>> i'm supposed to be at a foreign relations meeting. can i go ahead? >> you go first. then we'll give opening statements. >> i thank you mr. chairman and ranking member grassly. i thank you for letting me testify and thank you for making this hearing happen. senator bloomingthales advocating for consumers valuable partner to work with on this issue in the area rules and

regulations far often leave consumers holding the short end of the stick. i'm here to discuss sports blackouts and to explain why the continued use of policies failed to serve the interest of consumers, in this case loyal sports fans. i will truncate my opening statement just to say the simple fact is the rules as they are today only serve to benefit sports leagues and member teams at the expense of hardworking fan who is support them so loyally through money, time, passion. just last year during the nfl wildcard playoffs, fans of the cincinnati bengals, indianapolis colts, green bay packers came close to experiencing blackouts when those games hadn't sold out just days before the kickoff. the blackouts in these regions were only averted at the last minute local businesses bought up tickets to bring the total above the nfl required

threshold. there's something wrong with the situation in which the nfl can say to all those fans who made the league what it is today you better purchase tickets or else. the nfl and teams have been benefitted from myriad public benefits including exemption from antitrust rules, specialized tax status and tax that subsidize their multibillion sports stadiums. these benefits carry a responsibility back to the public and obligation to treat loyal fans with fairness. we've been chipping at rules for some time. there's still a lot of work to do. i'm happy mr. chairman to join you and introduce the fans act aim a aimed to eliminate the plaq blackouts. this ends blackouts in those circumstances when there are disputes between broadcasters, cable, satellite companies that

result in blackouts. we would strongly prefer the league take the initiative it's and demonstrate leadership by conforming policies and practices. let's be clear. should the league fail to act, we should do everything we can to stand up for consumers by advancing the fans act and other initiatives. i look forward to hearing from the witnesses on the following panel on ways we can work together to finally blow the whistle on sports blackouts once and for all. i'd like to say again mr. chairman, you come from a state which is huge as far as sports broadcasting is concerned. i particularly admire your courage on this issue. again, it's just unconsciousable to have average fans be deprived of the ability to see activity in a stadium they paid for. so, it's a no brainer in many respects. if we aren't able to succeed, it's frankly a triumph of

special interest over the public interests. i want to thank you for your leadership and thank the ranking member who as always have the greatest admiration for and respect. thank you. >> thank you so much senator mccain. i really appreciate you being here. i know it's a busy day and time of our closeding days of this session. i want to express my personal thanks for your leadership and courage in sponsoring this bill and working with me on it. i look forward to continuing our work together. i know you have another meeting. certainly you should feel free at any time to leave despite the powerful and rivetting remarks i'm about to give. i know you'll find it difficult to break away. >> thank you. thank you. i'd also like the to invite senator grassly to come to arizona for the super bowl and join many of his constituents who are smart enough to spend the winter with us.

thank you. >> thank you senator mccain. >> we are going to give opening remarks and then unfortunately going to have to take a recess because of the votes that are ongoing right now. we're going to come back at the end of those votes, we hope not long in a little while to continue the hearing at that point with the remainder of the witnesses. i will give my opening remarks. then senator grassly will give his. as senator mccain said, americans really love sports and they deserve to see them on their terms, not on terms that are described by the professional sports leagues in blacking out what they think americans should see rather than what americans want to see on their terms. the competitive teams of professional football, baseball, hockey, basketball leagues

represent a rich and vibrant part of our american culture. they contribute immensely to what makes america the greatest country in the history of the world. professional sports leagues generate billions of, thousands of jobs and critical economic activity in multiple industries. the super bowl is in fact the highest rated event on television. last year the nfl playoffs collectively accounted for ten most watched sporting events of the entire year. so these games are part of what makes america great. most of these games were carried on free over the air television. i believe we ought to keep it that way. sports fans power this media and measure channel degreesing juggernaut by purchasing tickets and merchandise, watching games on tv and supporting their teams through thick and thin. these billion professional sports leagues derive almost

half of their revenue from licensing tv rights to cable broadcasts and regional sports networks. some estimate those rights cost upwards of $17 billion a year. a large bill, a large cost that is increasingly passed on to consumers in the form of higher monthly rates for cable and paid tv. we have evidence of it at this very table when we've had recent hearings on some of the posed mergers. sadly, in return, fans in the public are often treated like a fumbled football. sometimes even a kicked football. when places like buffalo, new york fail to sell out, it's 74,000 person stadium, bills game is blacked out for local fans. when powerful cable companies and broadcasters fail to reach

an agreement, it's often the threat of holding sports programming hostage that is used to negotiate higher fees. and by the way, higher rates before consumers. even the internet can't escape blackouts. when fans live too close to their favorite baseball team but not close enough to actually watch them on television, they face online blackouts that force them to drive to the next city to catch a game. these blackouts are loathed by fans and rightly so. hated by consumers and by most industry stakeholders in the business of television. good news is we can do something about it. nfl, nba, mlb and nhl receive tremendous assistance, huge benefits from the congress in putting their brands, their sport and advertising before the american people.

this public assistance takes several forms but chief among them is the antitrust exception enjoyed by the four major sports leagues. essentially every company is bound by this price fixing. sports leagues are an exception. almost a unique exception to this antitrust rule. in the broadcasting act of 1961, congress granted a special exemption from the rules that govern other companies permitting professional sports leagues to coordinate and fix prices for negotiating broadcast rights. the country affords these teams their special status because of their special role in american culture. but that doesn't give them the right to abuse this privilege. the government certainly shouldn't endorse abusive behavior.

