Several drinking establishments intercepted St Louis Cardinal football games within the "blacked out" area. U.S Code Title 15, Chapter 32 outlines the telecasting of professional sports contests; Section 1291 prohibits the broadcasting of a game in the home territory (within 75 miles of the home stadium)if the game is not sold out 72 hours prior to kickoff. This section was created to encourage fans to buy tickets instead of just enjoying a free broadcast at home.
The businesses in question used satellites to receive games in the St Louis area which clearly Section 1291. The NFL sued and won against most of the alleged infringers on the basis of the Homestyle Act. The satellites were deemed not to be commonly found in private homes and the bars were prohibited from continuing this practice. Oddly enough, one bar was not found liable because he had closed the bar and just invited a handful of friends to watch the game; this was ruled a "reasonable circle of social acquaintances".
As stated above, Section 1291 is in place to ensure fans attend home games. When a bar steals the signal of a blacked out game and broadcasts it to attract customers (and thus increase business), they are denying the copyright holders, the NFL, their entitled compensation. The actions of these proprietors rob the NFL of ticket revenue, so Section 1291 was created. The FMLA prevents gatherings at bars large enough to lower the Nielsen ratings and deprive the NFL of advertising revenue. It is reasonable that fans of the Eagles should go to Eagles games; they can not all be free riders. However, fans of all teams watch the Super Bowl and it is a trend that they watch it in large gatherings; it is unreasonable to maintain a policy that supports a flawed ratings system while denying consumers their right to be social.
Fenwick, Michael M., "Football's Intellectual Side: The NFL versus Super Bowl parties and the story of the fifty five inch television", John Marshall Law School Review of Intellectual Property Law, Fall 2004
The National Football League (NFL) took action against Las Vega proprietors prior to the 2004 Super Bowl to prevent unauthorized public performances. These establishments intended to have Super Bowl parties (some inviting several thousand people) to watch the game on projector screens with diagonal measurements of up to 20 feet. The basis for the NFL's actions was the Fairness in Music Licensing Act of 1998 (FMLA), specifically with regards to an exemption known as the Homestyle Act. The FMLA limits audiovisual presentations of copyrighted material to screens with a diagonal length no greater than 55 inches.
Fenwick objects to the NFL's condemnation of Super Bowl parties because the FMLA was not meant for broadcast television, furthermore, if not for a flawed television ratings system (Nielsen ratings) this would not even be an issue. Consumers now are being punished for developing a popular trend and proprietors are given the burden of determining what equipment is common enough that it adheres to the Homestyle Act. Fenwick also believes that when a party broadcasts something, there is an implied public license and that the definitions of "perform", "public performance" and "audience" should be redefined; thus revoking the FMLA and the Homestyle Act. He concludes that "statutory language that defines infringement based on consumer trends" should be eliminated to be consistent with the Constitution.
The key statement is that the allegedly flawed Nielsen system is the root of this entire conflict. The NFL is upset that large Super Bowl parties in front of single screens artificially lower the Nielsen ratings, and thus lowers the price that advertisers are willing to pay. The NFL is a business, and they should not be denounced for doing what any profit minded capitalist firm would do; fight for their fair share of the pie. If 50% of American homes are tuning into the Super Bowl, but the Nielsen ratings only reflect 44%, advertisers are paying at a rate below the real market value, thus denying the NFL revenue they are entitled to. It is easy to blame the NFL for taking advantage of a vague, loosely constructed law, but an inadequate television ratings system has forced them to take such actions. In order to ensure a fair return of profits and enjoyability to the NFL and consumers respectively, the Nielsen system needs to be restructured in order to reflect the true number of viewers, and the law must be restructured to strike a fair balance between performers and audience as Fenwick says.
I feel it is important to discuss the differences between the NFL and the National Collegiate Athletic Association (NCAA). The NFL as an organization fights to protect their television rights, but the NCAA does not. In the early 1980's, the NCAA did attempt to gain an exemption from the Sherman Act and pool their rights in a similar manner to the NFL. The Supreme Court ruled that this constituted horizontal price fixing and restricted output (similar to the ruling in Shaw v Dallas Cowboys). The NCAA is supposed to preserve a tradition of amateurism, and the best way to maintain that is to maximize the number of games televised. Furthermore, Justice Stevens also stated that there is no evidence the television plan would increase equality amongst institutions. While the NFL has a salary cap that places a ceiling on how much money teams can spend on players, there is no regulation of spending on football programs in the NCAA. While football gives colleges a great deal of visibility, the football program is only component of a university. Some schools value television exposure more than others, and as Justice Stevens points out, restricting revenue earned from television is no different than restricting alumni donations or other sources of revenue for universities.
In arguing that professional sports should not fall under the jurisdiction of the FMLA (at least not without some exemptions made), I have said that the NFL has a vastly different business model than the music industry. The NCAA has a vastly different model from the NFL and does not function in the same way. The NFL is just a group of football teams; the NCAA is a group of colleges and universities that have sports teams, but many other purposes as well. Without this case, it would be easy to attack the NFL for trying to protect their rights because the NCAA does not. The reason of course is because they simply cannot.
Twentieth Century Music Corporation v Aiken provides an excellent background for the interpretation of a public performance. This case was decided in 1975 so it was before the 1976 Copyright Act modified the definition of a public performance. George Aiken owned a fast food business and had the radio playing through four loudspeakers in the restaurant for the customers' benefit. An ASCAP representative heard Twentieth Century Music's "The More I See You" and they filed suit. The radio station was licensed to air that song, but the lawsuit alleged because Aiken was not licensed, he could not allow this public performance in his restaurant. The Supreme Court however, viewed the radio has being a performer and that the customers in Aiken's restaurant were members of an audience that were intended listeners of the songs. Neither Aiken nor any customers were actually performing the work in the restaurant they were "passive listeners" (Fenwick: 2004). Justice Stewart, in giving the opinion of the Court thus affirmed the decision of the Court of Appeals stating:
'The petitioners have not demonstrated that they cannot receive from a broadcaster adequate royalties based upon the total size of the broadcaster's audience. On the contrary, the respondent points out that generally copyright holders can and do receive royalties in proportion to advertising revenues of licensed broadcasters, and a broadcaster's advertising revenues reflect the total number of its listeners, including those who listen to the broadcasts in public business establishments."
The key line is "broadcaster's advertising revenues reflect the total number of listeners, including those who listen to the broadcasts in public business establishments". One again it is important to separate the NFL from another group, in this case, radio. Radio ratings are based on surveys conducted by Arbitron that recruits listeners to record what they listen to in a diary. The Nielsen ratings of course are boxes that monitor what channel a television is on. Neither one in 2006 can be held to be completely accurate, especially with the rise of new forms of media such as online radio.$2.2 billion for the NFL may be a "fair return" according to Fenwick, but it likely is not the correct return; erring on the low side.