LOS ANGELES (CN) — The National Football League chose to distribute its Sunday Ticket package for "out-of-market" games though a satellite TV provider rather than a cable network to limit distribution of the bundle, an economist testified Tuesday at the league's antitrust trial.
Daniel Rascher, a sports economist at the University of San Francisco, was called as an expert witness by Sunday Ticket subscribers who claim they had to pay inflated prices to watch their favorite teams play on Sunday afternoon because the NFL colluded with CBS and Fox, the networks that show the games for free over-the-air, to minimize competition for their broadcasts.
If the NFL had partnered with a cable TV provider for its Sunday Ticket package, it would have been available to as many as 90 million potential customers instead of the 13 million DirecTV subscribers, Rascher told the jury in downtown Los Angeles.
Instead, the league made an exclusive deal with DirecTV to protect CBS and Fox's ratings for the popular Sunday afternoon games, he said. The more people who watch the networks' broadcast, the more money they can demand for advertising slots on the telecast. This in turn means that the NFL can extract a premium from the networks for their exclusive right to show the live games.
Between 2011 and 2023, the period that covers the class action price-fixing claims, Fox and CBS paid the NFL $23 billion for the Sunday afternoon games, which they broadcast through their affiliates in each NFL team's local market. In addition, they will broadcast one or two additional Sunday afternoon games of teams that are considered popular in that market.
DirecTV, over the same period, paid the league $15 billion to distribute the Sunday Ticket package, which includes all the games that aren't available on CBS or Fox in the subscriber's local market.
"No other professional sport has a similar exclusive deal with one distributor for out-of-market games," Rascher testified under questioning by Kalpana Srinivasan, one of the subscribers' attorneys. "Exclusivity makes Sunday Ticket very expensive."
DirecTV charged $295 a season for Sunday Ticket. By contract, in Canada, where regulations require the NFL to distribute Sunday Ticket through multiple outlets, the price of the bundle is just $149, or only $75 for a streaming subscription.
The deposition of New England Patriots owner Robert Kraft, part of which was played for the jury on Friday, illustrated the league's determination to limit distribution and keep the price of Sunday Ticket at a premium.
Kraft, who is also chair of the NFL's media committee, testified that a non-exclusive deal for Sunday Ticket would be a "non-starter" and that a low price for the bundle would devalue the league's deals with the networks. CBS and Fox wouldn't be paying the NFL what they're paying now if Sunday Ticket was more widely available, he said.
For the same reason, the NFL wasn't keen on an Apple offer for the Sunday Ticket package a few years ago, when the league was looking for an alternative to DirecTV, because Apple suggested bringing in 15 million to 20 million new subscribers.
"We're not looking to get lots of people," Kraft said in his deposition. "We want to keep it as a premium offering."
The league also didn't like an ESPN proposal in 2021 that would have lowered the price of Sunday Ticket to just $70 a season and that would have offered fans the option to buy a package for just one team, according to an email shown in court from the NFL's chief media and business officer.
Instead, the NFL made an exclusive deal with Google's YouTube TV, which charges $349 a season for Sunday Ticket on top of the standard subscription to the streaming service.
According to Rascher, without the NFL's anti-competitive practices and if Sunday Ticket was made available through multiple distributors, subscribers wouldn't have to pay anything beyond what they pay for their cable, satellite or streaming service.
The plaintiffs are seeking as much as $7 billion in damages, which under U.S. antitrust law is subject to mandatory trebling, putting the NFL potentially on the hook for $21 billion.
While DirecTV — which was the exclusive Sunday Ticket distributor during this time — is also a defendant in the case, U.S. District Judge Philip Gutierrez agreed to send the claims against the satellite TV provider to arbitration.
Three interrelated agreements between the teams and the NFL, between the NFL and CBS and Fox, and between the NFL and DirecTV — and now Google, whose YouTube TV since last year exclusively provides the Sunday Ticket package for residential subscribers — reduce choice and increase prices, the plaintiffs claim.
The jury will have to decide whether these agreements unreasonably restrain trade in violation of Section 1 of the Sherman Act and whether they allow the NFL to unlawfully monopolize the market for live video presentation of professional football games in violation of Section 2 of the Sherman Act.
Follow @edpettersson
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