Market Insight

FCC bows out of NFL blackout discussion

October 02, 2014  | Subscribers Only

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US regulator the Federal Communications Commission (FCC) has voted unanimously to eliminate its sports black-out rules, including the NFL’s 40 year old broadcast black-out policy on games not reaching sell out status. The regulatory body will no longer enforce or have a role in such practices. Black-outs could still occur under private negotiations, but these will not have backing from the FCC.

The rule applies to all professional sports teams, but the NFL has been the most vocal in contesting such a move. The NFL argued that such a move would expedite the move of NFL programming from broadcast to pay TV. In its decision, the FCC deemed that there will likely be no such migration in the near future as the NFL has lucrative contracts with the broadcast networks through 2022. In addition, the FCC found the rule rather antiquated as only two games out of 256 regular season games in 2013 were blacked out and with the league pulling in $6 billion in television revenue, there was no need for the NFL to have the backing of the FCC when it came to NFL black-out rules.

Following the FCC vote, the NFL issued a statement that its black out rules will continue for the foreseeable future. 

Our analysis

Federal regulation for the airing or blackout of NFL games is an antiquated notion without need in today's NFL context. The rule which prevented the broadcast of games which didn't sell out hasn't truly been relevant since the 1990s when, according to ESPN, 31% of games were blacked out. That figure improved significantly in the 2000s when an average of 8% of games saw the same treatment. Fast forward to the 2013 season and that number is 1%. 

There is no doubt that the NFL is the most popular sport franchise in the USA, its popularity growing in parallel with the amount of TV content that US consumers view daily. In addition, the NFL and its partners have become adept marketers, NFL is now one of the biggest draws on television. According to the FCC decision, the protections which it gave the NFL in terms of blackout restrictions no longer apply because the league is no longer reliant upon ticket sales for the majority of its revenue.

Worries that the long term availability of NFL content to pure OTA (over the air) TV households will be harmed is largely overblown. The NFL has contracts in place with broadcasters which run through 2022, their renewals at that time seem almost inevitable.

The ultimate question remains whether or not the consumer will be harmed by the FCC decision, IHS believes not. The decision is essentially neutral and passes the buck to the NFL and its programming partners. IHS also believes that the remaining 15.9% of non-pay TV households at year end 2014 are at no significant risk of losing access to NFL games. Frankly, given the relatively low number of non-pay TV households who actually field a DTT antenna, it is likely that the majority don't care one way or another.

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