WASHINGTON—The current state of live sports on TV has never been more fluid, with professional sports leagues from the NFL to the NHL experimenting with streaming, pay-TV and even good old fashioned broadcast.
The evidence of how such fragmentation has led to consumer frustration reached its peak several weeks ago with the uproar over NBC’s exclusive airing of the NFL AFC Wild Card game between the Kansas City Chiefs and Miami Dolphins on its Peacock streaming service (the game was carried live on NBC affiliates in Kansas City and Miami, however).
That incident, along with discussions over how cord cutting has impacted sports TV, as well as the continuing need for rural broadband access and even new opportunities for women’s sports were all on the agenda for the House Energy & Commerce Subcommittee hearing yesterday, “TV Timeout: Understanding Sports Media Rights.”
The subcommittee invited a cross section of TV and sports media executives and experts from pay-TV, broadcast and public interest to expound on the current state of sports TV.
More Choices, More Frustration
Chairman Bob Latta (R-Ohio) opened the hearing by identifying the positive aspects of the new age of streaming but warned about the pitfalls of consumer frustration when trying to find their favorite team.
“Consumers have more choices than ever when it comes to the way they watch their favorite sports. Streaming helps increase competition drive down costs and allow consumers to cut the cord if they want to,” Latta said. “The services are also providing new avenues for diverse content to reach a wider audience for rapidly growing leagues like the WNBA, women's NCAA volleyball to more targeted content like Major League Soccer and Formula One.
“But while the proliferation of streaming has benefited consumers, in many ways, it's also created new challenges,” Latta continued. “The massive fragmentation of the sports media market means consumers must now sign up for multiple streaming services to get the content that they want. And in extreme cases, the only way to watch big games is to sign up for the streamer who holds exclusive rights to enter the game. While this phenomenon isn't new, consumers are worried about what it can mean for big games in the future. Being forced to sign up for a new subscription service for every playoff game is not what consumers want, and not where we should be headed.”
Rep. Frank Pallone (D-NJ) warned about how the rise in sports rights fees are threatening legacy media, characterizing sports programs as “the lifeblood of our media ecosystem,” and how the move to streaming could impact broadcast.
We should examine the implications of a significant revenue generator like sports programming, moving off the free airwaves and what this will mean for the future of local news, and the evolving video market.”
Rep. Frank Pallone (D-NJ)
“Legacy broadcast media are our most trusted providers of local news, and our most widely available source of critical emergency information,” Pallone said, adding that “we should examine the implications of a significant revenue generator like sports programming, moving off the free airwaves and what this will mean for the future of local news, and the evolving video market.”
Pallone also emphasized the continued need for a variety of federal programs that help low-income and rural households access broadband, helping the federal government combat the “digital divide.”
“The digital divide persists and whether due to affordability or availability of broadband subscriptions sufficient to stream, live sports often remains out of reach,” he said. “It's just another reason that bipartisan programs like the Affordable Connectivity Program and the Broadband Equity Access and Deployment program are necessary to allow all of us to participate in modern society and communal events like sports events.”
More Opportunities for Broadcasters
Brian Lawler, presIdent of Scripps Sports, a division of Scripps Broadcast targeting live local sports, explained how the changes of the past decade, with cord-cutting, rising sports media rights costs and, in particular, the recent turmoil hitting regional sports networks has actually helped improve broadcasters’ profile when it comes to competing with streaming services for live sports.
“Regional sports networks 10 years ago was a terrific business—it would reach 80% of all the households in the markets,” Lawler said. “Today when we're meeting with teams, they talk about reaching 35-40% of all the households in the market. And so to be an owner of a NHL or an NBA team and to not be able to put your games in front of two thirds of your fans in your home market is a dramatic change. And I think that's the benefit of over the air broadcast—between cable, satellite and our over the air platform, we're able to reach every household in a DMA and of course it's free over the air.”
Lawler told lawmakers that like many broadcasters, Scripps depends on live sports to generate the revenues to support local live journalism.
“For a long time, I thought the strongest part of the network affiliate model was live sports,” Lawler said. “Over the last number of years, much of the entertainment programming has now navigated and shifted over to the direct-to-consumer platforms but live sports has really been the foundation and it's a great economic benefit for our local TV stations. We're very much concerned that the economics and the revenue we bring in from sports also helps fund our local news operation. And most local news operations are not profitable by themselves. We need sports and other assets to be able to generate the revenue that allows us to fund that.”
Taxpayer-funded teams should commit to making games available in their local markets on a free ad-supported basis, either through broadcast or streaming."
John Bergmayer, Public Knowledge
John Bergmayer, Legal Director for Public Knowledge, noted that differences between pay-TV and streaming are too significant to be addressed through current regulations and proposed several measures to help consumers.
“The differences between cable and streaming mean that certain regulatory approaches are not applicable, but the goals of competition, diversity, localism and affordability and the need for accessible programming remain the same, even if the way these can be brought about has changed,” he said. “There are some obvious hooks for policymakers to improve things for viewers in the short term: Taxpayer-funded teams should commit to making games available in their local markets on a free ad-supported basis, either through broadcast or streaming. Further, policymakers should review special legal protection some sports get such as antitrust exemptions and ensure they are conditioned on teams putting fans first.”
An Unmistakable Trend
John Ourand, sports journalist for Puck Media, corrected committee members who diplomatically were describing the current state of sports TV as an “evolving landscape.”
“What’s been described here as a rapidly evolving landscape I view as really ‘chaos’” Ourand said. “There's an unmistakable trend right now, going from traditional linear television, to streaming platforms. Because of that trend, it's taking a lot of money out of the sports marketplace, because the streaming services aren't paying as much as the pay TV services which were actually built for that.”
Despite some of the pessimism over the impact of live sports moving away from broadcast and pay-TV to streaming— particularly to network-owned streaming services that could, in effect, make subscribers pay twice for the privilege of viewing one game—Ourand was optimistic that media companies would temper their enthusiasm for moving marquee sports leagues to a pay-per-view model.
“All NFL games are going to be on over--the-air broadcast television into the 2030s,” Ourand said, adding that the NBA is renegotiating their sports rights—”those are certainly going to be on broadcast television.”
“The World Series is going to be on broadcast television and I think you can also look at just traditional linear television... the NHL, every single Stanley Cup final game until the end of its contract is going to be on linear television.”
Ourand also noted the increasing competition traditional media companies are facing with Silicon Valley companies like Amazon, Netflix and Apple TV+ getting into the live sports arena. “I think that you're clearly seeing trend lines heading there, but it's not quite a tidal wave yet,” he said. “Broadcast still is a priority to these leagues.”
Despite lawmakers' handwringing, there was little consensus to a solution with Rep. Jay Obernolte (R-Calif.) optimistic that a "marketplace" solution will resolve future issues.
"It seems to me like we're in this kind of confusing area where the industry is trying to sort out how to pay for this content," he said. "And I have faith that we're going to get there because free markets seem to find a way and consumer demand is going to drive consumer behavior and consumer behavior is going to influence the way that we provide that content to them."
Anna Eshoo (D-Calif.) was less sanguine.
"I think our job here is to protect the American consumer to ensure that they're able to easily access the content that they pay for," she said. "I mean, I just think it's a racket. It's a racket."
