Minnesota Twins News & Rumors Forum
  • MLB's Territorial TV Rights Challenged


    Baseball, bourbon, great legal minds and the end of TV blackout rules as we know them. If that sounds like a pretty good night, well, you missed it. I however, did not. So, let's recap....

    The partners of Snyder Gislason Frasier (a.k.a. The Law Geeks) - Chad Snyder, Adam Gislason and Mike Frasier - invited me out to share the finer things in life and parse through the broader implications of two class-action lawsuits. The suits were brought by fans against Major League Baseball, the NHL, Comcast and DirectTV -- Garber et al v. Office of the Commissioner of Major League Baseball and Laumann et al v. National Hockey League -- which were consolidated in 2012. The plaintiffs (fans) claim that sports franchises, that should be in competition, conspire to establish territorial TV rights with television distributors. As a result, they can charge enormous fees for people who want to watch out-of-market games.

    There is no debate about whether this really happens - even MLB admits it - although the distributors claim to be bystanders in this process. In fact, this has been a topic on Twins Daily forums. For instance, Cedar Rapids is about a four-hour drive from Target Field AND the home of the Twins Low-A minor league club, the Cedar Rapids Kernels. But local residents there can't get Fox Sports North on cable so they are not able to watch Twins games that way. They are ALSO officially within the blackout area of MLB.TV, so they can't get those games as an out-of-market option either. The Kernels can't tune into a Twins game, either as in in-market or out-of-market option, in their clubhouse.

    (But it actually gets more ridiculous for Minnesota's southern neighbors. MLB.TV considers the entire state of Iowa to be "in-market" for SIX major league teams: the Twins, Brewers, Cubs, White Sox, Royals and Cardinals. Iowa residents are at the mercy of the few cable stations that want to extend that far.)

    But just because it's true, doesn't mean it's legal or illegal.

    Although the fans’ case against MLB is a unique one, in the past, MLB has killed suits brought against it before they got off the ground using a unique defense – the “baseball antitrust exemption” i.e., unlike most other businesses, federal and state antitrust laws don't apply to them. You may have heard that baseball is a legal monopoly, but that isn't entirely true. The truth is considerably more gray. In the 1920s, the Supreme Court ruled that MLB games were not subject to federal antitrust laws. This ruling was later affirmed in the 1950’s by the Supreme Court, which, to use a football term, punted the question to Congress. Since then, including the Flood case, courts have not shown a willingness to expand on that ruling. And both the NHL and NFL have been shot down when trying to get the Supreme Court to apply the same broad antitrust exemptions applied to them.

    It looks like MLB didn't want to risk something similar befalling its exemption, because it didn't hide behind that standard defense when the suit was filed in 2012. That may have been because its lawyers aren't sure the courts, including the Supreme Court if it gets that far, will follow the prior Supreme Court decisions this time around the bases. "There are indications that the Supreme Court, as it's currently comprised, might not feel restricted by previous rulings," says Chad. Choosing not to claim antitrust exemption backfired, as it meant the suit was not dismissed and instead has been involved in two years of discovery. Recently, though, MLB claimed that the antitrust exemption "includes its territorial league structure and live video rules."

    That opens the door for a much higher stakes game, one that could even include a trip back to the Supreme Court. Not that TV rights aren't high stakes all by themselves; between how local television contracts have recently changed the landscape of team revenues AND the rise in profits and valuation of MLB Advanced Media, this suit could radically change a multi-billion dollar revenue stream.

    However, its effect could go even beyond that if MLB's nebulous antitrust exemption is further defined. One of the last times any official ruling was made on baseball's antitrust exemption, it led to the federal Curt Flood Act of 1998, which helped solidify free agency. The Curt Flood Act changed baseball's business forever, limited MLB's antitrust reach, but also recognized that there was at least some antitrust considerations upon which to reflect. If both sides get to the point where a ruling on the antitrust designation of MLB is challenged, far more than just TV revenues is jeopardized.

    This is unlikely to happen. "Given what is at stake for both sides, the current class actions will likely end in a settlement," suggested Adam, a common conclusion for these types of suits. "But a settlement will likely include changing how the industry currently works," added Mike.