the public benefit come with a public trust. the fcc recognized that when they threw a flag in september on nfl antifan blackout policy. chairman wheeler of the fcc announced at that meeting and i'm quoting "federal government should not be a party to sports teams keeping fans from viewing the games. period." i'm grateful that all five fcc commissioners joined together in a bipartisan vote and repealed their blackout rule as i had called for their doing along with senator mccain, senator brown, congressman higgins and many more. but despite the fcc's actions in september, sports leagues and the nfl in particular retain the po tore blackout games through their private contract agreements. i believe these blackout policies are antifan and anticonsumer because they disregard the public trust that

the leagues have because of this special benefits and public benefits that they receive and because of the trust they have to their fans and the teams. and more over, these policies are in the front to direct and indirect investment made by federal and local governments that provided tax exemptions, enhanced public transportation, infrastructure to stadiums and exemptions as i've mentioned from the antitrust law. that's why i've joined with senator mccain to introduce s 1721 furthering access and networks for sports act, fans act. that's why i've joined in seeking support from my colleagues. i believe that support is growing that we have momentum on our side. this bipartisan bill leverages the antitrust exemptions that leagues enjoy against the -- to

instruct anyone carrying their games that they can no longer hold sports programming hostage for higher fees and cable rates. it would make more live games available on the internet. i want to make one thing clear. this bill does not use the heavy hand of government to force the sports leagues to do anything. it doesn't require them to end blackouts with the threat of fines or enforcement actions.

it does end the blank check from the government to the leagues and it takes away congress's implicit endorsement of blackout policies. fundamentally it represent s a bargain to the leagues. they can continue enjoying exemptions from existing law if they treat fans fairly. if they want to continue their blackout policy, government won't stop them. they'll no longer get the special public benefits and protection from antitrust enforcement they currently have. i want to know particularly that this hearing is a fact finding mission. we obviously are not going to pass this bill out of the senate or congress this year. i look forward to a lively debate and senator mccain and i are open and committed to working with stakeholders on their ideas for changes and

edits before reintroducing this bill again next congress which we expect to do. thank you very much. i yield to senator grassly. >> sure. i thank you mr. chairman. you've been very thorough in your explanation and purpose of the legislation. i particularly compliment you for take on a strong, powerful force you're taking on. that's what has to be done if you're going to make changes sometimes. i thank the witnesses who are here and look forward to your testimony. i think we can all agree on one fundamental notion. no one likes sports blackouts. the sport leagues and their member teams don't like them. television providers don't like them. of course sports fans definitely don't like them. a particular issue in iowa is that we don't have major league

teams so the entire state won way or another falls within the blackout territory of six different teams, cardinal, royals, twins, brewers, cubs, white sox. i can tell you the periodic blackouts are very frustrating to experience for fans of my state. so there is no question that blackouts are exacerbating experience and disfavored. the question is how to minimize blackouts and maximum benefits to consumers while respecting the rights of private parties to negotiate with each other at arm's length. on that note, i'll add one other comment. as we all know, the federal communications commission voted unanimously in september to eliminate sports blackout. i think as a general matter, the federal government shouldn't be in the business of mandating policies or parties that

otherwise negotiate. at the same time i think we need to be mindful of the flip side. more specifically as a general rule, the federal government shouldn't be in the business of mandating which provisions should and shouldn't be in public contracts. any time such a step is proposed, we should tread carefully. the chairman just said he's beginning discussions on this and consideration of this. i'm happy to join in that dialogue. i thank the witnesses once again and look forward to the hearing of the start of that dialogue. >> thanks senator grassly and for your excellent remarks. we are going to apologize, take a recess now. i want to thank the witnesses the for your patience. we'll be back literally as soon as we can. we'll take the second panel at that time. again, my thank and apologies. we'll be right back.

thank you. we're back in stegs. i'll recognize the senator for an opening statement, and then we'll proceed to the second panel of witnesses. >> thank you, mr. chairman. first of all, i want to start by thanking you, senator blumenthal

and senator mccain, for bringing this important matter to the attention of the committee. i think you've raised an important question. no one really likes sports blackouts, at least of all the public, yet as we all know congress has permitted professional sports leagues to operate outside of our antitrust laws in order to have them. we've done so on the theory that without blackouts fans might stay home and watch the game on tv. well, the ticket sales necessary to sum port the team might dwindle as a result. that economic assumption has now been called into question. the proponents of the bill argue that there's no evidence to support it. fans, they say, will attend games if the ticket price is right regardless of whether they could also watch the game at home as an alternative. at the moment, however, i'm not yet prepared to support the fans' act without additional

study on my part. i am particularly concerned that the bill might unsettle some legitimate contractual expectations the sports leagues have bargained for with broadcasters without an appropriate phaseout period. i'd also like to take a closer look at the economic evidence on both sides of this issue. but i agree wa that the issue certainly merits the attention of congress. professional sports leagues have asked for and have received exemptions from the competition laws that most other american businesses are required to comply with. those antitrust laws are an important and effective tool for ensuring free markets and protecting low consumer prices. as ranking member of our antitrust subcommittee i take a green interest in ensuring that our competition laws are functioning well and having their desired effect of protecting competition. for that reason, i'm certainly open to examining in the future whether the antitrust exemptions

enjoyed by professional sports leagues in their current forms rest on sound justifications and, if not, how congress might act to modify those exemptions. thank you very much, mr. chairman. >> thank you, senator lee. i'm going to ask the next panel to please come forward and take your seats. and actually before you take your seats, why don't i swear you in, which, as you know, is the custom of this committee. do you affirm that the testimony you are about to give is the truth, the whole truth, and nothing but the truth so help you god? >> all: i do. >> thank you. by way of introduction, let me give a brief bio of each of the witnesses today. william lake is the chief of the media bureau at the federal communications commission. he has served as the dtv

transition coordinator for the fcc, counsel to the administrator at the environmental protection agency, and principal deputy legal adviser at the u.s. department of state. he was also a partner at wilner, cutler, pinkering, hale, and door. david goodfriend is the founder and chairman of the sports fan coalition, the largest multiissue public policy organization for fans. he's current through president of goodfriend government affair, and he served as deputy staff secretary to president clinton and media legal adviser to commissioner susan ness at the fcc. he also previously served as vice president of law and public policy at dish network. sally greenberg is the executive director of the national consumers league. she testified numerous times before congress on consumer protection issues from 2001 to 2007. she worked at the consumers

