Statement on Competition in Sports Marketplace

Statement

Representative Edward J. Markey (D-MA), chairman of the House Subcommittee on Telecommunications and the Internet, held a hearing on sports programming, consumer choice and migration of sports programming to pay television services. The following is his opening statement from the hearing:

"Good Morning. The subject of today's hearing is competition in the sports programming market.

"Competition, in sports, is the essence of the game. In sports, there are great teams and dynasties; there are compelling stories of underdogs and come-from-behind victories; there are perennial favorites to win championships and ....there are the Chicago Cubs.

"Yet sporting events are premised upon great feats of athletic prowess and competition being performed upon a level playing field. That level playing field ensures that athletes engage in sporting activities in a manner where their God-given talents and a compelling work ethic and practice can result in success.

"Competition in the marketplace, on the other hand, is what makes the consumer king. In our national video marketplace, many programming competitors assert that the playing field is not quite level at present. They argue that compelling content and a solid business gameplan do not even the odds against them. The field is unfairly tilted toward cable operators or broadcast networks, competitors claim, by a couple of key factors: 1) an insufficient number of cable providers within a market through which they can effectively reach consumers, and 2) by laws or regulations that either fail to achieve fairness as intended or serve to reinforce the position of incumbent market leaders or risk unduly raising prices.

"The consumer-fan, they say, is the resulting loser in this environment.

"We have seen several episodes over the last year in the sports programming marketplace that highlight policy issues for this Subcommittee to explore. Early last year, there was the issue of Major League Baseball's package of "Extra Innings," or out-of-market games slated to be carried on DirecTV on an exclusive basis and complaints by Comcast and other cable operators that this was unfair.

"There was the effort by the Big Ten conference to successfully launch its cable channel through carriage on the most broadly-watched tier on major cable systems. We saw the FCC intervene to declare that The America Channel, which has rights to various sports content, was a "regional sports network" for purposes of conditions imposed as part of acquisitions of the Adelphia cable properties by Comcast and Time Warner. These conditions permit unaffiliated sports networks to seek commercial arbitration when a carriage agreement with Comcast or Time Warner cannot be reached. The Commission is now considering proposals to adopt an expedited dispute resolution process for all such unaffiliated programmers, including regional sports networks.

"And the NFL Channel, in a manner similar to issues raised by the Big Ten Conference, sought carriage on the most broadly-watched tier unsuccessfully with several major cable operators. Cable operators, for their part, have objected to such carriage arguing that the price the NFL seeks is too high, or point to the NFL's exclusive deal with DirecTV over the so-called "Sunday Ticket," where consumer-fans can see all the Sunday football contests, or their deals with broadcast networks or ESPN, as an examples demonstrating that the NFL has other choices in the marketplace to distribute games.

"Policymakers have sought to remedy the lack of competition over the years. The program access provisions that I championed as part of the 1992 Cable Act have created competitive alternatives to incumbent cable operators - most notably from satellite providers - but also from cable over-builders, telephone companies and others. Today's hearing will provide the Subcommittee an opportunity to examine the effectiveness of these provisions in the law. It will also allow us to analyze the current marketplace for sports programming and assess the continued migration of sports programming from broadcast television to pay TV services, exclusive programming packages, the nature of cable tiering for sports programming, the emergence of conference or league channels, and program carriage issues generally.

"In the absence of sufficient competition, the role of this Subcommittee historically, and the role generally of the FCC, has often become that of a referee. Most refs simply prefer that the athletes just play the game and don't like to intercede. But the refs are here to step in when unfair play is perceived and to make tough calls at times to safeguard the integrity of the game, or in this case, to ensure fairness in the marketplace and consumer welfare.

"I wish to thank our witnesses for their willingness to testify today and look forward to their testimony. Thank you."

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