Will It Soon Be Lights Out for the Black Out Rule?
Exciting news was announced for sports fans living in towns with fluctuating home game attendance this week. The Federal Communications Commission (FCC) announced it is reviewing the need for the “blackout” rule.
The nearly 40 year old rule prevents satellite and cable companies from televising NFL Events in a team’s home market if the game does not sell out. The blackout rule was developed when teams earned a significant portion of their revenue from ticket sales. The idea was implemented in 1975 to encourage fans to buy available tickets rather than staying home and watching the game on TV. At that time, about 59% of NFL games were blacked out.
Today, games sell out far more often because the NFL has grown in popularity. Perhaps more importantly for the rule, teams now earn a much larger portion of revenues from broadcast revenues. Payments for the right to broadcast games dwarf revenues from ticket sales.
On Wednesday, the FCC released a notice of proposed rule making stating the agency may repeal the rule next year. “Changes in the sports industry in the last four decades have called into question whether the sports blackout rules remain necessary to ensure the overall availability of sports programming to the general public,” the commission said. According to the FCC, only 16 games were blacked out during the 2011 season, and only one game has been black out this season.
The commission took the first step to eliminating the rule by unanimously voting in favor of repealing the law. Next, the FCC will hear public comments on the rule before handing down a ruling sometime in the first half of 2014.
The NFL said it would “strongly oppose any change in the rule.” The league says while the rule has only affected very few games in recent years, it is “very important in supporting NFL stadiums and the ability of NFL clubs to sell tickets.”
On the other hand, a group of economists studying blackout rules disagree. They say “local television blackouts have little or no effect on ticket sales or attendance for the game that is being televised. Local blackouts of home games harm consumers without producing a significant financial benefit to teams.”
We will see in the coming months whether the FCC’s blackout rule will be repealed. However, even if it is, the FCC says the practice of blacking-out games will probably not end. The “elimination of our sports blackout rules alone might not end sports blackouts, but it would leave sports carriage issues to private solutions negotiated by the interested parties in light of current market conditions and eliminate unnecessary regulation,” the FCC said.