Can't see sports, Oscars without channel-bundle subscription you don't want? Let regulators know

Gencraft

I filed a comment today with the Antitrust Division of the U.S. Department of Justice regarding the Disney-Fox-Warner sport streaming deal, and more generally, the anticompetitive practice of streaming television sales with channel-bundling leverage and opt-out subscriptions.

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9 March 2024

Dear sir or madam at the Antitrust Division of the U.S. Department of Justice:

I understand you are scrutinizing the Disney-Fox-Warner sport bundling agreement, and you no doubt are sensitive to the situation in televised sport since the recent congressional hearings on sport media rights.

I draw your attention to two of this weekend's top offerings in sport and entertainment, because they are demonstrative of the problem now in the streaming industry—which is to say, for our times, in the television industry.

In sports, this weekend will see a meeting of the top two, closely matched soccer teams in the world contending for the Premier League championship, Manchester City and Liverpool.  NBC owns U.S. TV rights to Premier League matches in the United States.  NBC's practice is to break up matches horizontally, across its many media properties and contractual arrangements, compelling consumers to have to pay for multiple services to follow a single team in a single sport.

The practice is worse still: high-interest matches such as Sunday's are available only with the purchase of subscription bundles to channel packages consumers do not want.  Yes, the match is available from multiple electronic packages, but each is an expensive bundle: Fubo, Sling, DirecTV, and USA on cable television.  There is no one-off purchase option, nor even a one-channel purchase option.  The price of one month on one of these services far exceeds the market value of one match, or even four weekly matches.

This leveraged bundling, compelling consumers to buy what they do not want to get what they do want, especially in a billing format of opt-out subscription renewal, is an anticompetitive practice. It is ironic that Fubo has sued in private antitrust enforcement to stop the Disney-Fox-Warner agreement. Fubo's position seems to be that it wishes to profit in the vertical market from bundling leverage, but does not want providers to profit from the same model in a horizontal arrangement. In entertainment, the Oscars air on ABC Sunday night.  Like NBC in sports, ABC is making this popular program available only through bundled channel services such as Fubo, Sling, YouTube Live, Hulu Live, DirecTV, and ABC on cable television. Again, there is no one-off purchase option, nor even a one-channel purchase option. 

Again, consumers must buy access to content they do not want, again in a billing format of opt-out subscription renewal.  Media watchers such as Vulture advise consumers to purchase a television antenna to see the Oscars on ABC broadcast.  Is it not plain evidence of ABC's anticompetitive practice that in this day and age consumers would have to regress technologically to over-the-air broadcast to avoid paying for what they do not want?  Never mind the fact that old-fashioned broadcasters have substantially dampened their signal power, so that over-the-air reception is not feasible for many Americans, even on the fringes of large markets.

Disney-Fox-Warner argue that they must forge an agreement to meet consumer demand, so their agreement is in the public interest.  They are not wrong.  However, they are right only insofar as you already have permitted an anticompetitive market to exist.  For a player in this market to succeed, it must grow bigger, must exploit horizontal and vertical integration.

The fundamental problem is that the market already is dysfunctional.  Market actors are trying to replicate the cable model in a streaming world. But the cable model came about as a function of technological limitations, not market forces.

Is it not self evident that in a free market, consumers would be able to buy what they want and not buy what they do not want?

I entreat you not to approve of the creation of another integrated market player. At the same time, I entreat you, start taking a hard look at the anticompetitive practices that already are tolerated in existing horizontal and vertical integrations, especially through the strategy of channel-bundling leverage and opt-out subscription sales.

Sincerely,

Rick J. Peltz-Steele

(for information only:)
Attorney, Washington, D.C.
Chancellor Professor, UMass Law School

U.S. Soccer, FIFA lose antitrust appeal; defense shows short-sighted strategy to develop soccer in America

Cristiano Ronaldo plays for Real Madrid against Barcelona in 2011.
Jan S0L0 via Flickr CC BY-SA 2.0

U.S. Soccer and the Fédération Internationale de Football Association (FIFA) will have to defend an antitrust action in federal court for refusing to permit a Spanish La Liga match on U.S. soil, the Second Circuit ruled in March. 

