BY: XANDER LANDY
Are you ready for some football? For the last 20 plus years, DirecTV has been the exclusive provider of non-regional NFL games on Sundays. In order to watch those games, you must watch through DirecTV. Until now, or more specifically, in a couple years it will not be that way. The 27-year-old deal expires after the 2022-2023 season.
Amazon is the front runner to acquire rights to NFL Sunday Ticket according to a CNBC report. The expected cost is somewhere around $2.5 billion per year. One reason for the change I personally think is that more and more younger people are cutting the cord. People are moving over to streaming games and other entertainment, rather than having a cable subscription. (Personally, I only have cable to watch live sports). While DirecTV allows streaming without a subscription, Amazon has a bigger streaming market. Roger Goodell echoed something similar, telling CNBC that the package may be “more attractive on a digital platform”.
The Sunday Ticket provides a different problem for any buyer. Not only is it enormously expensive. There is current litigation on whether the package is in violation of the Sherman Act. The Sherman Act was created to break-up monopolies. It states that the there cannot be a concerted action to unreasonably restrain trade. That is the claim that customers have against the NFL and the 32 teams. The allegation is that the NFL’s 32 teams are colluding with each other instead of allowing members to sell competing streams. Part of this case is now going to arbitration, but there is a trial with a target for 2024.
One of the most important aspects of an antitrust is defining the product. The customers are going to want to make the product defined as narrow as possible, non-regional NFL games. The NFL will try to define the product as broad as possible, entertainment across the globe. The reason for each side to define it as narrow or as broad as possible is to show market control, or lack thereof. If the product is defined as entertainment, then the NFL does not have control on the market, at least not the requisite control needed to be a monopoly. This definition is usually left up to the trier of fact.
The next step for the plaintiffs is to prove anti-competitive effects. Because DirecTV is currently the only provider of NFL Sunday Ticket, and assuming there are no substitutes, then DirecTV is engaging in price fixing because they are subjective due to a lack of competition. Along with price fixing, reduced output is also anti-competitive. There is a restriction of output because there is no other way to watch the games. Xfinity cannot stream the games; Comcast cannot stream them. It is only through DirecTV. There appears enough to be a case against the NFL and the NFL Sunday Ticket Package.
Amazon and others interested in the Sunday Ticket Package should be very wary of purchasing it. The deal could be worth significantly less if the exclusivity rights are deemed anti-competitive and in violation of the Sherman Act.
This is just a brief introduction into antitrust. There are much more complications that go into antitrust cases. But in antitrust cases, violations can be costly. Damages are trebled. Something the future purchaser must keep in mind.
Xander Landy is an Associate Attorney at Knight Hoppe, Kurnik, & Knight, he graduated as part of the Marquette Law School Class of 2021. He can be found on Twitter at @zoolandy.
