Intellectual Property Law

What I know about sports

By Susan Crawford

I know nothing about sports.

But I have heard that the shared American experience these days is watching sports events.

We don’t have widely-viewed broadcast programs (really - unless you count American Idol or Dancing with the Stars, and who would?) or universally-read newspapers.  We do have the Super Bowl, watched this year by 106.5 million viewers.  More people watched the Super Bowl than saw the final episode of MASH in February 1983. Major League Baseball games do better in terms of audience share than the top-ranked broadcast programs.

People choose their video distributor (cable or satellite) based on sports programming somewhere between 40% and 70% of the time.

So when a cable distributor is also the sports distributor, it can squelch competition.

Let’s take Comcast, for example.  It has ten regional sports networks serving many of the country’s most important metropolitan areas.  All of its RSNs are in areas where Comcast serves a significant portion of the area’s cable customers (Atlanta, Baltimore, Boston, Chicago, Denver, Houston, New York City, Philadelphia, Portland, Oregon, Sacramento, San Francisco, Salt Lake City, and Washington, DC.)  It has used its control over local sports programming to make life difficult for its competitors (Philadelphia, Portland, and Seattle coming soon).

According to the WSJ, in April 2009, Comcast’s COO, Steve Burke, said “Sports is the must-have programming on cable. One way that you can hedge yourself a bit is to get into it yourself.”  And in June 2009 Comcast’s Jeff Shell said that expanding Comcast’s sports content was the “top of our list over the next five years.”

If Comcast merges with NBC, it will be able to combine its many RSNs, and its Versus and Golf Channel cable networks, with NBCU’s broadcast-sports business and rights to major sports events, including a Super Bowl and two Olympic games.  Then it can put all of this material behind an authentication wall online, so that its subscribers can watch games when they’re away from their big TVs.  It’s not clear how program access rules apply to online sports events.  It IS clear that Comcast will have high-speed Internet access services that satellite providers won’t have.

Putting these operations together will make Comcast a threat to ESPN, and allow Comcast to squeeze Fox and CBS.  Comcast will have access to additional broadcast channels, and that will be attractive to college sports conferences and others who control rights to games and want distribution on multiple networks.  No one will be able to out-bid Comcast.

So - what’s the bottom line?  Just four steps: (1) everyone wants to watch sports, (2) every distributor needs access to sports in order to compete, (3) in the current framework, Comcast can make access to this programming expensive and bundled, so that other wired and satellite distributors can’t compete effectively, so (4) Comcast will have the ability to keep prices for sports subscriptions - and video services generally - high.

special HT to William Wilhelm for the shared experience

Full post as published by Susan Crawford Blog on April 21, 2010 (boomark / email).