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 Post subject: MLB Faces Antitrust Suit Regarding Its TV Blackout Policies
PostPosted: Mon May 14, 2012 3:44 pm 
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Love it. Anything that makes Bozo Selig look bad.

http://sports-law.blogspot.com/2012/05/done-mlb-faces-antitrust-suit-regarding.html

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Mon May 14, 2012 4:32 pm 
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I am firmly in the plaintiffs' corner on this one, for two reasons: (1) even though I have a cable subscription and do not have MLB TV, I think the blackout policies are absolutely ridiculous and a total money-grab; and (2) I am looking forward to baseball's antitrust exemption getting thrown in the can sooner rather than later. The latter could pave the way for later potential suits regarding the relocation of ball clubs and the quasi hard-slotting system for amateur players in the amateur draft, the results of which could create boons for small market clubs like the Pirates.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Mon May 14, 2012 8:44 pm 
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Interesting.

I know quite a few people who have complained about this very topic.

As unlikely as it is, here's hoping this leads to much needed change within the MLB.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Mon May 14, 2012 10:12 pm 
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MLB is run by idiots. My father would buy the package to see Pirate games. However, despite the fact that he is close to 200 miles fro Pittsburgh, he would be subjected to the blackout policy. So in essence, they get nothing, rather than the subscription fee for the package. This has to effect any fan over 50-60 miles away. He also cannot get ROOT Pitt so is left out entirely..... :roll: :roll: :roll: :roll: :roll:


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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 11:10 am 
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Hmmmm. Will be interesting to see how this plays out.

But . . . play it out . . . Pirates can't guarantee to ROOT Sports that it will have such a large "local market" and that the fans in . . . say . . . West Virginia are no no longer blacked out from Pirates games and are now "out of market" and can watch games via MLB.tv or Extra Innings. Instantaneously, the value of the local cable contract with ROOT is diminished. Thus, less local cable revenue for the Pirates (not that it is competitive with the rest of the league). The "out of market" market expands and the Extra Innings and MLB.tv market expands as the blackout restrictions are lessened. Those dollars are infused into the MLB general fund and distributed equally among the 30 clubs.

I'm skeptical that any "cure" that will emanate from this lawsuit will end up being a material benefit. OK . . . MLB allows me to purchase just Pirates games (I've written here several times that is going to be the natural evolution of technology and the need for increased revenue). What's to prevent them from charging a "one team discounted price" of $119 and charge $129 for the entire league? Also, if each teams' local cable revenue is decreased because of diminished "local market" blackout restrictions, where is that revenue going to be recaptured? My guess? Increased pricing on the Extra Innings or MLB.tv subscriptions.

Don't get me wrong . . . I hate the blackouts. Big time. But, I'm cautious that the "cure" will be better than the status quo. Very cautious and very skeptical. I may end up being able to "buy" access to the Pirates' games but, if so, I bet that I end up paying close to the $129 that I'm currently paying for league access and that if I want to maintain league access that I'll end up paying significantly more. I'm betting that individual subscription prices will end up being raised higher to make up for other lost revenue. Just because something is offered a la carte doesn't mean that individuals will end up getting bargain prices.

MLB would be well-served to mandate access to MLB.tv in any area that is not covered by a RSN - like Az's father's situation. But the RSN and the Pirates would likely counter it contractually bargained for an exclusive broadcast right and Az's father's "beef" is with the local cable provider. Perhaps if there was more competition in the cable provider industry as opposed to DirecTV versus the local cable monopoly, you'd have better choices. That being written, I'm not sure that the "cure" in that situation would be a heck of a lot better.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 12:14 pm 
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No. 9 wrote:
Hmmmm. Will be interesting to see how this plays out.

But . . . play it out . . . Pirates can't guarantee to ROOT Sports that it will have such a large "local market" and that the fans in . . . say . . . West Virginia are no no longer blacked out from Pirates games and are now "out of market" and can watch games via MLB.tv or Extra Innings. Instantaneously, the value of the local cable contract with ROOT is diminished. Thus, less local cable revenue for the Pirates (not that it is competitive with the rest of the league). The "out of market" market expands and the Extra Innings and MLB.tv market expands as the blackout restrictions are lessened. Those dollars are infused into the MLB general fund and distributed equally among the 30 clubs.

I'm skeptical that any "cure" that will emanate from this lawsuit will end up being a material benefit. OK . . . MLB allows me to purchase just Pirates games (I've written here several times that is going to be the natural evolution of technology and the need for increased revenue). What's to prevent them from charging a "one team discounted price" of $119 and charge $129 for the entire league? Also, if each teams' local cable revenue is decreased because of diminished "local market" blackout restrictions, where is that revenue going to be recaptured? My guess? Increased pricing on the Extra Innings or MLB.tv subscriptions.