    Just what those changes could look like is anyone's guess. Baseball fans in several regions have been victimized by the momentum of the current system. It's likely time for an overhaul. Perhaps this suit will encourage baseball to face the challenge head on.


    ------

    Snyder Gislason Frasier LLC is a Minneapolis-based law firm committed to providing personalized service to their clients while cheering for the Minnesota Twins. Their talented lawyers can help you find innovative solutions to legal issues in many areas, including general business law, litigation, contracts, family law, employment law, and entertainment law.
    Comments 42 Comments
    1. Old Twins Cap's Avatar
      Old Twins Cap -
      Hey, I don't have a TV. At all. And, I ain't going to get one. And, I love baseball. And, I have no way to get my favorite team into my home, via MLB, or cable, or by circumventing the law. (Well, apparently, I could do that, and maybe I will, if the Twins ever get good enough.) The point is, a lot of things are changing around how people access information. I have a computer, an MLB account and I am willing to pay money. How is it that we can't find a business model where people like me get to watch my team's baseball games, I pay money, and everyone goes home happy? It's wrong, it's un-American, it's anti-market -- and it's the way it is right now.

      Something has got to give.
    1. SD Buhr's Avatar
      SD Buhr -
      Obviously, as an Iowan, this issue hits home for me. Anyone inclined to read what I've written about it in the past can do so by clicking the "Alice's Restaurant" link in my TD signature line.

      But I have doubts that anything will change any time soon. As John writes, there will likely be some kind of settlement at some point before this ever goes to court and I see NO WAY that baseball will allow any such settlement to include an end to the blackouts resulting from the demands of regional sports networks.

      RSNs are funding so much of the increase in baseball's revenue that they really are calling all the shots here. Using the Twins as an example, they need to maximize their media rights revenues to have any hope of keeping up with the big market teams. So if FSN says "we want Iowa to be considered 'in market'," then that's exactly what the Twins will do.

      Twins executives will (and have) tried to pass the buck on this issue. They've told fans to contact our cable companies. They've told us it's a MLB office issue. I even had Dave St. Peter tell me once that I should contact my representatives in Congress. Yes, as incredible as it is to believe, it almost felt like he was suggesting I write my Congressman to urge him to do something about baseball's anti-trust exemption.

      But it is the Twins' issue, as much as they want to claim it isn't. If they felt it was important enough to them to expand their fan base further in to Iowa and that the way to do that would be to allow us to watch their games on MLB.tv, they simply could refuse to have Iowa included in the blackout area. That might cost them a few bucks in their media deal with FSN, but that's a decision the Twins are making. It IS their call, in the end. No matter what Mr. St. Peter claims.

      But the influence of regional sports networks is increasing, not decreasing, as MLB relies more and more on the money from that source. That being the case, I'll be surprised if there aren't wider blackout areas, rather than narrower.

      There's some hope, perhaps. If you haven't been following the fiasco related to the Dodgers' new local rights deal, you should Google it. They are now on a RSN that most Los Angeles cable companies refuse to carry because of the enormous fees that company wants to charge the cable carriers. So Dodger fans in Pasadena and elsewhere can't watch Dodger games. It's hard to imagine baseball allowing that situation to continue.

      It's a crazy mixed up world.


      Covering the Cedar Rapids Kernels for
      MetroSportsReport.comwhile my alter-ego, Jim Crikket, opines about the Twins and Kernels at Knuckleballsblog.com.

      ~You can get anything you want at Alice's Restaurant~
    1. JB_Iowa's Avatar
      JB_Iowa -
      $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$


      I find it a bit amusing that an article mostly relevant to $$$$ is "sponsored" by a law firm. (But thank you, TD, for maximizing revenue sources and keeping the site free of charge.)

      To address the Iowa situation, I think that the inclusion of the entire state in six home markets is short-sighted by these teams. The idea of inclusion in regional sports networks is to increase the amounts paid by cable companies -- but if those cable companies aren't including them, what good is inclusion doing????

      From a team's standpoint, shouldn't it also be about building your market base in those areas so that fans who live there will, on occasion, travel to your city and spend $$$$$. Somewhat distant fans might not buy season tickets but in any given trip, they are likely to go to multiple games plus drop quite a bit of cash on food, lodging and shopping. How do you encourage that if they rarely see you on TV???

