Friday, December 21, 2007

The NFL's Chutzpah

The NFL's campaign to enlist Hill folks to pressure Comcast and Time Warner to carry the NFL network on terms other than those reached by voluntary negotiations in the marketplace is an exhibition of sheer chutzpah. (The classic definition of the Yiddish chutzpah is that given by Leo Rosten: "That quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.") Broadcasting & Cable reports that yesterday another group of legislators urged FCC Chairman Kevin Martin to impose some type of arbitration mechanism on cable program carriage disputes. This follows NFL Commissioner Roger Goodell's proposals to the same effect for mandating "baseball-syle" arbitration to settle the carriage issues.

I wrote here last week in "Peace, Prosperity, and the NFL Network" that I did not understand why politicians "would take time to intervene in a dispute the marketplace is perfectly capable of resolving in a way that maximizes consumer welfare -- at least until the weighty national issues of peace abroad and prosperity at home have all been resolved to everyone’s satisfaction." A week later, I still don't understand why some politicians think they need to inject themselves into a dispute that ought to be settled in the marketplace by private negotiations. Surely there must be more important work for the legislators to do in areas where the government has a legitmate role to play. Surely the FCC has more important work to do.

Back to chutzpah: According to Communications Daily [subscription required], in his latest letter to Time Warner Cable CEO Glenn Britt, the NFL's Goodell states: "The objective is to have a neutral third party determine the price and tier for NFL Network distribution...We view it as a way to make sure that your customers can view our programming on fair terms."

If the NFL thinks it is so important, so much a matter of the national interest, that all Americans be able to watch its games it can opt to have them carried on a broadcast network. Presto! Problem solved.

With an antitrust exemption already in hand, short of a willingness to have itself declared a traditional "essential facility," perhaps on the theory the NFL is "essential to maintain the American way of life," the NFL should quickly back off its full court press to engage politicians in the business of deciding carriage terms. If the NFL keeps it up, at some point the league may convince the politicians that the NFL should be regulated as a public utility "in the public interest."

As I said last week, with competition now the rule among video providers, private negotiations in a marketplace setting are perfectly capable of resolving disputes between the owners of programming, including "high value" programming, and the owners of the facilities used to distribute such programming. Back to chutzpah. For Goodell to say to Time Warner that he views arbitration as a way "to make sure that your customers can view our programming on fair terms," well, that takes chutzpah. Why does Goodell think he knows more about what will best serve Time Warner's customers than does Time Warner? In today's competitive video marketplace, you can be sure that Time Warner, and Comcast too, are attentive to the desires of their customers.

In this instance, one of the customer desires that the cable operators are probably attending to is not overpaying for NFL programming that they perceive may be desired by a certain segment of their customers, but not by all. The politicians ought to let them tend to this business themselves and reject the NFL's pleas for government intervention.