In 2017, world famous football (soccer) clubs Real Madrid and Barcelona faced off in an exhibition game in Miami. The match was fabulously lucrative for the commercial interests behind it, including organizer Relevant Sports, LLC, based in New York.

World sport likes the United States, because our infrastructure practically prints money. Americans, especially the top echelons of the wealthy, have been habitualized by our unregulated and often subsidized sport-and-entertainment monopolists to pay more than people elsewhere in the world to see live events, both directly for seats and indirectly in media rights.

Incidentally, that's the principal reason that bringing the FIFA (men's) World Cup back to North America in 2026 was not really a hard sell, notwithstanding modest public enthusiasm and the theater of the global bidding process. The 2026 co-hosts, the United States, Canada, and Mexico, likely did not even have to pay the half-billion dollars that Qatar apparently spent, mostly to FIFA executive committee members, in, uh, let's say, "incentives," in siting the 2022 World Cup (about my World-Cup-2022-contemporaneous lecture; Qatar on this blog): check out the investigative exclusive by Armin Rosen for Tablet (link from inset), published late last month, using U.S. court records in collateral matters.

Understandably, then, Relevant Sports wanted to maintain the momentum of the 2017 exhibition match. The company proposed that the Spanish La Liga subsequently might site a regular-season, full-stakes match in the United States. 

However, FIFA rules say that a match cannot be held in a country foreign to both sides without the approval of the football federation in the host country. U.S. Soccer said no.

Relevant sued, alleging that the rule improperly protects domestic football from being overshadowed, and therefore diminished in interest and income, by high-profile competitors. U.S. Soccer and FIFA defend the system on the merits under antitrust law, and, saliently in this intermediate disposition, argued that the FIFA "rule" is not really a rule, because FIFA doesn't make the decision for U.S. Soccer or La Liga. They're free to make their own decisions, notwithstanding potential adverse consequences, such as exclusion from international competition for players, teams, or federations that don't play ball.

The instant Second Circuit decision is limited. The court remanded the antitrust claim to proceed, recognizing that FIFA's rule is rule enough to represent the kind of concerted action in violation of antitrust law that Relevant alleges.

Earlier this week, I wrote about Cory Doctorow's enthusiasm, which I share, for the federal government's antitrust agenda—including the Justice Department investigation of Google. (I canceled my Google Nest Aware subscription upon the 25% rate hike. Google's not the only game in town. Yet.) U.S. Soccer's loss in the Second Circuit represents a judicial step in the same right direction.

I'm not an antitrust expert. But to my relatively lay eyes, the fact that the federal district court dismissed the case in 2021 on the faint theory that U.S. Soccer was not formally bound by FIFA's command demonstrates how appallingly far U.S. antitrust law has strayed from basic fair-market principles. Or maybe the court just didn't understand the governance system in world sport and its facility for subverting the laws of nations.

USWNT celebrates in times happier than this year's World Cup.
rachael.c.king via Flickr CC BY 2.0

The U.S. Soccer position in the litigation to me demonstrates furthermore a fundamental misunderstanding of what it will take to make football successful in America. American soccer advocates often wonder aloud why the sport seems to stall again and again, even after the men's World Cup in the United States in 1994 and the astonishing run of the U.S. Women's team in an unprecedented four World Cup titles.

To be sure, there are many, many reasons for the frustrating cycle of revving and stalling. But equally surely, one of those many reasons is the short-term greed of commercial actors that works a detriment to long-term development. 

I've written previously about this problem in the context of media rights. When NBC acquired the rights to English Premier League football, the broadcaster divvied up matches among its many media properties based on the popular appeal of each. NBC's strategy was to leverage interest in the league to sell separate subscriptions to multiple services: NBC, NBC Sports, (at one time, "NBC Gold,") Peacock, USA, Telemundo, Universo.

The network either didn't consider or doesn't care what that model looks like from the customer's perspective. Football in a place such as its home U.K. (at least before U.K. media companies such as Sky started merging with U.S. media giants and took sport away from the publicly minded BBC; that's another story) maintains a multi-generational foothold because supporters follow their teams.  