union. she served for many years on the board of directors at the alliance for justice and h.a.l.t., an organization that focuses on protection of consumer rights in their interaction with lawyers and the legal system. gerald walden is a partner at cubington burling representing a range of technology companies online, social and media company, and communications clients before the fcc, the ftc and congress. before joining covington, jerry served as senior counsel on the house subcommittee on telecommunications and worked on the committee staff for over ten years. thank you all for being here today. let's begin with mr. lake. >> good morning, senator blumenthal and senator lee. i'm bill lake, chief of the media bureau at the federal communications commission. i'm pleased to appear before you today to discuss the recent fcc action to eliminate our sports

blackout rules. a built of history may provide useful context for our action. our sports blackout rules specifically prohibited cable and satellite operators from airing any sports event that had been blacked out on a local broadcast tv station pursuant to a private blackout policy adopted by a sports league. the commission adopted a sports blackout rule for cable in 1975, finding that the rule was necessary to ensure that cable importation of distant signals would not reduce ticket sales and thus lead sports leagues to refuse to sell the rights to their events to distant stations which could, in turn, reduce the availability of sports programming to tv viewers, which was the principal concern of the commission. we later adopted similar rules for satellite carriers and open video systems. as you know, the commission voted unanimously to eliminate

these sports blackout rules on september 30th this year, finding that they were unnecessary and outdated today. the repeal of the rules took effect on november 24. the commission's action followed an open and transparent public process that began in 2011 when the sports fan coalition filed a petition for rule making with the commission. after careful review of the comments we received in the proceeding, the commission found that significant changes in the sports industry since the rules were adopted had eliminated the justification for the rules. first, for the nfl, the only league for which the commission's sports blackout rules continued to be relevant, ticket sales are no longer the primary source of revenue. the massive popularity of pro football means that the primary source of income for the nfl has shifted to television.

with tv revenues now the nfl's main source of revenue approaching $6 billion this year, total nfl revenues reportedly exceeded $10 billion in 2013. second, the increased popularity of nfl games has brought fans to the stadiums in numbers that make blackouts exceedingly rare. in 1975 almost 60% of nfl games were blacked out because they failed to sell out. last year only two of 256 regular-season nfl games, less than 1%, were blacked out, and no games have been blacked out so far this year. moreover, in recent years, blackouts have affected only a few nfl markets such as buffalo, cincinnati, and san diego. finally, the commission determined that the impact on consumers of eliminating its

sports blackout rules would be minimal. the nfl's existing contracts with the broadcast networks extend through 2022, keeping games on over the air stations through at least that time frame. beyond that, the commission found it is highly unlikely that the nfl would find it more profitable to move its games from over the air stations to pay tv in the absence of the sports blackout rules. in conclusion, i would like to note that i am limiting my testimony to the commission's decision and its rationale. elimination of our rules does not prevent the sports leagues from continuing to have a sports blackout policy, and the commission does not take a position on whether congress should eliminate or modify existing antitrust exemptions that allow leagues to have such blackout policies in the first place. again, thank you for the opportunity to appear before you today.

i will be happy to take your questions. >> thank you, mr. lake. mr. goodfriend. >> thank you, senator. thank you, senator blumenthal, senator lee, and senator klobucar, members of the committee. we appreciate very much the fact that you've invited sports fan kos ligs to testify. my name is david goodfriend and i'm the founder and chairman of sports fan to co-ligs, the largest fan advocacy organization in the public policy arena. founded in 2009 we have tens of thousands of members across the usa and are led by a bipartisan, diverse, and seasoned board of directors. the government should not subsidize or support anti-fan activities by professional sports leagues, period. when a sports league receives a public benefit, the fans should get a fair return or the subsidy should go away. that is why sports fans coalition is proud to have led the successful effort to end the fcc's sports blackout rule. the nfl's blackout policy prohibits a local broadcaster

from televising a game when tickets don't sell out 72 hours before kickoff. the fcc rules you just heard bolster that anti-fan policy by requiring paid tv companies likewise to impose such blackouts. sports fans coalition along with our friend from national consumer lesion and others -- our efforts culminated in a unanimous 5-0 vote this past september 30th to end the 40-year-old anti-fan sports blackout rule. and we could haven't done it, senator blumenthal, without support from you and senator mccain and others, so thank you for that. that was a great moment for fans, but the problem is the nfl's policy remains in place. the nfl should end its local blackout policy once and for all effective immediately. fans hate local blackouts, and you know this. but just listen to two fan who is told the fcc how they feel. dennis steinmiller from new york said, "i'm a disabled vietnam

vet. i also suffer from posttraumatic stress disorder. i'm unable to attend the bills games because of my disabilities. watching the bills on tv is one thing i look forward to every year as well as to help me with my ptsd. please put all the games on tv for me and the other who is gave much of ourselves for our country." or listen to mary bash from florida, who said, "for people like me who are disabled, this blackout rule is discrimination against people with disabilities. i can't physically attend a live i'm stuck at my home with only the television to bring me to sports or anything else that i enjoy watching. the nfl blackout policy from the '70s does not reflect the times of today. technology has changed. the nfl's market has changed. where do they think all that money comes from? it is us, the consumer, who buys the products from their advertisers. it is us, the taxpayer, who built most of those arenas. it's us, the american citizen, who continues to foot the bill." real fans, real comments

submitted to the fcc. but the fans aren't alone. we saw economists from stanford, michigan, and other institutions submit detailed declarations to the fcc explaining why the nfl's blackout policy doesn't even serve its stated purpose of getting more fans in seats. listen to other professional sports leagues. we submitted data, depositions from the commissioner of baseball, the commissioner of hockey who said under oath we got rid of our blackout policy because it doesn't work. and the fcc agreed with all this when they got rid of their own sports blackout rule. now the nfl should do the right thing. it should listen to fans, economists, other leagues, the commissioners of the fcc, the members of congress, and end its local blackout policy. failing that, congress should pass the fans act. the antitrust statutes currently shield leagues from liability when imposing local blackouts. it would eliminate the get-out-of-jail-free card. the sports fan coalition also

believes fans shouldn't be used as pawns during contractual disputes between big companies. the fans act would take care of that too. finally, i'd like to make clear that sports fans coalition fully supports putting as many games as possible on free over the air broadcast tv. the migration of sports off broadcast tv has created problems. just look at los angeles where time warner cable took over the television rights of the l.a. dodgers, and what happened? 70% of l.a. fans could not watch their dodgers play in a great season because they didn't have time warner cable. so when major league baseball and the l.a. dodgers have received so much public subsidization, fans should have a better access to those games and putting them on broadcast is one way to do that. perhaps a revised fans act could require all sports leagues to maintain just a certain amount of games on free over the air tv so that fans have access to at least some games. thank you, and i look forward to answer anything questions. >> thank you very much, mr.

