COMPETITION IN THE SPORTS PROGRAMMING MARKETPLACE HEARING BEFORE THE SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS SECOND SESSION March 5, 2008 Serial No. 110–98 ( Printed for the use of the Committee on Energy and Commerce energycommerce.house.gov U.S. GOVERNMENT PRINTING OFFICE 50–109 PDF WASHINGTON : 2008 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 15:41 Jul 07, 2009 Jkt 037690 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-98 SCOM1 PsN: JIMC COMMITTEE ON ENERGY AND COMMERCE JOHN D. DINGELL, Michigan,Chairman HENRY A. WAXMAN, California JOE BARTON, Texas EDWARD J. MARKEY, Massachusetts Ranking Member RICK BOUCHER, Virginia RALPH M. HALL, Texas EDOLPHUS TOWNS, New York J. DENNIS HASTERT, Illinois FRANK PALLONE, JR., New Jersey FRED UPTON, Michigan BART GORDON, Tennessee CLIFF STEARNS, Florida BOBBY L. RUSH, Illinois NATHAN DEAL, Georgia ANNA G. ESHOO, California ED WHITFIELD, Kentucky BART STUPAK, Michigan BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois ALBERT R. WYNN, Maryland HEATHER WILSON, New Mexico GENE GREEN, Texas JOHN B. SHADEGG, Arizona DIANA DEGETTE, Colorado CHARLES W. ‘‘CHIP’’ PICKERING, Vice Chairman Mississippi LOIS CAPPS, California VITO FOSSELLA, New York MIKE DOYLE, Pennsylvania STEVE BUYER, Indiana JANE HARMAN, California GEORGE RADANOVICH, California TOM ALLEN, Maine JOSEPH R. PITTS, Pennsylvania JAN SCHAKOWSKY, Illinois MARY BONO, California HILDA L. SOLIS, California GREG WALDEN, Oregon CHARLES A. GONZALEZ, Texas LEE TERRY, Nebraska JAY INSLEE, Washington MIKE FERGUSON, New Jersey TAMMY BALDWIN, Wisconsin MIKE ROGERS, Michigan MIKE ROSS, Arkansas SUE WILKINS MYRICK, North Carolina DARLENE HOOLEY, Oregon JOHN SULLIVAN, Oklahoma ANTHONY D. WEINER, New York TIM MURPHY, Pennsylvania JIM MATHESON, Utah MICHAEL C. BURGESS, Texas G.K. BUTTERFIELD, North Carolina MARSHA BLACKBURN, Tennessee CHARLIE MELANCON, Louisiana JOHN BARROW, Georgia BARON P. HILL, Indiana PROFESSIONAL STAFF DENNIS B. FITZGIBBONS,Chief of Staff GREGG A. ROTHSCHILD,Chief Counsel SHARON E. DAVIS,Chief Clerk DAVID L. CAVICKE,Minority Staff Director (II) VerDate Nov 24 2008 15:41 Jul 07, 2009 Jkt 037690 PO 00000 Frm 00002 Fmt 8486 Sfmt 8486 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-98 SCOM1 PsN: JIMC SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET EDWARD J. MARKEY, Massachusetts,Chairman MIKE DOYLE, Pennsylvania FRED UPTON, Michigan Vice Chairman Ranking Member JANE HARMAN, California J. DENNIS HASTERT, Illinois CHARLES A. GONZALEZ, Texas CLIFF STEARNS, Florida JAY INSLEE, Washington NATHAN DEAL, Georgia BARON P. HILL, Indiana BARBARA CUBIN, Wyoming RICK BOUCHER, Virginia JOHN SHIMKUS, Illinois EDOLPHUS TOWNS, New York HEATHER WILSON, New Mexico FRANK PALLONE, JR., New Jersey CHARLES W. ‘‘CHIP’’ PICKERING, BART GORDON, Tennessee Mississippi BOBBY L. RUSH, Illinois VITO FOSELLA, New York ANNA G. ESHOO, California GEORGE RADANOVICH, California BART STUPAK, Michigan MARY BONO, California ELIOT L. ENGEL, New York GREG WALDEN, Oregon GENE GREEN, Texas LEE TERRY, Nebraska LOIS CAPPS, California MIKE FERGUSON, New Jersey HILDA L. SOLIS, California JOE BARTON, Texas (ex officio) JOHN D. DINGELL, Michigan (ex officio) (III) VerDate Nov 24 2008 15:41 Jul 07, 2009 Jkt 037690 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-98 SCOM1 PsN: JIMC VerDate Nov 24 2008 15:41 Jul 07, 2009 Jkt 037690 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-98 SCOM1 PsN: JIMC C O N T E N T S Page Hon. Edward J. Markey, a Representative in Congress from the Common- wealth of Massachusetts, opening statement .................................................... 1 Hon. Cliff Stearns, a Representative in Congress from the State of Florida, opening statement ................................................................................................ 2 Hon. Anna G. Eshoo, a Representative in Congress from the State of Cali- fornia, opening statement .................................................................................... 4 Hon. John D. Dingell, a Representative in Congress from the State of Michi- gan, prepared statement ...................................................................................... 108 Hon. Bart Stupak, a Representative in Congress from the State of Michigan, prepared statement .............................................................................................. 108 Hon. Edolphus Towns, a Representative in Congress from the State of New York, prepared statement .................................................................................... 