Divvying up the matches makes it impossible in the United States for a viewer to follow a team. Each week, one gets whatever match a selected service happens to carry, based on its level of market appeal.  If you subscribe to a middle-tier service and your team starts to lose, you might get more matches. If your team starts winning, and you start becoming more engaged, you find yourself suddenly deprived of matches.

That market behavior doesn't build a fan base. For American football or basketball, maybe there are enough viewers who will watch any game because they love the sport. But Americans don't yet love soccer that much. Sport-market development requires fostering two interrelated conditions at the same time: public enthusiasm for the sport, and public enthusiasm for a team. Neither can thrive without the other.

U.S. Soccer's refusal to permit La Liga to play a match on U.S. soil also is self-defeating, if for the converse strategic blindness. Both media rights usurpers and U.S. Soccer, focused on short-term profits, are dampening American enthusiasm by impeding U.S. viewers' access to the highest level of play in the world, in the Premier League and La Liga. While NBC's strategy deprives Americans of the opportunity to root for a team, the U.S. Soccer strategy deprives Americans of the opportunity to root for the sport.

Again, neither can thrive without the other.  U.S. Soccer is trying to protect Major League Soccer and the federation's underage and lower divisions. The federation reasons coldly that someone who buys a $500 La Liga ticket will skip five or ten $48 Tampa Bay Mutiny matches.

They're wrong. One of my U.S.-based family is a card-carrying member of the Toon Army, a dedicated supporter of Newcastle (U.K.) United FC. He traveled domestically to see Newcastle play an exhibition match in the United States this summer. Being a Newcastle supporter has made him a more, not less, enthusiastic supporter of his nearby D.C. United and the U.S. men's and women's national teams. With access to the matches of each, live and on TV, he's more likely to spend money on all of them.

Antitrust law is not a device to make commercial actors prioritize long-term interests over short. To the contrary, if NBC and U.S. Soccer put themselves out of business, that's a healthy outcome for the free market. But if antitrust inadvertently compels U.S. Soccer to up its game and compete for eyeballs by actually developing the sport, rather than constraining consumer choice, then that's an outcome I can get behind.

The case is Relevant Sports, LLC v. U.S. Soccer Federation, Inc. (2d Cir. Mar. 7, 2023). U.S. Circuit Judge Raymond J. Lohier, Jr.., wrote the opinion of the unanimous panel that also comprised Chief Judge Livingston and Judge Lynch. In 2017's "El Clásico Miami," Barcelona bettered Real Madrid 3-2.

UK orders commission to study women's football; rising TV prices warn of commercial monopolization

Karen Carney in 2019
(James Smed CC BY 2.0 via Wikimedia Commons)

The UK has announced "an in-depth review into the future of domestic women’s football" and appointed the decorated footballer and today commentator Karen Carney MBE to chair.

In the United States, this year marked the historic equal pay settlement for the blockbuster Women's National Team (USWNT). And in the UK, England hosted and won the 13th UEFA Women's Euro 2022, delayed two years by the pandemic, in a nail-biter over Germany.

Though to say women's football is coming into its own is an assertion decades late, just as it is decades early to say that women's football has at last been afforded parity with men's in social and commercial recognition.

The UK announced three points of focus for the review:

[1] Assessing the potential audience reach and growth of the game—by considering the value and visibility of women’s and girls’ football in England, including the potential to grow the fanbase for women’s football and whether current growth still supports home-grown talent and can be achieved without overstretching infrastructure.

[2] Examining the financial health of the game and its financial sustainability for the long term. This will include exploring opportunities and ways to support the commercialisation of the women’s game, broadcast revenue opportunities and the sponsorship of women’s football.

[3] Examining the structures within women’s football. This includes the affiliation with men’s teams, prize money, the need for women’s football to adhere to the administrative requirements of the men’s game; and assessing the adequacy, quality, accessibility and prevalence of the facilities available for women’s and girls’ football for the growth and sustainability of the game.

The UK does have already a system for youth development in women's football that looks sophisticated from the U.S. vantage point. Carney is a case in point. Even in the 1990s, Carney came up through the ranks of Birmingham City since age 11. She became one of England's top capped players, scoring 32 goals for the national side from 2005 to 2019.