goodfriend. miss green berg. >> yes. good morning, senator blumenthal, senators lee, klobucar, and franken. my organization, the national consumers league, was founded in 1899. we are the nation's pioneering consumer organization and our nonprofit mission is to advocate on behalf of consumers in the united states and abroad. we very much appreciate you inviting the consumer point of view for this very important bill, s-1721. i'm delighted to see my fellow minnesotans here because i grew up going to minnesota vikings games and minnesota twins game. i'm an avid fan. i love watching professional sports. but like me, millions of americans define themselves in part by the teams they support. however, the professional sports leagues are also multibillion-dollar businesses that benefit from a multitude of public subsidies. these take the form of exemptions from federal antitrust laws, tax breaks, and

public funding for stadiums, infrastructure sum port for municipalities and blackout policies that benefit the leagues and their broadcast partners. as the leagues enjoy huge profit, taxpayers are right to question what they receive in return for these public benefits. for example, a harvard university study recently calculated that 70% of capital costs of national football league stadiums have been provided by taxpayers, whether they are sports fans or not. a 2012 bloomberg study estimated the tax exemptions on interest paid by municipal bond issued for sports facilities cost the u.s. treasury $146 million a year. and over the life of the $17 billion of exempt debt issued to build stadiums since 1986, taxpayer subsidies to bondholders would total $4 billion. lavish public subsidies for stadiums aren't the only way that taxpayers subsidize professional sports.

the rising cost of acquiring sports programming is also a significant driver of rising cable bills, which have gone up more than three times the rate of inflation since 1998 due to the wye spread practice of channel bundling, the increasing costs of sports programming are passed along to all cable and satellite subscribers regardless of whether they actually watch sports. sports programming costs are also a major driver of the fights between broadcasters and cable television providers over retransmission fees that have contributed to the increasing number of programming blackouts. in return for the government largess lavish on sports leagues, consumers are right to be outraged when essential services are cut to subsidize unaffordable tickets at publicly funded stadiums. cable and shiite subscribers, fans and nonfans alike, are angry that their bills go up due to ever-higher sports programming costs when the games even make it on air. the game is clearly rigged in

favor of the professional sports leagues. taxpayers are getting the short end of the stick. so it is indeed time for congress to step up and begin to level the playing field. that's why nc slshgs proud to support the fans act. the bill would benefit consumers in a number of ways, by reining in cable rate hikes, reducing incentives to blackout games, and giving consumers access to online game broadcasts. to elaborate, the bill commissions require that they not black out games as a result of contractual disputes with cable and satellite companies. ncl believes consumers should not be used as pawns in tis puts over retransmission fees, thus the bill helps to reduce the insensitive to use blackouts as a negotiating tactic and promises to reduce the frequency of these programming interruptions. second, the bill eliminates the antitrust exemption for local sports blackouts in the event the games do not sell out

through tickets np will benefit millions of fans in smaller markets such as buffalo, many of which have larger stadiums but smaller populations and thus are less likely to sell 85% of their seats. and third, the bill benefits consumers living in teams overlapping broadcast territories by conditioning the league's antitrust exemptions on the provision of alternative platforms like the internet. this would particularly help major league baseball fan who is live in states like arkansas, connecticut, nevada, oklahoma, that are overlapped by separate clubs in their home television territories and thus subject to local blackouts. finally, the bill corrects a historical anomaly by bringing major league baseball under the auspices of the clayton antitrust act in the same way as the nfl, nba, and nhl are currently treated. in doing so, the statutory conditions placed on existing antitrust exemptions by this bill would also apply to mlb.

in conclusion, i'd like to reiterate our strong belief that the fans act addresses some of the unfair and unbalanced subsidies and preferential policies like antitrust exemptions that professional sports leagues enjoy at the expense of taxpayers and sports fans alike. thank you very much. >> thank you very much, miss greenberg. mr. walgren. >> good morning, senators. members of the committee. my name is gerry wauld ren and i'm here in my christmas ti as outside counsel to the national football league on television-related matters. i appreciate the opportunity to discuss the nfl's commitment alone among the professional sports leagues in ep suring that all of its games are available across the country via free over the air television. for more than five decades the sports broadcasting act has been the key component in this strategy, enabling the nfl, major league baseball, the nba, and the nhl to put their games on broadcast television. in the nfl's case, the league

has agreements to put all 256 regular-season games and all playoff games on free tv. that is a claim that no other sports league can make about all its playoff games, let alone all its regular season games. quite simply, the sports broadcasting act is working to benefit fans in the public interest. for this reason, the fans act, which attempts to dictate business decisions, would ultimately be harmful to fans. for continue tech, the nfl strategy serves three main goals. first, because nfl teams generally play once each week, the league tries to make each game a special event and obtain the widest possible audience for those games. second, the league wants to encourage strong fan support in each local market. and third, the broadcast television agreements generate substantial revenues that are shared equally by the 32 nfl clubs, thus clubs in buffalo, green bay, or minneapolis

receive the same amount from tv contracts as teams in the new york city and chicago media markets. to month pro-mote these goals the nfl has long maintained the blackout policy, which is incorporated into the league's contracts with the broadcast networks. the hallmarks of informal. in games are full stadiums, excited crowds, and competitive games. soldout games improve the experience both for fans in the stadium and for those watching on television. increased attendance at games also helps to support local jobs, businesses, and taxes. and the league's business judgment is that it serves these objectives well. while some may disagree with the league's television policy, strong television ratings matched with high attendance demonstrate that the policy is working. the debate about blackouts of nfl games should be seen in context. nfl game blackouts are at an

