After 26 years of existence, one of the longstanding National Football League (“NFL”) broadcasting agreements faces uncertainty. The unsettled future between the NFL and AT&T Inc’s DirecTV (“DirecTV”) faces an even greater dilemma following the Supreme Court’s decision on November 2nd to allow a proposed class-action antitrust lawsuit against the NFL and DirecTV to move forward. Pending the litigation results, the decision could significantly impact the NFL’s revenue and future broadcasting deals, and most importantly, the NFL consumer.
The NFL and DirecTV’s broadcasting agreement dates back to the 1990s. Through their arrangement, DirecTV created a popular subscription sports package, known as the NFL Sunday Ticket, which retains the exclusive broadcasting rights for NFL regular-season games outside of their local market. The NFL’s collaboration with its media broadcasters ABC, CBS, ESPN, FOX, NBC, and the NFL Network, determine local market games. Any games falling outside of the local market—excluding nationally televised games such as Sunday Night Football—can only be watched through the NFL Sunday Ticket. As a result, if a Las Vegas Raiders fan living in Atlanta wants to see a live broadcast of their team’s game during an ordinary Sunday, their only option to watch the game at home would require them to purchase the NFL Sunday Ticket package. The same is true for any NFL fan wanting to watch a team outside of their local market.
For over two decades, fans have endured the consequences of the pricey agreement between the NFL and DirecTV. Currently, the NFL Sunday Ticket subscription costs households a minimum of $294 for the 2020 NFL regular season, with the premium package costing upwards of $400. These high prices are likely the result of the monstrous deal signed back in 2014. The eight-year agreement—set to expire in 2022—requires DirecTV to pay an average annual rights fee of $1.5 billion to the NFL for its exclusive out-of-market broadcasting rights. Under the current deal, the average yearly rights fees increase by roughly 50%. This steep increase further exacerbates DirectTV’s deficit from the NFL Sunday Ticket package, which reportedly loses more than $500 million annually. In an effort to mitigate their losses, DirecTV has raised the cost of the NFL Sunday Ticket package drastically, infuriating NFL fans in the process.
The Supreme Court’s decision to deny the NFL attorney’s petition for certiorari may be a step in the right direction for outraged NFL consumers. The issue reached the nation’s highest court after NFL attorneys sought a review of the 2019 ruling by the Ninth Circuit. In that case, a divided three-judge panel reversed the trial court’s previous decision to dismiss an antitrust complaint against the NFL and DirecTV. In doing so, the Ninth Circuit found that the plaintiffs’ claims plausibly alleged that the NFL Sunday Ticket agreement could be a violation of the Sherman Antitrust Act. NFL Sunday Ticket subscribers believe that the agreement financially constrains NFL consumers because it eliminates competition in the marketplace for live broadcasts, and the Ninth Circuit found some merit to that argument.
Amidst this lawsuit the future for the NFL consumer remains unclear. Even if the subscriber-plaintiffs are successful in their antitrust suit, it is not certain that prices for the NFL Sunday Ticket package—or competing packages—will drastically lower. What it would do is open the door for competing entities, like Amazon or Apple, to help drive the market price, likely creating a fairer and more equitable environment. However, history and precedent do not favor the plaintiff-subscribers’ chances of succeeding. Justice Kavanaugh’s statement eluded to such, after making it explicitly clear that the Supreme Court’s decision “should not necessarily be viewed as agreement with the legal analysis of the Court of Appeals.” Further, he added that the breadth of the plaintiff-subscribers’ argument “appears to be in substantial tension with antitrust principles and precedents” and that they may not even have “antitrust standing to sue the NFL and the individual teams.” Despite these statements, the subscribers and NFL consumers live to fight another day, and perhaps, could be paving the way for how the NFL enters future broadcasting agreements.