After three years at Arsenal, in 2009, Carney moved to the United States to play for the Chicago Red Stars, a team then affiliated with the Women's Professional Soccer league (WPS). The WPS was a short-lived installment in the fits and starts of women's pro soccer in the United States. The league collapsed after scarcely a year. Carney returned to England in 2011 to play for five years again for Birmingham City, then three years for Chelsea.

Today, Carney comments on both men's and women's football for Sky Sports and Amazon Prime. The Chicago Red Stars play today as part of the National Women's Soccer League.

Sky, like NBC in the United States, is a division of Comcast. The anti-competitive bundlings of these interrelated companies is making it unaffordable for viewers in the UK and in the United States to follow a team. I'm not sure how long UK viewers and regulators will tolerate the exploitation. Some Latin American governments have been increasingly ruffled about commercial efforts to make access to football a privilege of the elite. I've speculated that in the United States, NBC is effectively killing the goose that laid the golden egg. U.S. viewers will never commit to world-class Premier League football if they're given access only to different teams and lower priority matches week to unpredictable week.

Unfortunately, commercial development of the women's game presents the same conundrum. Commercialization in the priorities of the Carney review is presented as an undisputed good. To be sure, that's where the money is, and it will take money to bring the women's game to gender parity.

At the same time, there is evidence already in the United States that commercial success, ironically, invites audience exclusivity and, thus, narrows public appeal. USWNT television rights presently lie with ESPN and Fox Sports, both divisions of Disney. But Disney+ viewers won't find the USWNT there, nor in the Disney+/ESPN+ bundle, as "+" seems to be a number less than (ESPN)2 and (ESPN)3.

In March, US Soccer awarded USWNT and men's team rights together in an eight-year deal to HBO Max and Turner properties, all divisions of AT&T by way of WarnerMedia. An HBO subscription doesn't come cheap, and different Turner channels require subscription to different bundles.

With media empires now controlling access to football on both sides of the Atlantic, fans' budgets will be stretched thin, and appetite for allegiances to new endeavors, such as expanded women's football, might prove difficult to stir. If the women's game is to be kept from becoming a victim of its own success, the goal of commercialization should be viewed with a discerning eye, wary of monopolization.

A call for evidence in support of the Carney review is expected from the UK Football Association in the coming weeks. HT @ lawyer Paul Maalo, writing for the Wiggin digital commerce team in London.

NBC resists TV free market, overcharges U.S. viewers: PL football costs $20 in Canada, $70 in United States

Each year, I become freshly enraged at the cost of seeing Premier League football in the United States, a ready example of antitrust non-enforcement in the communication sector.

The Sporting News had the audacity, or stupidity?, to describe NBC carriage of PL matches in the United States as a "luxury." I guess it is, a luxury only the rich can afford. To follow one's team, one must, at minimum, subscribe to NBC partner FuboTV for $70 per month. Access via FuboTV costs just US$20 per month in Canada.

The tangled cross-ownerships of what used to be broadcast TV are indicative of the dearth of consumer protection in the area. NBC "competitor" CBS (Viacom) owns a stake in FuboTV. The legacy broadcasters are using their weight in contracting power to lock down content in channel consolidators that emulate the old cable TV business model, by which consumers were compelled to overpay for a sliver of content in a library they didn't want. Hardly the free market promise of streaming.

But the FCC long ago left the helm unmanned on consumer protection when broadcasting gave way to cable. And the FTC and DOJ have had little interest in expanding their purview in times of corporate-captured governance. As usual, the United States purports to model free market capitalism in an oligopolized market that is anything but.

FuboTV in Canada at left, United States at right.
The package in Canada has fewer channels,
but if PL is all you want, that's not an option.

Covid court backlog, solved: 'Night Court' returns

I've been reading about how courts are struggling to overcome coronavirus backlogs in their caseload.  To me, the answer is obvious.  I saw it on TV.