all-time low. last season only two games were blacked out across the league. this season there have been no blackouts. so over the past season and two-third, with almost 450 nfl games played, there have been just two blackouts. this reduction reflects adjustments in the nfl's blackout policy that the league has made over the years to promote both game attendance and viewership. the sports broadcasting act encouraging broad-based game viewership. congress passed a law in 1961 to enable league agreements with broadcast networks and a sharing of revenues. under the fba, the nfl has created the most pro consumer television plan in sports today. the nfl has maintained its commitment to broadcast television, even extending its contracts to 2022 with its

broadcast partners and trends by the other sports leagues off of free tv and towards pay television. the fans act proposes changes to the sba that would ultimately harm fans by creating uncertainty around the future of sports on free television. a possible result would be to migrate popular sports programming from free broadcast television to pay tv. this committee has cautioned against such a move. the act propose untenable commissions on the trust provisions. the bill would deny a sports league the anti-trust exemption if third parties such as a television station or cable or satellite company have a contract dispute. no business can plan its operation under laws that could change at a moment's notice due

entirely to the actions of third parties. in conclusion, nfl television policies made pop by the sba bring fans across the country a wide range of outstanding television content each week. the nfl and the other sports league's practice of tell advising games and these policies should not be allowed. i'll take questions. >> thank you. i have some questions that i'm going to pose to you and then yield to my colleagues. i particularly am grateful to the head of the judiciary committee for being here today. you mentioned the uncertainty of fans. the reason for the uncertainty right now is the potential

deprivation they suffer from blackouts. there may have been few this year but the potential for blackouts is what creates their apprehension that they may be deprived of access to these games. i wonder whether you have additional evidence that was not presented to the fcc that you have to present to this committee or whether it's your contention that the fcc failed to consider the evidence that you presented in reaching its conclusion. >> senator, i have two comments. one, it was mentioned that the sports economists provided a study. dr. hellsinger said that an important reason why the nfl keeps games on broadcast television is because it's able to control its product. there was conflicting evidence before the fcc. i respect what mr. lake said that the fcc made one

conclusion. the nfl's business judgment is that this is very important, but i think it misses sort of a larger point. senator, with respect to your constituents, they have seen every giants game this year, last year, the year before, the year before that, all the way back to the early 1990s. if you look at the knicks games, they have to pay $80 a month to get their knicks games, their rangers games and to get almost all their yankees games. but they have seen every one of their giants games and i dare say every one of the jets games going back to that same time frame. i recognize that there are blackouts of nfl games, they are few and far between. but the nfl's commitment to broadcast television stands out among the other sports leagues. >> but the threat continues to exist in connecticut and around the country that they will be deprived of access to those games, and if the reality is that they are seeing the games anyway, why continue with the threat of blacking them out?

it seems to me that your contention is that the blackout policy is essential to your business policy. in fact, it's the anti-trust exemption that's essential to your business policy. without the anti-trust exemption, you wouldn't be able to negotiate the enormously lucrative broadcast agreements that you have and the revenue sharing pacts that you enjoy, and as a condition for receiving that very public and unique benefit, why not eliminate the threat to connecticut consumers and others around the country, fans across the united states, that simply because of a failure beyond their control of big business interests to reach an agreement, they may be deprived of access. >> i recognize that the sports broadcasting act gave an exemption to all the sports

leagues and the nfl has used that exemption very responsibly by putting overwhelmly its games on television. to be clear, major league baseball testified last year before the senate judiciary committee, the only reason why the world series is on fox television is because of the sports broadcasting act. it ensures that broadcasters -- and i would say if you look at the nfl in comparison to the other leagues, i think the league as used its anti-trust exemption very responsibility blee by putting so many of its games, all of its regular season games and all of its playoff games on free television. i acknowledge that last year there were two, this year none so far, that they are few and far in between, but the overwhelming number of games are on television and we think that's a responsible use of the sba provision. >> and the overwhelming number of games also are sold out in the stadiums, are they not? >> yes, that's correct. >> so why the blackout policy?

>> we think over the long term it has served to promote that benefit. it's easy to remember that in the late 1990s, 25% of games actually were still being blocked out. >> in fact, aren't there other actions that the teams regularly take during the 2012 system season, the miami dolphins bought tickets to prevent a blackout for seven of its eight home games, the jacksonville jaguars have covered approximately 10,000 seats at ever bank field with tarp since 2005, reducing their stadium capacity from 76,000 to 67,000. the teams regularly take action to fill their stadium, giving away tickets, selling them for less than face value, so as to avoid blackouts. why not eliminate the blackouts? >> i think that is profane.

i think it's evidence that the clubs actually understand. the nfl doesn't want blackouts. the clubs don't want blackouts. senator lee and grassley both made that point in their opening statements. no one likes blackouts and that includes the nfl. so i think the examples that you have shown are clubs trying to respond and the league has adjusted its policy to be more responsive. we think over the long term it has served and it's in the business judgment of the league that has served it, but as that shows, clubs take extraordinary examples to avoid them. >> i'm going to continue this conversation with you and the other witnesses but now turn to senator kroeb achar. >> thank you. i thought i'd start with you. the blackout rule was put in place in 1961, is that right? >> the sports broadcasting act was adopted in 1961. the fcc's rule was put in place in 1975. >> most of the money made by sports tickets came from ticket

sales, but today nfl games are consistently among the most popular television and programs, certainly in my state where we're proud of the vikings and with that comes a significant increase in revenue. cost of tickets has significantly increased. it's a big expense. do sports teams need blackout rules the same way they did half a century ago? if not, why do we have the same rule? >> no question that those facts are all right. this is in the record. it may surprise people that as much as a quarter of the revenue of the nfl still comes from ticket sales. ticket sales still sort of remain important. the nfl has a balance. they want to have popular games on television and they want to have a stadium that's full. you can imagine the scenario in which the other sports, they only play 162 games or 82 games, so every game as not a special event. in the nfl, they work hard to make every game a special event, so they try to balance that

maximizing the full stadium capacity with the engaging of the fans on television. it's a balance and they have, frankly, adjusted that balance. we think it encourages fan attendance and fan engagement over television. >> the fcc voted to repeal blackout rules which prevented cable and satellite operators from airing sports events blacked out on a local station. is there anything preventing the nfl and other sports leagues from negotiating blackout rules directly with cable and satellite operators now? >> what prompted the commission's action was the change in the sports industry since 1975 when we adopted our rule, principally the two facts that the senator has noted. in 1975 the principle source of revenue for the nfl was ticket sales, and over 60% of the games