      It would make logical sense to me that the Twins' home market only extend to about the northern quarter of the state (and even then, perhaps not all the way to the eastern border). In northwest Iowa we've always considered ourselves "Twins Territory" but that may be because we watch Sioux Falls television as much as Sioux City for network & local programming. And in general, our local cable companies carry FSN.

      JC and I have exchanged posts in the past about the cable situation. For those Iowa residents who are fortunate enough to opt for satellite TV instead, the situation is better. You can go with something like extra innings on Direct TV. But I still stay with Dish Network instead. Without opting for any programming other than what I would purchase anyway, I get the games for all 6 "home" teams plus MLB network and MLB alternate (when not blacked out) plus the ESPN games, etc. etc. I don't get to see everything I would see with an mlbTV subscription but there's enough variety that I don't feel deprived.

      The situation is a mess, though. I'd like to see demographics (by age) on cable subscribers. I would guess that it is a population that is "aging out" somewhat as younger viewers opt for internet options rather than cable. And in the end, it is the changes in viewing habits that are likely to bring change.
    1. Willihammer's Avatar
      Willihammer -
      I blame Comcast
    1. Brock Beauchamp's Avatar
      Brock Beauchamp -
      Quote Originally Posted by JB_Iowa View Post
      I find it a bit amusing that an article mostly relevant to $$$$ is "sponsored" by a law firm. (But thank you, TD, for maximizing revenue sources and keeping the site free of charge.)
      Heh, yes, a bit funny. They also used their legal expertise to help explain the situation and they're big baseball geeks as well... So, win-win all around! Glad to have them on board with Twins Daily!
    1. JB_Iowa's Avatar
      JB_Iowa -
      JC, do you think there is a better chance of the CR area cable companies picking up FSN as some of the prospects who've played with the Kernels arrive in the TC?
    1. BigTrane's Avatar
      BigTrane -
      I'm in China, so I'm struggling with an equally frustrating, though distinctly different situation... I have spent nearly 3 hours trying to watch game #3 on MLB.tv, and am still only 36 minutes in.

      So my heart goes out to all the Iowa fans (what is the situation in Wisconsin?- assume Dakotas are ok). I also have family in LA, and they have no Dodgers games- though that's because of the club, more than the cable company. (Might also toss in: A's can't move because of Giants' territorial rights.)

      No matter what, the current situation is clearly unfair, and results in punishing the most willing (to spend!), supportive fans. So short-sighted.
    1. SD Buhr's Avatar
      SD Buhr -
      Quote Originally Posted by JB_Iowa View Post
      JC, do you think there is a better chance of the CR area cable companies picking up FSN as some of the prospects who've played with the Kernels arrive in the TC?
      It's possible.

      One year after the affiliation began, we now have a local radio station carrying 120 of the Twins broadcasts (they carried the White Sox the past few years).

      Mediacom has chosen to provide Comcast Sports out of Chicago (Cubs and White Sox games). I don't see them switching to FSN because the Kernels affiliation will not change the fact that there are more Cubs fans in this area than any other allegiance.

      Maybe eventually they'll add FSN, depending on what FSN would charge per subscriber. You can actually get a package that includes the YES network... but not FSN. Yes, that gripes me.

      Of course, the Twins/Kernels affiliation expires after 2016, so I guess there's even a chance that, about the time the first Kernels alums not named Buxton arrive at Target Field, there could be another affiliation change.
    1. Monkeypaws's Avatar
      Monkeypaws -
      I find it pretty funny that NBC Sports can provide me coverage of every Premier League match every weekend, online or on TV, yet our own sports are locked down tighter than a drum.
    1. Drewseph42's Avatar
      Drewseph42 -
      I think the quickest resolution possibility is going to be from the world of Apple TVs, Amazon's FireTV, and other technology expanding. The MLB getting direct money from customers buying the MLB.tv subscriptions is a plus for them. Additionally, the majority of people who would get such a subscription, aren't going to be dropping their cable subscriptions, so any potential argument from the RSN's can be minimized.