Anderson, 1987
(Alan Light CC BY 2.0)

Created by writer Reinhold Weege after his Barney Miller wrapped up, Night Court (wiki) ran for 193 episodes over nine seasons on NBC, from 1984 to 1992, a hit by any measure.  Harry Anderson, who passed away in 2018, managed the underbelly of New York criminal process as Judge Harry T. Stone.

Night Court launched many ships.  If already 10 years into his acting career, John Larroquette became a household name as deadpan prosecutor Dan Fielding.  Selma Diamond is unforgettable as gruff bailiff Selma Hacker, even though she appeared only in the first two seasons, passing away in 1985 at age 64.  (Read more about her at the Encyclopedia of Jewish Women.)  A parade of guest stars passed through Judge Stone's Manhattan courtroom, including some who went on to greater notoriety, such as Michael Richards, Seinfeld's Kramer, and Brent Spiner, Star Trek's Data.

"Night court" is a real thing, here and there, in the United States, not just in Manhattan.  Like in the TV show, night courts specialize in preliminary criminal proceedings, namely arraignment.  The courts don't run through the night, but after hours, Manhattan's wrapping up around 1 a.m.  Many jurisdictions have found night courts efficient to handle arraignments on drug charges or to settle minor matters, such as outstanding misdemeanor warrants, for people whose life challenges will be compounded if they're forced to get to court during the usual workday hours.  How many times have I complained that the retail counter of the post office should be open at night, when people have time to wait in line?  Though for obvious reasons, night court doesn't work as well for American jury trials. 

Rauch, 2013
(Dominick D CC BY-SA 2.0)

Night Court should be one of those sitcoms that doesn't stand the test of time.  Its humor seems to me pretty specific to the cultural moment of the 1980s.  Nevertheless, Night Court stuck around over the years in cable reruns, and, lately, with retro content pouring into streaming services and being discovered by new audiences, the show has earned its own little niche as a cult classic.  The real Manhattan night court has been a real thing since 1907, according to the New York Post, but in recent years, in part thanks to a listing in the Lonely Planet, the Manhattan night court has become a tourist attraction, appealing to visitors from around the world.

Whether real night court might help unjam our covid court backlog, I don't really know.  But TV Night Court might be getting a new lease on life.  According to a Deadline exclusive in December 2020, Melissa Rauch, The Big Bang Theory's Bernadette Rostenkowski, was a fan of the original in her New Jersey childhood and pitched a reboot to NBC.  Rauch is now set to executive produce the new show, which will feature "unapologetic optimist" Judge Abby Stone, daughter of the late Harry.  John Larroquette is lined up to return as an older and wiser Dan Fielding.

Ted Lasso heads to UK, will coach AFC Richmond

From The Daily Show with Trevor Noah (Oct. 6, 2020)

A new Apple TV+ show has Saturday Night Live alum Jason Sudekis playing southern-drawl-wielding American football coach "Ted Lasso," as he is recruited to coach an English Premier League (PL) soccer squad.

Lasso's fictitious team in the Ted Lasso comedy series is "AFC Richmond," but Sudekis wore an authentic Manchester City FC (my team) hoodie for his interview with Trevor Noah on last night's Daily Show.

Financially regrettably, this show compels my wife and me to re-subscribe to Apple TV+.  We shelved the channel, pending new content, after we finished the highly gratifying For All Mankind (blog), and after I finished the sufficiently compelling if after all tritely pedantic Morning Show (both shows 2019, second seasons forthcoming).

Ted Lasso is a co-creation of Scrubs (2001-2010) creator Bill Lawrence, which scores dispositively in my playbook, though I don't think Lawrence has since re-created that Scrubs magic.  Ted Lasso is a spin-off, or spin-up, of NBC Sports promotional shorts imagining Lasso's appointment as head coach of Tottenhan Hotspur.

 

Incidentally, I'm a consistent critic of NBC's intellectual-property monopoly over PL broadcast rights in the United States.  NBC carves up the PL season so that one would have to subscribe to an impossible, and impossibly expensive, range of commonly owned services to follow a favorite team.  Americans would never tolerate such exploitation of American football broadcast rights.  NBC and the PL are greedily short-sighted, because inculcating loyalty to a single side is essential to sell British soccer to the American viewer in the long term.  It remains to be seen how UK regulators would react were NBC, since merging with Sky, to dare to try such such shenanigans there, where team loyalty is a multi-generational sacrament.  Other sports-loving countries won't have it.