failed to sell out. now those facts are both reversed. tv revenue is the principle source of revenue for the nfl, and most games are sold out. what the commission concluded was that there was very little risk that elimination of the fcc's rule would lead the nfl to move its games from broadcast television to pay tv. the objective of our rule from the outset was not to maximize the revenues of the sports leagues or of the broadcasters, but to try to protect the right of viewers to see games. at the time the rule was adopted, it was thought that the rule would help to keep games on broadcast tv by eliminating the risk that if a cable operator, for example, reported a station, that might lead the leagues to fail to sell the games to that distant station, and more viewers would lose the right to

see the games. we concluded because of the changes in the industry, that risk no longer existed and therefore the rule was outdated. i should note that to your last question, the commission's action simply eliminates the support for the private blackout policies that was previously in the commission's rules. that action does not prevent the leagues from continuing to implement their blackout policies as a private matter without fcc support. although, as i say today, blackouts are increasingly uncommon, the risk of blackouts continues. >> thank you. does anyone want to add anything to that? any other witnesses? >> thank you, senator. i think this discussion would be helped by understanding how we got the law in the first place. we're talking a lot about the anti-trust exemption as though

it's always been there. let's talk about how we got here. in 1953, the united states department of justice anti-trust division succeeded in litigation with the nfl on anti-trust. are you commenting on the packers? >> we are commenting. we just noticed it. it might not have been your smartest move given that half of the senators here are from minnesota. >> i realized that as i started talking. but we gave you brett favre. >> we're not at all distracted, are we? >> i was just thinking of senators finegold and cole. they enjoyed that. >> but we are here now. continue answering. >> i love the color purple. >> all right. >> 1953 u.s. versus nfl, the department of justice succeeded in winning litigation against

the nfl for violating anti-trust laws. why? there were four things. number one, the league restricted the broadcast of games locally during a home game. number two, the league restricted the broadcast of an away game in the home market. number three, same restrictions with respect to radio, and number four, a kind of blanket power given to the nfl commissioner to restrict broadcast all over. t three of those four violate anti-trust laws. one, the restriction of broadcasting games locally during a home game, the judge allowed to stand. that was 1953. in 1960, a new football league, the american football league, came along and did a deal with abc television network, whereby it pulled all the teams' broadcast rights and did one nationwide deal, so the nfl tried to do the same thing. it enter the same type of deal

with cbs. no, said the court. that violates our 1953 order. what did the nfl do? it came right here to this committee, the united states congress, and it said, we need your help. how can it be fair that the afl gets to pool its broadcast rights but we don't, that's not fair. and congress agreed. the sports broadcasting act of 1961 was expressly designed to overturn the 1953 eastern district of pennsylvania decision, while at the same time preserving that court's decision to allow local blackouts. that's how we got here. it was to overturn a case brought by the united states department of justice during the eisenhower administration. what does that mean for today's discussion? the court in 1953 and congress in 1961 both premised their decision on the importance of local ticket sales, the importance of maintaining the

economics of the league. that was over a half century ago. it's perfectly legitimate for this committee to revisit the statute from 1961 and ask, do the same economic principles apply today? question at sports fans coalition think they don't. any time the government gifts a league to a sports league, it's legitimate to ask, does the gift still make sense? it is after all a gift from the american people to a private, multi-billion dollar organization to get an anti-trust exemption for your type of business practice. >> thank you very much. my time is expired. >> senator franken. >> the threat of blackouts during retransition contract disputes is especially concerning to me because that could potentially affect fans of

any major sports league. such contract negotiations seem to be growing increasingly contentious each year. last year, for example, negotiations between time warner, cable and cbs led to a month-long blackout of programming that affected millions of consumers. as you know, comcast proposed the acquisition of time warner cable as currently being reviewed by the fcc and the department of justice. it's a deal that would unite the two largest cable operators in the country and, in my view as i've made very public, it should be rejected. i think it's simply a bad deal for consumers. i don't believe it would improve service or choice, and i believe it will result in higher prices. a combined comcast time warner cable company would exert particular power in the sports

programming market. you've noticed that both companies have long track records of trying to prevent individuals who don't subscribe to cable from viewing games. can you explain what that means and tell us what you think the implications of the proposed acquisition deal would be for sports fans. >> thank you, senator franken. let me note that sports fans coalition is on record opposing the comcast time warner cable merger and filed a petition to deny the fcc to that effect. your question regarding the effect on sports, my friend from covington mentioned the economist who opposed us in the blackout proceeding, mr. singer also authored a paper that we cited extensively in your pleading that said when a cable company owns a regional sports network, the tendency is for fans who don't subscribe to that cable company to not be able to

see the game. that's the trend. as opposed to let's say on independent regional sports network that's carried more widely on other providers. mr. singer and his colleagues went on to conclude that the bigger the local cable company, the worse the problem gets. and that actually just makes sense intuitively. if i'm going to give up revenue by not sharing my sports with you, the smaller you are, the bigger i am, the less of a loss it is to me. so that was the conclusion of singer etal. in the context of the proposed mirj merger, take a market like los angeles. los angeles has time warner cable and as i mentioned time warner cable owns a regional sports network. the merged entity would acquire ruffle a quarter million new subscribers from charter. what does that mean? the local cable company is getting bigger. as a result, the trend we already see today when time warner cable owns dodgers games and won't see to it to those

games are seen by everybody, it's going to get worse. that's why sports fans coalition has chosen to oppose the merger. >> thank you. i'm going to get on a little bit different subject. m we spoke about the sports leagues including the nfl enjoy. as a country we provide such enthusiastic sports for professional competitive teams at least in part because we recognize all the ways in which they can enrich our culture. yet, we have a team in the nfl that continues to call themselves by an offensive name, a racial slur. the use of the name is hurtful and insulting to so many people in our country, including in my home state of minnesota, where

