Kerry, Specter weigh in on EI move

The rumblings of discontent are getting louder, and are being made by more notable persons, but it may not make much of a difference after all ...

NY Times article by Richard Sandomir on latest EI move news

(excerpts from Kerry)

“Here’s what bothers me,” Kerry said yesterday in a telephone interview. “You get M.L.B. and DirecTV marshaling their forces to go out and make money while cutting out fans. In my judgment, more fans watching games strengthens baseball.”

He added, “There’s a whole movement toward fans being screwed by consolidation which raises prices and reduces options.”

Kerry isn’t sure the deal can be scotched, but last week he wrote to Kevin Martin, the chairman of the Federal Communications Commission, asking him to investigate it.

“The F.C.C. doesn’t have the right to say, ‘You can’t do this,’ but they have levers that affect this business,” said Kerry, who sits on the Senate Commerce Committee, which oversees
communications.

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(and then this from Specter)

Last year, when he was still the chairman of the Senate Judiciary Committee, Specter, a Pennsylvania Republican, fulminated about the antitrust implications of some of the National Football League’s TV practices, such as its exclusive deals since 1994 to sell its Sunday Ticket package of out-of-market games to DirecTV.

Now, Specter said by telephone: “Since I found out about the baseball deal, I’ve asked my antitrust people to do research to confirm my preliminary judgment that it’s an antitrust violation. But I don’t think I’ll be able to stop it.”

Baseball has a longstanding, Supreme Court-blessed exemption from antitrust laws, except for its labor dealings, which were removed in 1998.

“You can’t charge baseball with an antitrust violation,” Specter said, but Congress could continue the exemption on the condition that baseball avoids exclusive deals like the one it will soon announce with DirecTV.

Still, even that exemption, which some say is not fully defined in its scope, may not protect baseball from a serious antitrust challenge to the DirecTV deal. Gabe Feldman, an associate professor at Tulane Law School, said, “A few courts have said the exemption does not apply when baseball makes agreements with third parties.”

Unlike baseball, the N.F.L. lacks a broad, if ambiguous, exemption. But it has had a narrow one (as other leagues do) to collectively sell its teams’ broadcast rights as permitted by the Sports Broadcasting Act of 1961, an exemption that Specter would like to get rid of. He joked that he was selling rights to his regular squash games to DirecTV.

In 1997, a group of DirecTV subscribers filed a class-action suit against the N.F.L. in Federal District Court in Philadelphia saying that the Sunday Ticket package violated antitrust laws partly because it was sold exclusively. The plaintiffs settled for an undisclosed sum before a definitive judgment. But the United States Court of Appeals for the Third Circuit upheld the lower court’s ruling that the 1961 law applied to broadcast deals, not those made with a satellite service.

Disgruntled former cable (or Dish Network) subscribers of Extra Innings may take a similar route to court. But their success is far from guaranteed.

In its defense, baseball may argue that it has not restricted the output of games by selling Extra Innings to DirecTV because the games will also be on mlb.tv (and, besides, there is so much local and national baseball on TV).

“Baseball might say there is a process under way that is merging Internet streaming with TV, and anyone who wants the package can go to mlb.com,” said Andrew Zimbalist, an economics professor at Smith College.

But baseball may open itself to a counterargument that because it controls mlb.com, it is offering an option to its DirecTV deal — a type of eyebrow-arching vertical integration — that is not purely competitive, with a price that it sets on its own.

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... and all of this over MLB's desire to have its "Baseball Channel" on a standard tier on cable systems  ....

(sigh)