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Pallone Throws Red Flag on NFL Exemption

In his first major policy speech as ranking member of the House Energy & Commerce Committee, Rep. Frank Pallone (D-N.J.) took aim at the NFL's antitrust exemption, saying "we need to ask whether the NFL’s antitrust exemption still benefits consumers." (He also mentioned he had issues with fantasy football, but decided to stick to the real thing).

Pallone was addressing a video competition forum at Duke University, and called for not redefining streaming video services as cable services, but he also said no conversation about how consumers will get content in the next decade could exclude one of the biggest content players around: the NFL (football games always dominate the weekly list of highest-rated programming).

He said as he studied the video markets, he kept being told there would not be big changes until 2022. he said that rather than that being some expected technological breakthrough, it turned out they were talking about when the NFL's current TV network contracts expire.

"To be fair, the exemption may still be a benefit to today’s market," he said. "But it is possible that it has become a multi-billion dollar handout to a special interest."

He pointed out that Congress had granted that exemption back in 1961 after a court had rules that the NFL's then-12 teams could not collectively negotiate TV contracts without violating antitrust laws, but suggested that was a call that should be under review.

"The hope was that giving the league negotiating power would mean more fans could watch the games they want," said Pallone.

Fast forward to 2011, he said, and the monopoly power the Congress granted has been used to hammer out a $27 billion broadcasting contract. "[T]hat’s a 60% raise from their previous contract," he said, a cost that "eventually get passed along to consumers. More than that, the NFL was able to put tight limits on the ways the networks could distribute their content."

He also said that although the exemption was for dealing with broadcast contracts--back when the was basically the only game in town--it is now used to negotiate cable, satellite and online deals.

Pallone said Friday that Congress had an obligation to review the impact of the exemption on consumers and fans and to what extend the NFL is dealing with other distributors as a monopoly.

The Sports Fans Coalition, which has been urging Congress to review, and reject, the exemption, applauded. ""There clearly is a trend among lawmakers. They are recognizing that sports leagues are using public subsidies to squeeze fans and consumers," said coalition chairman David Goodfriend. "Mr Palone should be congratulated for bringing to light leagues' abuses."

An NFL spokesperson had not returned a request for comment.

Last month, Congresswoman Eleanor Holmes Norton of the District of Columbia introduced a bill that would prohibit the NFL from receiving an antitrust exemption so long as it allows the Washington team to continue to use the name "Redskins."

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.