we have a large and vibrant native american community. i've heard from tribal leadership in my state who understandably find this name offense and harmful, as do i. a simple step would be for the nfl to address the need for a name change. what is the league considering doing at this time? >> senator, i recognize the importance of your question. i am not in a position to answer it. i advise the league on television matters but i will consult with them and get back to you with an answer. >> i would appreciate that. thank you. mr. chairman. >> thank you, senator franken. just to continue with some of what we were discussing and i think mr. lake addressed part of this issue. mr. waldron, i guess it's your contention that the fcc failed to consider certain evidence and

therefore reached the wrong conclusion by a 5-0 vote? >> sure. i'm not -- it's an assessment of uncertainties and mr. lake cannot prove that he's right anymore that i can prove that mr. lake is wrong when he said the fcc's prediction was changing the sports blackout rule will have no effect on what the nfl does with respect to it. their judgment in looking at the evidence and looking at the sports economist study and the dr. singer study, they said, no, that was their judgment looking at the evidence. the nfl has been at this for 50 years. it actually wants to maximize the number of people in the stadiums. >> things have changed over that 50 years. >> i understand that, and they watch this every week. the nfl watches this every week. >> isn't the present policy in effect to the disadvantage of certain cities over others,

certain fans over others. for example, the ralph wilson stadium in buffalo represents 28% of the population in this city, that stadium can hold 28% of the population compared to the capacity of soldier field in chicago which represents 2% of the population of that city, the stadiums in the new york area probably even a smaller percent which may be the reason that they are regularly filled. but the threat is there for all fans -- new york, connecticut. maybe it falls more heavily on buffalo, cincinnati, san diego, tampa bay, where economic recession, population trends may have made the markets less robust. isn't is there a discriminatory

aspect here and as as far as it frankly hits the elderly, disabled, and folks who can't attend? >> two parts of that answer. first is i think the league has recognized the different stadiums and different clubs are in different situations which is why it has adopted and adjusted its policy and adopted more flexibility and the flexibility that was adopted in 2011 or 2012, frankly, it has benefitted the very clubs that you mentioned, tampa bay and cincinnati and san diego. that's one of the reasons we have not seen that. to the point about the earlderl and we've all seen the studies -- >> if i may and i'll let you finish on the elderly and disabled and people of modest means who may not be able to afford tickets right now. if you're worried about filling the stadium, why not just lower the ticket price? that's the way the market normally works. you have the immense benefit of

an exemption from normal market forces in the anti-trust exemption. why be greedy about it? the anti-trust exemption are the keys to the kingdom. they are the gold mine for you. it seems to me you've taken -- you continue to take a step too far. isn't it in your own enlightened self-interest to eliminate the blackout legislation? >> all the sports leagues enjoy that. congress passed it to benefit the public by putting sports on television. that was the judgment when congress passed it in 1961. it has been a benefit to the league. i don't want to suggest otherwise. we recognize that. but it's also been a benefit to the public in that regard. the dr. singer study that was cited earlier, he actually found that it actually does have a downward pressure on prices for the very reasons that you cite which is if you want to put people in the seats you're going to lower your prices and you actually have an incentive. because of the blackout policy,

clubs have that intensive. but i don't want to lose sight of your very important comment about the elderly and latinos. many of those same people can't afford cable, yet to watch everieevery sabres game they're going to have to pay $80 to $100 a month. they certainly watch all of their away games. every buffalo bills away game is on free over their television in buffalo. so we think that the league actually has used its benefits under the sba responsibly and to benefit the public. >> i'm going to ask some of the other witnesses to respond to the points that you have made very well. mr. lake, in essence i think you've heard mr. waldron say that the fcc could and would

have adopted a conclusion. >> we held a proceeding in which we received extensive comments from a wide variety of parties including conflicting presentations and the conclusion of the five unanimous commissioners was that based on that record, elimination of our sports blackout rule would not be likely to lead the league to move their games off of over the air television and onto pay tv. the commission noted that the contracts today extend through 2022, so that ensures that they will remain on over the air television at least within that period. >> so the fcc in essence, to put it from the fans' perspective, found no uncertainty as to what would happen? >> they certainly concluded that the very likely result is that this would not take games off of over the air television. >> mr. goodfriend, do you agree with that conclusion and particularly as it affects the

smaller cities and fans in those cities and the threat to fans in the larger cities as well? >> senator, you'll note from our prior conversation i am wearing a green bay packers tie so i care about small market teams very much. i think it's a little of a red herring to argue that all this is made possible solely by the united states congress in granting the anti-trust exemption. the nfl is not running a charity. they are a highly profitable multi-billion dollar organization. they put their games on television because that's where the money is. they put their games on broadcast because that's where the audience is. the day that pepsi and budweiser and gm stop paying top dollar for top ratings on broadcast, we'll see a change. until that day comes, the nfl's maximizing its revenues as any rationale business actor would. professor rod ford at the university of michigan, in the

submission he made that the fcc pointed out that even under the most exotic assumptions, the threat of a local blackout might put a few thousand more people in seats on any given sunday. contrast that with the loss of revenues from taking a game off broadcast, it would be in the millions, perhaps tens of millions. professor ford concluded the rationale economic actor would say i'm not going to give up all that money on the broadcast tv side just to put a few thousand more people in seats. that's why intuitively you could say there really is not going to be too much of a connection between putting games on broadcast and having a local blackout policy or anti-trust exemption that sus stains it. rather, the league will make money. if it thinks it's going to make more money putting it on broadcast or putting it on espn

as with monday night football or on thursday with the nfl network, it will do so. it already has. it's important to differentiate between what the league gets between its local blackout policy and broadcast tv. i think it's a red herring to threaten taking games off broadcast unless we get this anti-trust exemption for local blackouts. the numbers just don't add up. >> thank you. miss greenburg, what does this mean for ordinary consumers and fans? how are they impacted? >> well, there's a problem with fans being able to afford to go to games. our figures are that from 2010 to 2013 the cost for a family of four to attend an nfl game increased by 8% to $459. that's out of the pun intended, the league of many, many

