Federal Lawsuit Could Change The Way You Watch Baseball On TV

The way you watch baseball on television could change in significant ways in the near future, depending on how a judge rules in a lawsuit about to be brought in federal court in New York City.

This isn't just hype, either. You can read more details about this lawsuit in this excellent Fangraphs article by Nathaniel Grow. It's long but worth your time. Here's the short version:

By way of a brief recap, though, the lawsuit essentially alleges that MLB violates federal antitrust law by assigning its teams exclusive local broadcast territories (the same rules that also give rise to MLB’s infamous blackout policy).

Not only do the plaintiffs allege that the creation of these exclusive territories illegally prevents MLB teams from competing for television revenue in each others’ home markets, but they also contend the rules restrict teams from competing with the league itself in the national broadcast marketplace (preventing teams from signing their own national television contracts, for instance, or offering their own out-of-market pay-per-view services in competition with MLB Extra Innings and MLB.TV).

Thus, the Garber suit presents a direct challenge to MLB’s existing television business model, one that could revolutionize the way in which baseball is broadcast in the future.

The article goes on to say that Judge Shira A. Scheindlin, who's presiding over the case, ruled a couple of years ago that baseball's antitrust exemption didn't apply, and so the lawsuit, which represents fans in general, could go forward. It's also been certified as a class-action suit, which means whatever ruling is made could benefit baseball fans in general, not just those who brought the legal action.

Hm, you're saying. This is a pretty big deal. And you'd be right about that. Here, essentially, is what could happen:

Ultimately, Judge Scheindlin will apply antitrust law’s so-called "rule of reason" to the case, deciding whether the harms of MLB’s current broadcasting practices outweigh the benefits that have resulted from the existing system.

If Judge Scheindlin determines that the current policy is more harmful to consumers than beneficial (or, alternatively, that the benefits of the system could be better obtained via less harmful means), then she will rule that the league’s restrictions are illegal under the Sherman Act. On the other hand, should Judge Scheindlin find that the asserted benefits of MLB’s television policies outweigh their harmful effects, then the existing system would be affirmed as lawful under federal antitrust law.

It's very difficult to sum up what could happen in this case without quoting huge chunks of Grow's article, so I'll simply say you should read it all. Grow notes that it's possible that Judge Scheindlin, who he says "has been skeptical of most of MLB's defenses in the past," could rule that some changes must be made in MLB's current broadcasting policies. He mentions that a similar lawsuit brought against the NHL was settled before it came to trial, and in an article he wrote last summer, says:

In particular, rather than continue to only offer a single league-wide pay-per-view package, the NHL has agreed to allow out-of-market fans to purchase a smaller package featuring only their favorite team’s games for 20% less than the cost of the league-wide service.

If this sounds familiar, it should. Just a couple of weeks ago I wrote about a similar plan for MLB.tv for 2016.

There could be other changes in MLB's broadcast policies, depending on how Judge Scheindlin rules:

For instance, Judge Scheindlin could rule that the very concept of exclusive local broadcast territories is inconsistent with antitrust law, and thus throw out MLB’s current restrictions in their entirety. This would not only force the league to allow its teams to directly compete with one another locally, but also permit teams to directly compete with the league itself in the national broadcast marketplace. At the same time, an order along these lines would presumably spell the end of MLB’s blackout rules.

I could go on and continue quoting from Grow's article, but you really should read all of it. This case and how it's finally adjudicated could have wide-ranging impacts on the way you watch baseball on television going forward. This trial begins a week from today, January 19 and Grow says it could last "at least" two weeks -- and beyond that, there could be appeals, particularly if MLB loses, so it could be a while before you'll see any actual changes to MLB's television policies.

Here's the lawsuit if you want to read it. (WARNING: Long! 45 pages.) You'll note that in addition to Major League Baseball and MLB Advanced Media, both the Cubs and CSN Chicago are listed as defendants, as well as six other teams (White Sox, Yankees, Phillies, Giants, Rockies and Pirates) and several other regional sports networks.

As Craig Calcaterra says regarding this case::

Stay tuned. Assuming you’re not blacked out, of course.