      The NFL has made it work with NFL Sunday Ticket and online subscriptions with blackout rules. Vikings games are available when a Packer game is on the same network, and I don't see why there would be a problem. Plus...the NFL's agreement with DirecTV is up after the 2014-2015, and that's the prize cow in all of this. The NFL is in the driver's seat when it comes to have to power of blackout changes. If someone like Apple or Amazon steps up, that could be game changer.

      Charter is the primary cable provider (we use DirecTV), and they actually carry BOTH FSN-North our of the Twin Cities and Wisconsin (DirecTV has both in HD unlike Charter), so both Twins and Brewers fans are covered here.

      Iowa was just a mess. Nothing was worse IMO than having to listen to Hawk and Stone call the handful of Twins' games when they were play the White Sox. I get that Mediacom doesn't want to have to pay for all of the FSNs and CSNs, but make it available in some premium sports package.

      It's teams that have lower TV contracts that should be clamoring for a change. The Twins obviously aren't going to get a Dodger or Angels type TV deal, but added advertising revenues from FSN being able to branch out into Iowa and Wisconsin would provide the Twins with great revenue available in future deals. States with weird blackout overlaps (see: Iowa, and the Mid-Atlantic states) should be joining in this debate.
    1. tmerrickkeller's Avatar
      tmerrickkeller -
      Can't speak for everywhere, but most of Eastern South Dakota (Midcontinent Cable) carries FSN. I remember when the Twins tried to create their own network a few years ago, only one small local cable company carried the new service, so there was no television broadcast for most in the Sioux Falls area. That lasted until early May, if I remember correctly, when a deal was brokered, the Twins network died, and the team was back on Midco.

      We've also been very fortunate in that at least one Sioux Falls station has carried the games on the radio (right now, 1140 KSOO, but it was also a different sports radio network at some point). The best news is that 570 WNAX out of Yankton has been a Twins station - that radio signal reaches far and wide throughout the state. They carried the Cubs for a few seasons, but have been consistent Twins broadcasters for most of the past decade.

      I remember when the season schedule also (customarily) included a list of regional radio affiliates. I often wander the 5-state area for business or pleasure, so it is always handy to have that list in my car. I do subscribe to MLB, but only the radio version (but when I'm way out of market, or in my office during day games, that works great). Thanks for the discussion on this topic.
    1. Drewseph42's Avatar
      Drewseph42 -
      Quote Originally Posted by Monkeypaws View Post
      I find it pretty funny that NBC Sports can provide me coverage of every Premier League match every weekend, online or on TV, yet our own sports are locked down tighter than a drum.
      All these leagues are paying attention to globalizing their brands. I've lived in Europe a couple times, and the first time (2006), I had an mlb.tv subscription, and could only listen to the radio broadcasts live (could only watch after the game had aired). Living there again last year, you could watch live games.

      The NFL also introduced NFL Gamepass which was the same thing as NFL Sunday Ticket for free if watched on a computer. Trying to break into immerging markets is pretty enticing when you're dealing with that much money...
    1. Mike Frasier Law's Avatar
      Mike Frasier Law -
      John and TD crew - thanks for drinking bourbon with us and geeking out on baseball and the law. In my opinion, these agreements among MLB teams and with the cable providers hurt both the competitive balance of the league (increasing the revenue imbalance between teams like the Yankees and the Twins) as well as us consumers. I've read that as much as half our cable bill is attributed to the cost of broadcasting sports, and that's only going to increase. The blackout restrictions, specifically designed to curtail competition, makes it possible.
    1. spycake's Avatar
      spycake -
      Is it really that unfair? Yeah, it would be better (and more logical) if cable providers could at least offer the "local" RSN for purchase, but that's about the extent of the unfairness.

      Satellite sports packages (including all of your "local" RSNs) are ~$12 extra per month if you are a satellite subscriber and don't already receive FSN. Just eyeballed Dish Network and the regular price of their standard package plus the sports add-on is $70 per month. Doesn't that compare to cable? If you are worried about losing your bundle discount with cable+internet, there are DSL+satellite bundles just about everywhere now too.

      This situation isn't ideal for everyone, but it's not a travesty, and it's probably light years ahead of what was available even 10-15 years ago.

