SBJ/June 30-July 6, 2014/Media

Supreme Court’s ruling leaves sports TV market intact

Nothing will change in the sports television business as a result of last week’s Aereo decision at the Supreme Court, and that’s good news for leagues that have grown to depend on ever-increasing rights fees from sports networks.

The NBA can remain secure in the knowledge that its projected media rights windfall will not be threatened by lowered retransmission consent revenue at ABC, Fox, NBC or any of its potential bidders.

The Big Ten Conference can expect broadcast networks ABC and Fox to have the resources to pay a healthy media rights fee increase when it starts negotiating a new deal, probably next year.

It’s the same story for European soccer leagues like the Premier League and La Liga when their rights come up. The U.S. sports rights bubble is not about to pop.

The sports industry dodged a bullet last week when the Supreme Court ruled 6-3 against Aereo, a service that redistributes broadcast signals via the Internet for a small monthly fee.

SBJ Podcast:
Media writer John Ourand and editor Tom Stinson talk about CBS's Thursday night NFL package, as well as last week's Supreme Court decision concerning Aereo and what it means.

The court’s ruling ensures that the status quo will remain in place for the TV business, which means that broadcast networks will continue to reap retransmission consent fees from cable and satellite operators.

“Nothing changes in the business as a result of this decision,” said Adam Chase, an attorney with Washington, D.C., law firm Cooley, which specializes in media issues. “The court left a couple of decisions for another day — issues dealing with cloud-based services and network DVRs. But this protects the structure that’s been in place.”

In a series of TV interviews last week, CBS CEO Leslie Moonves said his network expects to bring in $2 billion in retransmission consent fees by 2020. Those fees helped fund CBS’s $275 million deal for a package of Thursday night NFL games this fall.

Had Aereo prevailed, those fees would have been threatened as cable and satellite distributors likely would have adopted Aereo’s business model and cut their retransmission payments.

“Now broadcasters don’t have to look at other business models and can maintain the status quo,” Chase said. “They don’t have to consider turning their broadcast channels into cable networks or wireless services.”

Before the ruling, News Corp.’s Chase Carey said Fox could shed the local affiliate system and be turned into a cable channel. Moonves talked about turning CBS into an over-the-top network.

Both plans would have kept Aereo from using their signal and preserved the networks’ retransmission fees. But they likely would have caused existing sports rights contracts to be changed.

Broadcasters’ media deals are cut on the basis of reaching all 116 million broadcast TV homes. If CBS, for example, became a fully distributed cable network at 99 million homes, how much extra would a league like the NFL charge for the loss of those 17 million homes?

Because of last week’s Supreme Court ruling, broadcasters will not need to find out an answer to that question. When asked last week what the ruling means for CBS, Moonves could not help but mention the country’s top TV property.

“We will continue to deliver to the American consumer the NFL,” he told Bloomberg Television.

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