109 Hon. Eliot L. Engel, a Representative in Congress from the State of New York, prepared statement .................................................................................... 109 WITNESSES W. Kenneth Ferree, president, The Progress & Freedom Foundation ................ 5 Prepared statement .......................................................................................... 7 Glenn A. Britt, president and CEO, Time Warner Cable .................................... 11 Prepared statement .......................................................................................... 13 Roger Goodell, commissioner, National Football League ..................................... 20 Prepared statement .......................................................................................... 22 George Bodenheimer, president, ESPN, Inc. ......................................................... 46 Prepared statement .......................................................................................... 47 Mark Cooper, Ph.D., director of research, Consumer Federation of American .. 49 Prepared statement .......................................................................................... 51 Derek Chang, executive vice president, Content Strategy and Development, DIRECTV, Inc. ..................................................................................................... 79 Prepared statement .......................................................................................... 80 (V) VerDate Nov 24 2008 15:41 Jul 07, 2009 Jkt 037690 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-98 SCOM1 PsN: JIMC VerDate Nov 24 2008 15:41 Jul 07, 2009 Jkt 037690 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-98 SCOM1 PsN: JIMC COMPETITION IN THE SPORTS PROGRAMMING MARKETPLACE WEDNESDAY, MARCH 5, 2008 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. The subcommittee met, pursuant to call, at 9:37 a.m., in Room 2123 of the Rayburn House Office Building, Hon. Edward J. Mar- key (chairman of the subcommittee) presiding. Members present: Representatives Markey, Eshoo, Stupak, Stearns, Deal, Cubin, Shimkus, Radanovich, Terry and Barton (ex officio). OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REP- RESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS Mr. MARKEY. Good morning. Welcome to the Subcommittee on Telecommunications and the Internet. The subject of today’s hear- ing is competition in the sports programming market. Competition in sports is the essence of the game. In sports there are great teams and dynasties. There are compelling stories of un- derdogs and come-from-behind victories. There are perennial favor- ites to win championships, and there are the Chicago Cubs. Yet sporting events are premised upon great feats of athletic prowess and competition being performed upon a level playing field. That level playing field ensures that athletes engage in sporting activi- ties in a manner where their God-given talents and a compelling work ethic and practice can result in success. Competition in the marketplace, on the other hand, is what makes the consumer king. In our national video marketplace, many programming competi- tors assert that the playing field is not quite level at present. They argue that compelling content and a solid business game plan do not even the odds against them. The field is unfairly tilted towards cable operators or broadcast networks, competitors claim, by a cou- ple of key factors. One, an inefficient number of cable providers within a market, although there are barriers which as a result competitors can reach consumers, and two, by laws or regulations that either fail to achieve fairness as intended or serve to reinforce the position of incumbent market leaders or risk unduly raising prices. The consumer fan, they say, is the resulting loser in this en- vironment. (1) VerDate Nov 24 2008 15:41 Jul 07, 2009 Jkt 037690 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-98 SCOM1 PsN: JIMC 2 We have seen several episodes over the last year in the sports programming marketplace that highlight policy issues for this sub- committee to explore. Early last year there was the issue of Major League Baseball’s package of Extra Innings, or out-of-market games slated to be carried on DIRECTV on an exclusive basis, and complaints by Comcast and other cable operators that this was un- fair. There was the effort by the Big Ten conference to successfully launch its cable channel through carriage on the