families. so of course they turn to free broadcast to get access to their games. i'm curious about something that mr. waldron has said on several occasions, that the nfl has evidenced a lot of flexibility about the blackout rule. i wonder what evidence there is of that. i think what we're really talking about, as david has just pointed out, it's enormously profitable, not an act of charity on the part of the nfl. it's enormously profitable for the league to have games on broadcast television and that's why they do it, not because they're so flexible. i don't understand, as you've pointed out, i don't understand the fighting this blackout rule issue when it doesn't seem to be a problem for them and they could be part of the solution instead of being part of the problem. for fans it's obviously critically important for those

fans who can't make it to the game because of physical disabilities, the costs are too high, because they have kids at home, i'm puzzled by why the nfl is fighting this very i think sensible proposal. >> mr. waldron, has any consideration been given within the nfl? i know you can't speak for other leagues, but within the nfl to changing the blackout rule? >> actually, after the fcc repealed its rule in late september, commissioner goodell said that he was going to study it. my understanding is that the owner's committee is studying this issue. >> is there a time line for it possibly actually reversing the rule? >> i am not aware of any time line for that. i can get back to you on that. >> if you could let us know whether there is any time line for the committee reaching a conclusion, i'd appreciate it. what will be the determining

factors in the consideration that the owners -- and they're the ones to decide? >> yes, yes. >> what will be the determining factor in their decision? >> it's a really good question and i will come back to a comment that was just made, an economist study that said blackouts actually increase ticket sales by 4,000. that's the league's contention. so that's the balance that the league has faced which is, we want to have fans' attendance and games on television. that's the balance that we face and it has been adjusted over the years in order to frankly take care of some of the large stadiums that were out there and lots of consequences. so that is the consequence which is the incentive for fans to attend as well as maximizing broadcast television. we don't like blackouts. no one likes blackouts, but they look for that balance. that's exactly what the owner's committee is looking at.

>> i strongly encourage them to do the right thing on their own. i think they become heros rather than the opposite which they are now. it is an outdated, obsolete rule which in many respects, to be very blunt, the owners seem to work hard to avoid imposing as a matter of practice. that's why they issue free tickets or low priced tickets or fictionalize their attendance, not in the sense of any fraudulent activity, but they go through the pretense of filling the stadium so as to avoid the blackout which is against their interests and the threat of a blackout gives them a black eye no matter what they do. i look forward to hearing more. >> i will share that perspective. thank you, senator.

>> miss greenberg, i hear about cable rates all the time. you've raised the issue very appropriately. when we talk to cable companies, they point to the cost of sports as driving, in many respects, these rates skyward. is it fair to black out games after driving up those costs to the fans of, in effect, buying the cable services and mr. waldron has raised this as well. >> absolutely not. consumers are right to be furious about the fact that they're paying these very high rates and may not even have access to the sports programming that they are paying for. not to mention all of the other subsidies that taxpayers and consumers provide to sports teams. it's patently unfair and that's

one of the reasons why we're so strongly supportive of this legislation. we think consumers are angry about it and they have a right to get access to the programming that they paid for. >> when you go back to your client whom you've represented well here today, mr. waldron, i hope you'll remind them that we are acutely aware of those other public benefits that the league enjoys, and not just your league. again, it's not meant to put the focus only on the nfl but those benefits in subsidies and infrastructure, whether it's transportation or stadiums or other kinds of public benefits that professional sports enjoys and we've chosen to single out one which is the anti-trust exemption.

these public trusts really demand a public trust from the league itself, special public benefits in my view demand a recognition of that public trust from the league. do any of the other witnesses -- >> there is one category of american here who has not been mentioned and is harmed by the local blackout policy. i just want to make sure this goes on the record. local broadcasters, local grocery stores, local business people often scramble at the last minute to buy up blocks of tickets in order to avoid a blackout. if ever there was an example of a tax being imposed on business people, that's it. it is a tax imposed on them by virtue of this protection, the anti-trust exemption, that allows the league to threaten a blackout. i'll point out that the sports fans coalition in our reply

comments pointed to allegations that were provided to us from an executive we wish to remain anonymous, that the reason why those three playoff games that you alluded to in your opening statement in green bay, indianapolis, cincinnati, the reason why those threatened blackouts didn't occur, it was alleged, was because the nfl pressured broadcast networks to buy up unsold tickets in order to avoid the blackout. now, let's assume for a moment that that allegation is true. let me get this straight. the united states government gives the nfl an anti-trust exemption, the nfl takes that anti-trust exemption and exerts power on other third parties to get them to buy something from the nfl at full value. now, the nfl had every opportunity to turn around to me, to sports fans coalition and say that's blatantly false, how

dare you make such allegations. instead they said nothing, nothing. for weeks, nothing. when it was their turn to file at the fcc, the best they could come up with was if sports fans coalition cares for fans, they shouldn't care how we employ blackouts. in my opinion that's an admission. do we allow the league to avoid blackouts. they talk about how few there are, yes, that's true, but how did we get there? do we allow the league to avoid blackouts by coercing others, allegedly, to purchase tickets, or do we say enough is enough, you don't get the gift anymore. you don't get to have your anti-trust exemption for local blackouts. there would be a loud cheer not just among fans but in my opinion, local broadcasters, local grocery stores and local business people if we did that. >> thank you. i might point out with respect

to those local businesses and grocery stores and broadcasters, if they got together the way that clubs or teams do in collaboration to maximize their bargaining power, they would be seeing their state attorney general or the united states attorney general and they would be in court defending against an anti-trust prosecution, civil or criminal. so this exemption is really very special, very unique, and very undeserved if the leagues in my view fail to recognize their special public trust because of that unique exemption. i would invite any other comments. if there are none, we're going to keep the record open for one week and i will adjourn. thank you.

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but i want to start with the closed versus open platform. we have seen two different models in the smart phone market. which of those models do you think from a consumer perspective and from a crime perspective is more likely to take hold going forward for the internet of things. rick, do you have a thought on that? >> technicians love the apple product because it's shiny and smooth and looks cool and looks like you know what you're doing if you carry one. so we will go for an apple product because it makes us look smarter. consumers want the cheaper but fancier things, so they're always going to buy the open environment if it's a cheaper product, and right now i believe it is. i don't see us changing any time soon. i agree with you that the apple line is a smarter approach, but