      As to MLB.tv live streaming blackouts, I'd guess at some point they'd almost rather have online viewers than cable/satellite viewers -- better user tracking and targeted ads -- but I guess we're not there yet. It's pretty easy to circumvent online location-based blackouts anyway, so it's probably a moot point for many.
    1. spycake's Avatar
      spycake -
      Quote Originally Posted by Drewseph42 View Post
      I think the quickest resolution possibility is going to be from the world of Apple TVs, Amazon's FireTV, and other technology expanding. The MLB getting direct money from customers buying the MLB.tv subscriptions is a plus for them. Additionally, the majority of people who would get such a subscription, aren't going to be dropping their cable subscriptions, so any potential argument from the RSN's can be minimized.
      Uh, I think a ton of people would drop their cable subscriptions if they could get the content they want (particularly live content like sports) available a la carte online.

      I could see more networks offering streaming for cable/satellite subscribers, like the WatchESPN app. But that's just an extra feature for existing subscribers. I don't see any quick resolution to the blackout rules -- live sports is just about the only worthwhile thing cable/satellite offers that can't already be consumed a la carte online.
    1. Willihammer's Avatar
      Willihammer -
      Quote Originally Posted by spycake View Post
      As to MLB.tv live streaming blackouts, I'd guess at some point they'd almost rather have online viewers than cable/satellite viewers -- better user tracking and targeted ads -- but I guess we're not there yet. It's pretty easy to circumvent online location-based blackouts anyway, so it's probably a moot point for many.
      I dunno. Take the ESPN contract, for example. 8 years, 5.6 billion. Add the dozens of contracts each team has with RSNs. That's guaranteed money, and as a bonus, it puts the onus on the networks to actually sell their product to the cable providers and ultimately, the viewer. Seems like a pretty sweet deal to me.
    1. Willihammer's Avatar
      Willihammer -
      The plaintiffs (fans) claim that sports franchises, that should be in competition, conspire to establish territorial TV rights with television distributors. As a result, they can charge enormous fees for people who want to watch out-of-market games.
      $130 per year?
    1. chaderic20's Avatar
      chaderic20 -
      I live in Des Moines, and I remember a few years back I emailed both my cable provider (Mediacom) and MLB every single day for a few months, until both of them told me that they would no longer acknowledge any future requests from me. I also got into a brief twitter spat with the president of MLBAM until he blocked me.
      The lesson I've taken from this is that none of them give a rat's ass what we think or want. And if we get too annoying, they just ignore us, and won't change a thing. So I've resigned myself to Gameday Audio for most games, and less-than-legal methods of watching games of particular interest.
    1. spycake's Avatar
      spycake -
      Quote Originally Posted by Willihammer View Post
      $130 per year?
      Yeah, I'm not sure if that was just worded poorly? I haven't see the details of the lawsuits. It's cheap and easy to see MLB out-of-market games. The problem is local blackouts (and cable RSN unavailability) that aren't that "local".
    1. spycake's Avatar
      spycake -
      Quote Originally Posted by chaderic20 View Post
      I live in Des Moines, and I remember a few years back I emailed both my cable provider (Mediacom) and MLB every single day for a few months, until both of them told me that they would no longer acknowledge any future requests from me. I also got into a brief twitter spat with the president of MLBAM until he blocked me.
      The lesson I've taken from this is that none of them give a rat's ass what we think or want. And if we get too annoying, they just ignore us, and won't change a thing. So I've resigned myself to Gameday Audio for most games, and less-than-legal methods of watching games of particular interest.
      Can you drop Mediacom and go satellite?

      Honestly, it's hard to blame Mediacom in this situation. Iowa's pro sports allegiances are at best divided (and probably somewhat tenuous to any single team), so it may not make financial sense for them to pay for FSN, even as an extra tier of service (particularly if FSN isn't offering Mediacom a very good deal). Satellite companies are much better situated to deal with those fractured niche audiences, and the cost should be comparable to cable, no?

      MLB and FSN are far more culpable -- if Iowa fandom is so divided and tenuous, it probably shouldn't be on 6 teams blackout lists. But the availability (and cost similarity) of satellite vs cable seems to mitigate most of that, even if it's not the most convenient and cost effective solution (MLB.tv).
©2014 TwinsCentric, LLC. All Rights Reserved.
Interested in advertising with Twins Daily? Click here.