I Want My Direct TV
Needless to say, a lot of people are beefing about this. These special sports packages are just the thing for transplants. What can be done to rectify this injustice?
1. Who said this is an injustice? Why shouldn't the leagues be able to structure their television packages to elicit the most lucrative rights fees someone will pay? From what I've read, the satellite company basically offered a better deal (in terms of cash, broadcast channel for MLB's own channel, and so forth) than did the company that offered the package through both cable and satellite networks. This result reflects what freedom of contract can produce. We have to live with it (or without it, if you don't want to drill holes in your roof).
2. On the other hand, it looks like freedom of contract, but the law does put some limits on contracts. Specific to this situation is the antitrust law. The relevant part of that law prohibits "contracts in restraint of trade." Sounds perfect. The problem is that all contracts that are worth writing will involve some future performance ("I pay you today to deliver your goods to me tomorrow"), and all contracts involving future performance are, in essence, a restraint on trade. That's the point of a contract, to restrain trade. A contract in which the seller promises to deliver his goods to the buyer restrains trade in that the seller may no longer (with impunity) choose to deliver his goods to someone other than the buyer, and, by the same token, another person who wants those particular goods may not have them. This contract restrains trade, if only by limiting it to the contracting parties. But the Congress couldn't have intended to outlaw all contracts when it wrote the antitrust law, only some of them. So the Congress impliedly left it to judges to determine which contracts are in fact restraints on trade and which are not. (By the way, it was the judges who figured out that Congress impliedly gave over this authority to the judges. Judges aren't troubled by obvious conflicts of interest that would embarrass the rest of us.)
3. Is the Direct TV deal an illegal restraint on trade? Courts will uphold contracts that restrain trade as long as the restraint is "reasonable," by which basically is meant that the contract promotes consumer welfare. Does the TV deal? Does denying the consumer what he wants promote the consumer's welfare? Yes. Here would be MLB's argument: the league needs competitive balance among its teams. No one wants to see some wealthy team, like the Boston Red Sox, blow everyone else away all season on their way to another World Series title (although we should try this for a season, just to confirm this theory). Players are pricey. So the league needs to maximize its revenue streams and spread the wealth out among the teams so they can afford players, thus making games and seasons competitive, thus eliciting maximum fan interest, thus allowing MLB to compete with the other outlets for our time and money, like golf, movies, golf movies, internet surfing, and so forth. Consumers get a better product by not letting them see it. Sounds a little crazy, but the leagues have done pretty well with arguments just like that in litigating over player rights for the past century. In short, if the antitrust issue got litigated, don't think it a foregone conclusion that MLB would lose.
[Note to lawyers: one could also view this arrangement as a tie-in sale or a boycott case. Will get the same rule of reason analysis, I would think. I just wanted to mention these ideas so you could all justify billing this time as legal research.]
4. But maybe this argument loses. Most likely, MLB will never have to make it. That's because MLB enjoys its historic "antitrust exemption." I've written about it here, where I speculated about the putative success of an antitrust suit by Daisuke Matsuzaka. The U.S. Supreme Court gave baseball that exemption, and has never taken it back, basically daring Congress to do it. The Congress did, as far as labor issues go, with the Curt Flood Act of 1998. But arguably (and this is a close argument), baseball's antitrust exemption extends to MLB's other business dealings (apart from dealings with its players), such as television contracts. So likely MLB will never have to defend its Direct TV contract in a court of law. Baseball is exempt from the law. (Must be nice.)
5. What about football? How does the NFL get away with sticking its game package on Direct TV? Simple. The Congress, when no bloggers were looking (it was 1961) gave the NFL an antitrust exemption too! The NFL's is more limited than baseball's historic exemption; basically the NFL is exempt from the antitrust laws with respect to its (drumroll please) television contracts! Perfect. No one can be sued. (I'm going to write my congressman and ask for an antitrust exemption for the TSLP International Broadcasting Rights.)
6. Maybe the members of Congress, angered because they can no longer get free game tickets, will at the least want to watch the games too and will act to revoke these antitrust exemptions (in time for Opening Day, please). Alternatively, we'll see highly trained legislative assistants climbing on the roof of the Russell Senate Office Building following the installation steps on the satellite dish. Someone's got to back down: either MLB, the U.S. Congress, or Mrs. TSLP. This is going to be a rough summer otherwise.