Sports comedy is supremely watchable when it's well executed.  I thoroughly enjoyed Hank Azaria's Brockmire (2017-2020), though I have not watched baseball in many years.  And who can forget comedy-drama Sports Night (1998-2000)?  The West Wing (1999-2006) is too often credited for Aaron Sorkin's introduction of fast cuts and fast-paced dialog into small-screen canon, but it was on Sports Night that he pioneered the art.

The Sudekis interview appeared on The Daily Show just a day after Trevor Noah opened with some Premier League humor (cue to 1:13), noting Aston Villa's defeat of both Manchester United and Liverpool, the latter 7-2.  Noah is a Liverpool supporter.

Here is the trailer for Ted Lasso.

Conn. high court hears argument after non-dismissal of Sandy Hook parent suit against Alex Jones

As reported in my Sandy Hook update a couple of weeks ago, today was the day for Connecticut Supreme Court oral arguments over a discovery dispute in the Alex Jones case.  The Connecticut Supreme Court usually gets audio up within a day.  Check here. [UPDATE: Now posted and embedded below.]

Alex Jones (by Sean P. Anderson CC BY 2.0)

This is the defamation lawsuit against Jones and InfoWars brought by Sandy Hook parents for the broadcasters' assertions that the Sandy Hook school shooting was a hoax, perpetrated in media with the help of "crisis actors."  Megyn Kelly, making her mark after jumping ship from Fox, (in)famously interviewed Jones on this matter in 2017.  You can watch that weird-meets-weirder interview at NBC.  Kelly and NBC managed to infuriate both Jones and Sandy Hook advocates.  The latter objected to giving Jones the platform to sell his brand of crazy and included a few paragraphs on the interview under the "Campaign of Abuse" heading in the May 2018 complaint.

The case is Lafferty v. Jones, No. UWY-CV18-6046436-S.  The complaint is available from the Connecticut docket.  Besides defamation and defamation per se, plaintiffs claim false light, negligent and intentional infliction of emotional distress, deceptive trade practices under statute, and civil conspiracy on the common law claims.  After removal to and return from federal court, the Connecticut trial court allowed limited discovery over the defense's anti-SLAPP motion.  Thus we are in Hartford.

News coverage so far is lackluster.  "Lawyer Norman Pattis told the Connecticut Supreme Court on Thursday that Jones exercised his free speech rights," Dave Collins wrote for The AP (e.g., via WaPo) this afternoon.  To be fair, this appeal focuses on a discovery compliance dispute, which is tangled up in First Amendment considerations, but does not squarely present the anti-SLAPP problem.  The Hartford Courant has more detail on the merits and procedural posture.

Meanwhile...

Also as reported earlier, the Sandy Hook gun manufacturer liability suit against Remington is pending with a defense cert. petition in the U.S. Supreme Court, since the Connecticut Supreme Court allowed plaintiffs a narrow theory to circumnavigate Remington's federal statutory immunity under the Protection of Lawful Commerce in Arms Act (at The Savory Tort). That case is now Remington Arms Co. v. Soto, No. 18-A-1185.

Amici in Remington Arms piled in to the Court on September 3 and 4 and are collected on the case page at SCOTUSblog.  The NRA, 22 members of the U.S. House, the State of Texas, the National Shooting Sports Foundation, the Gun Owners of America, and Professors of Second Amendment Law filed briefs.  The latter comprise "Randy Barnett (Georgetown), Royce Barondes (Missouri), Robert Cottrol (George Washington), Nicholas Johnson (Fordham), Joyce Malcolm (George Mason), George Mocsary (Southern Illinois), Michael O’Shea (Oklahoma City), Joseph Olson (Mitchell Hamline), Glenn Reynolds (Tennessee), Eugene Volokh (UCLA), and Gregory Wallace (Campbell)," with counsel for the Firearms Policy Coalition, the Independence Institute, and the Cato Institute submitting the brief.

Oral Argument in Lafferty