Flag on the Play?: The NFL’s Expansion to Streaming
In the past few years, the National Football League (“NFL”) has begun to strike exclusive deals with streaming services to broadcast certain games.[1] This started in 2021 when Amazon Prime received the rights to broadcast Thursday Night Football.[2] Earlier this year, the NFL moved a playoff game exclusively to a streaming service for the first time in a deal with Peacock.[3] And this season, the NFL is airing two Christmas Day games on Netflix.[4] All of these games were previously broadcast for free on national television but now require fans to pay a subscription fee to each service in order to watch.[5] Since the NFL’s antitrust exemption under the Sports Broadcasting Act most likely does not apply to games broadcast on streaming services, the NFL’s ability to sell each team’s rights collectively may rely on the fact that they do not overdo it with these deals.[6]
In the early years of the NFL, each team handled its own broadcasting rights by independently negotiating deals with television networks.[7] In an effort to ensure some teams did not drive others out of business in competing for broadcasting deals, the NFL began requiring teams to follow certain restrictions in telecasting their games.[8] However, in a suit brought by the Justice Department, the court held that some of the NFL’s restrictions violated the Sherman Antitrust Act, which prohibits unreasonable restraints of trade.[9] Years later, the American Football League (“AFL”) was formed and became a direct competitor of the NFL.[10] To adapt to this competition, the NFL wanted to begin selling all of its teams’ broadcasting rights collectively, sharing revenue equally among teams.[11] As this league-wide collective selling of rights violated the earlier court decision, the NFL eventually sought help from Congress.[12] In response, Congress enacted the Sports Broadcasting Act of 1961 (“SBA”).[13] The SBA provides that “[t]he antitrust laws, as defined in section 1 of the [Sherman] Act . . . shall not apply to any joint agreement . . . by which any league of clubs participating in professional football . . . sells or otherwise transfers . . . the rights of such league’s member clubs in the sponsored telecasting of the games.”[14] The NFL was therefore able to begin selling all teams’ broadcasting rights collectively as one package and has continued to do so ever since.[15]
As technology advanced, the NFL began broadcasting games through cable and satellite rather than free television, and the SBA became the subject of litigation due to the fact that it applies to “sponsored telecasting.”[16] Multiple courts faced with challenges to these types of deals acknowledged that antitrust exemptions must be construed narrowly and concluded that “the SBA does not exempt league contracts with cable or satellite television services, for which subscribers are charged a fee, from antitrust liability.”[17] Therefore, there is a strong argument that the NFL’s recent streaming deals do not fall under the SBA exemption from antitrust laws.[18]
Since the NFL’s streaming deals are likely subject to antitrust laws, the “rule of reason” test would apply to determine whether the deals amount to a violation by creating an unreasonable restraint on trade.[19] Under this rule, a plaintiff must prove (1) that there is a contract or conspiracy between two or more business entities, (2) that the entities intended to harm or restrain trade, (3) that the contract actually injured competition, and (4) that the plaintiff was harmed by the anti-competitive aspect of the entities’ conduct.[20]
In a case brought in 2016, In re National Football League’s Sunday Ticket Antitrust Litigation (“In re Nat’l Football League”), plaintiffs alleged that the NFL’s deal with DirecTV for Sunday Ticket harmed fans by eliminating competition and thereby violated antitrust laws.[21] Sunday Ticket is a package available through, at the time of the case, DirecTV for a subscription fee that enables fans to watch all out-of-market Sunday afternoon NFL games.[22] An analysis of the rule of reason factors for a suit based on the NFL’s recent streaming deals would be analogous to that in In re Nat’l Football League.[23] In In re Nat’l Football League, the NFL did not deny that the first two factors of the rule of reason test were satisfied, as they entered into contracts that intended to restrict trade.[24] The second factor is determined by looking at the impact on competition, which is even more apparent in the case of streaming platforms.[25] This is because, unlike games broadcast on Sunday Ticket, the games that are the subject of the streaming deals were accessible for free to all consumers before the recent deals.[26] For the same reason, the third and fourth factors would likely be satisfied because a restriction on output is an adequate showing of injury and plaintiffs would be able to prove that this anti-competitive conduct of the streaming deals harms them.[27]
Earlier this year, a jury found for the plaintiffs in In re Nat’l Football League; however, the judge overturned the verdict.[28] The judge acknowledged that there was evidence to support “a reasonable jury’s finding of an unreasonable restraint of trade at each step of the rule of reason.”[29] Rather, the reason for overturning the verdict was that it would be “impossible for a jury to determine on a class-wide basis that Sunday Ticket subscribers would have indeed paid less in the absence of Defendants’ anticompetitive conduct.”[30] As described above, the Sunday afternoon games offered on Sunday Ticket were not previously available on national television or otherwise for out-of-market fans.[31] However, this is not the case for the streaming service deals because the subscribers did previously pay less as the games were initially broadcast for free.[32] Therefore, it appears that the reason the plaintiffs were unsuccessful in In re Nat’l Football League would not be an issue in a suit over the NFL’s streaming deals. Since a jury found that the plaintiffs in In re Nat’l Football League proved each factor of the rule of reason test and the court acknowledged that this finding was supported by evidence, the likelihood that a case regarding the NFL’s streaming deals would succeed seems even higher.
As the number of deals between the NFL and different streaming platforms continues to grow, the cost for fans to be able to watch all NFL games is rising as well.[33] So, while the NFL has yet to face a suit regarding its recent agreements, it should “tread lightly.”[34] Pushing these deals too far will cause more and more people to take issue with the way the league sells the teams’ broadcasting rights.[35] While consumers are the obvious potential plaintiff, there is also the possibility that traditional television networks who are now losing out on deals or individual NFL teams who could make more money selling their own rights will want to protest the recent agreements.[36] Depending on how the NFL moves forward, it could be a matter of time before a plaintiff successfully argues that the NFL’s antitrust exemption does not apply to streaming deals.[37] The NFL is certainly aware of the possible consequences of moving too many games exclusively to streaming platforms, so it will be interesting to see how much they are willing to test this limit.
Footnotes
