Are the Murdochs and Ellisons behind FCC’s recent interest in sports fragmentation?

Sometimes, writing about what’s happening in the media industry is simply about connecting dots. And with every passing day, some dots are seemingly coming into alignment that are almost too coincidental to not notice.

Those dots center on the FCC’s recent interest in sports fragmentation, and the threat the federal government poses to the antitrust exemption granted to professional sports leagues via the Sports Broadcasting Act of 1961. There’s been a swell of headlines in recent weeks about FCC chairman Brendan Carr suggesting that this antitrust exemption, which allows the NFL, NBA, NHL, and MLB to pool television rights together to sell to national broadcasters rather than each individual team selling rights to its own games, could be threatened as leagues increasingly move games off of free, over-the-air broadcast networks and onto paid streaming services.

At the same time, the NFL, by far the most important sports league for networks to broadcast from a business standpoint, is beginning to renegotiate its media rights deals in what can reasonably be seen as a do-or-die moment for broadcast television, broadly speaking.

As we’ve written about extensively at Awful Announcing, the NFL has quite a bit of leverage in these negotiations. The league is reportedly seeking well over a 50% increase in rights fees, and the conventional wisdom suggests that, to keep their NFL packages affordable, legacy broadcasters like CBS and Fox will need to accept fewer games in their Sunday-afternoon windows. In turn, some of the inventory CBS and Fox forfeit back to the league would almost certainly land on paid streaming services.

One roadblock to the NFL’s grand plan, however, increasingly appears to be the federal government.

In recent weeks, Carr has repeatedly brought up the antitrust exemption granted to pro sports leagues. Earlier this month, Sen. Mike Lee (R-UT), who chairs the Senate committee on antitrust, urged the FTC and DOJ to reexamine the exemption provided in the Sports Broadcasting Act. The FCC recently launched an inquiry seeking public comment on fragmentation in sports broadcasting, which Carr says garnered thousands of responses.

But what has spurred Carr’s recent interest in this issue? The NFL and the other three major North American professional sports leagues have been moving more games to streaming services for years. Why now?

Well, one reason might be that the issue polls well. A recent Fox News survey indicated that 72% of sports fans think major sporting events should remain on free broadcast television rather than move to paid streaming services. In that same poll, nearly 60% of sports fans reported having skipped watching a game “at least a few times in the past year” due to streaming paywalls. Never put it past a federal agency to become enamored with an issue solely because it’s popular, especially when an administration is engaged with a multitude of issues that are deeply unpopular.

But perhaps there’s a bit more to it. Let’s take a look at a recent appearance Carr made on Fox News.

Here’s the sitting FCC chair directly threatening the NFL’s antitrust exemption on a cable network owned by Fox Corporation. Fox, in a matter of weeks or months, will begin negotiating a new deal with the NFL that could determine its viability as a business for years to come. It’d be wise for Fox to gain as much leverage as it can before entering those negotiations. And outside of simply threatening to walk away from the negotiating table and ride out the rest of its current contract until the NFL’s opt-out clause hits after the 2029 season, which Fox would assuredly like to avoid, there’s not a lot of leverage the network can exert.

Of course, the cozy relationship between the Murdoch family, which owns a controlling stake in Fox Corporation, and the Trump administration is well-documented. There’s alignment here. The Murdochs need leverage over the NFL in media rights negotiations, lest Fox agree to a financially ruinous deal that jeopardizes the company’s future. The Trump administration can help Fox secure that leverage by deploying Carr to threaten the NFL’s antitrust exemption, all the while platforming an issue that is politically advantageous. And doing so helps ensure that Fox remains financially healthy enough to continue being an ally to future Republican administrations.

The same can be said of the Ellison family, who completed the purchase of Paramount last summer, in part due to a wink-wink, nudge-nudge deal with Trump to shift CBS News to the right. Paramount and the NFL are in active negotiations; the league wants to strike a deal with Paramount before its other partners, as the Ellisons’ recent purchase of the company triggered a change-of-ownership clause that would allow the league to exit its deal immediately if it chose to do so. Just like Fox, CBS benefits from federal pressure on the NFL to keep games on broadcast television rather than stream them.

Is it a coincidence that now is the time that Brendan Carr has chosen to start regularly talking about the NFL’s antitrust exemption? Or is it a result of strategic backchanneling from two well-connected families that are in good with the current administration?

Obviously, it’s impossible to say. But there are hints to suggest that Fox, in particular, has started to feel a bit emboldened.

Earlier this month at a Morgan Stanley conference, Fox CEO Lachlan Murdoch seemed to have deliberately changed his outlook on his company’s upcoming NFL rights negotiations. When asked about the negotiations previously, Murdoch welcomed it as an opportunity to “deepen” Fox’s relationship with the NFL. He even told investors he expected the network to “rebalance” the rest of its sports rights portfolio to make room for a heftier NFL bill. But this month, Murdoch shifted. He said that he believed Fox was already paying “market” price for its NFL package, which would seemingly indicate that an increase in the 50-percent-or-greater range, as has been floated for Paramount’s package, is higher than Fox is willing to pay.

Whether the shift in tone is a function of pressure being put on the league by the federal government, or confidence in other areas where Fox has a bit of leverage (i.e. the ability to walk away until post-2029, the knowledge that the league wants Fox to remain economically viable for the next set of rights negotiations, or the NFL simply valuing continuity), is anyone’s guess.

But it also makes plenty of sense that Fox and CBS would use their friends in high places to get a leg up on the NFL any which way they can. And perhaps that explains why we’ve seen so much bluster about this issue recently.