract rights. Under this rule, if a local TV broadcast station is not televising the local sporting event and does not have permission to televise the local game, no other broadcaster’s signal displaying the game can be shown in the protected blackout zone.
United Kingdom and European Union
Since the 1980s, the Football Association, the Premier League and the Football League have enforced a compulsory blackout of sporting events between 3 PM and 5 PM on Saturdays in the United Kingdom (“UK”) in order to encourage greater attendance of spectators at football matches. Until recently, the Football Association (“FA”) Cup Final was an exception and had been broadcast on 3 PM on a Saturday afternoon in May; however, in 2012, the FA Cup Final was moved to 5 PM.
A loophole in the UK blackout restrictions is that viewers outside of the UK can avail of the broadcast of the blacked out games, thus enabling UK viewers who have subscribed to foreign channels or have installed foreign decoder cards to also view the blacked out games as demonstrated by the case below.
In February 2011, in the joint case of Football Association Premier League Ltd and Others v QC Leisure and Others (C-403/08) and Karen Murphy v Media Protection Services Ltd (C-429/08), Juliane Kokott, the Advocate General (“AG”) of the Court of Justice of the European Union (“CJEU”), delivered her opinion on the issue of importing of decoder cards into the UK in an attempt to circumvent the exclusivity agreements concluded between the UK’s Football Association Premier League and the licensed broadcaster, British Sky Broadcasting Group PLC. The AG’s view is that any attempt to prevent the use in the UK of satellite decoder cards purchased abroad to watch Premier League matches amounts to a restriction of the freedom to provide services and a restriction of competition in the internal European markets. With regard to the blackout restrictions, the AG opined that there was no substantial evidence that the blackouts increased attendance at league matches. On 4 October, 2011, the CJEU delivered its judgment on the matter, stating that “a system of licenses for the broadcasting of football matches which grants broadcasters territorial exclusivity on a Member State basis and which prohibits television viewers from watching the broadcasts with a decoder card in other Member States is contrary to EU law”.
In the European Union (“EU”), the European Commission’s Audio Visual Media Services Directive (2007/65/EC) (“AVMS Directive”), which was previously known as the Television without Frontiers Directive, allows member nations to designate certain events as ‘events of major national importance’, thereby prohibiting broadcasters under their jurisdiction to exclusively televise these events. The reasoning behind this is to not “deprive a substantial proportion of the public in that Member State of the possibility of following such events by live coverage or deferred coverage on free television”, as described in Article 14 of the AVMS Directive.
In December 2012, Advocate General Niilo Jääskinen delivered a non-binding opinion in respect of a long standing dispute centred around the decision of the UK and Belgium to designate two major footballing tournaments, namely the Fédération Internationale de Football Association World Cup and the UEFA European Championship as events of major national importance in line with the powers granted to members of the EU under the AVMS Directive. The Advocate General opined that member nations should be free to determine which events should be broadcast on free-to-air television, so as to meet the end envisioned by Article 14 of the AVMS Directive. (A detailed analysis of this opinion is available at Advocate General’s Opinion on Free to air Broadcasting of Sports in the EU 20).
From the above, it is evident that blackout restrictions do not hold ground any longer in the European Union. Within the UK, individuals with foreign decoder cards can easily circumvent the blackout restrictions. The significance of blackout restrictions is dwindling, a conclusion corroborated by the fact that in the 2011-2012 season, the number of football associations in the EU exercising the right to block broadcasting hours has decreased to six (6), only three (3) of which are outside of the UK.
Australian broadcasting law is governed by the Broadcasting Services Act, 1992 and the Australian Broadcasting Corporations Act, 1983, both of which are national legislations applicable to the Commonwealth of Australia.
According to section 115 (1) of Broadcasting Services Act, 1992, “the Minister may, by notice published in the Gazette, specify an event, or events of a kind, the televising of which should, in the opinion of the Minister, be available free to the general public”. The Minister in question is the Australian Federal Minister for Broadband, Communications and the Digital Economy.
Further, the Minister for Broadband, Communications and the Digital Economy also has the power under section 78(1) of the Australian Broadcasting Corporations Act, 1983 to direct the public broadcaster, the Australian Broadcasting Corporation, to air an event considered to be in the ‘national interest’. If such a direction is given, the Australian Broadcasting Corporation must broadcast that event, free of charge, in accordance with the direction.
If any blackout restrictions are imposed in Australia, they are strictly contractual in nature, with no legislative sanctions. Further, such contractual restrictions can be revoked by the Minister for Broadband, Communications and the Digital Economy, in the manner mentioned above.
In direct contrast to US blackout regulations, India, like the EU and Australia, has provisions relating to “free-to-air” broadcasting of major sporting events. The Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 (“SBS Act”) mandates that no content rights holder or broadcasting service provider can telecast live a “sporting event of national significance” unless it simultaneously shares the live broadcast signal with Prasar Bharati which is the State run national free to view television broadcaster. The SBS Act was enacted with a view to creating a balance between protecting the commercial rights of the broadcasters and enabling the public to avail of the content from sporting events. Accordingly, the SBS Act mandates that the official rights holding broadcaster is entitled to 75% of the advertising revenue earned by Prasar Bharati in the process of televising the sporting event. Such an arrangement not only creates a safety net for the masses from potential blackout restrictions, but also ensures that the effect on broadcasters’ contractual obligations is minimal.
In the examination of blackout regulations in various jurisdictions, it is evident that the US is the only jurisdiction that still clings to the restrictions imposed by blacking out of certain sporting events. It is significant to note that the blackout restrictions originated in an age where ticket sales were a crucial aspect of the revenue generated by the sport event organisers, and the growing demand for televised games was perceived as a threat to this revenue. This may not be the case any longer, with lucrative broadcasting and sponsorship deals being major sources of revenue.
Today, in the age where entertainment rules supreme, it is entirely possible that a blackout may cause consumers to forgo the blacked out sporting event and watch something else on television rather make the effort of watching the event at the stadium. Further, it has become increasingly simple to resort to illegal means to watch blacked out sporting events over the Internet, thus defeating the purpose of the blackout regulations.
The effectiveness of the blackout regulations has thus been called into question, and the TCF Act has proved to be a starting point for change. The TCF Act may be seen as an attempt to harmonize the US policy on blackouts of sporting events with the rest of the world.
© The Sports Law & Policy Centre