Don't get me wrong . . . I hate the blackouts. Big time. But, I'm cautious that the "cure" will be better than the status quo. Very cautious and very skeptical. I may end up being able to "buy" access to the Pirates' games but, if so, I bet that I end up paying close to the $129 that I'm currently paying for league access and that if I want to maintain league access that I'll end up paying significantly more. I'm betting that individual subscription prices will end up being raised higher to make up for other lost revenue. Just because something is offered a la carte doesn't mean that individuals will end up getting bargain prices.

MLB would be well-served to mandate access to MLB.tv in any area that is not covered by a RSN - like Az's father's situation. But the RSN and the Pirates would likely counter it contractually bargained for an exclusive broadcast right and Az's father's "beef" is with the local cable provider. Perhaps if there was more competition in the cable provider industry as opposed to DirecTV versus the local cable monopoly, you'd have better choices. That being written, I'm not sure that the "cure" in that situation would be a heck of a lot better.

No. 9, what makes you think that MLB Advanced Media has not already set the price for MLB.TV at the profit-maximizing price? Since there is no one else competing with them for baseball-related entertainment services, they have a natural monopoly and likely exercised that monopoly to squeeze every dollar they could out of their customers. If MLBAM were to raise prices above and beyond their current level to make up for lost revenue, as you predict, they will likely lose customers and, therefore, lose even more money. Its a losing proposition to raise prices to make up for lost revenue or increased costs. Just ask American Airlines.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 12:33 pm 
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And yet . . . DirecTV can still raise prices every year for the Sunday Ticket. It has a monopoly (and had held it for more than a decade). . . why didn't it find the "perfect" price point and exploit its market position? Its a common shortcoming in economic analysis . . . the assumption of perfect information.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 12:54 pm 
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Well there would certainly need to be additional changes to how revenue from MLB.TV, etc are shared out to make up for lost income from local cable contracts, but it would still seem that lifting the blackout restrictions should increase the size of the total market if many people are stuck without the option to watch at all. There are also going to be some people willing to subscribe to MLB.TV for their mobile devices even if they can also watch on ROOT.


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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 12:56 pm 
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No. 9 wrote:
And yet . . . DirecTV can still raise prices every year for the Sunday Ticket. It has a monopoly (and had held it for more than a decade). . . why didn't it find the "perfect" price point and exploit its market position? Its a common shortcoming in economic analysis . . . the assumption of perfect information.

Fair enough, but if MLB Advanced Media were able to raise prices successfully after a positive antitrust verdict, then what is to stop them from doing so after a negative antitrust verdict? Heck, what's stopping them from doing it now? You're assuming that the blackout policy and the lack of a la carte game selection is keeping prices down. How does that work?

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 1:26 pm 
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Players won't agree to reduced salaries.
Owners don't want reduced revenue streams.
Ticket prices are likely very close, if not already, at maximum prices.

Unless the expansion of potential customers who will now buy Extra Innings or MLB.tv offsets the diminished market value of a cable TV package, owners face lower revenues and players face lower salaries. That will put pressure on other potential revenue streams. IMO, viewing over internet, mobile device, wireless streaming to TVs are going to be the areas where you see the pressure on pricing. Perhaps the result will allow me to still get Pirates games for $129 (which is my main purpose for purchasing) but I may lose access to the remainder of the league.

Again . . . I've written it before . . . I think that we are all on the verge (5-10 years) of huge changes in the way that TV on sports is being broadcast and priced. No matter how this antitrust suit plays out, I'm not expecting cheaper prices for home viewership.

And, despite what you may think of Selig and the blackout rules, it is my opinion that MLB is way out ahead of the other major sports in terms of technology and what it is currently offering its fans.

Final question . . . why isn't this lawfirm suing the NFL and DirecTV? It seems to me that the Sunday Ticket agreement is far more restrictive than any of the issues identified in the suit against MLB and the NHL. If I want to watch Chargers/Raiders on Sunday and its not shown in my area, then I must subscribe to DirecTV and purchase the Sunday Ticket package. I don't even have the capability of contracting directly with the NFL to watch it on the internet on my computer.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 2:00 pm 
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No. 9 wrote:
Players won't agree to reduced salaries.
Owners don't want reduced revenue streams.
Ticket prices are likely very close, if not already, at maximum prices.

Unless the expansion of potential customers who will now buy Extra Innings or MLB.tv offsets the diminished market value of a cable TV package, owners face lower revenues and players face lower salaries. That will put pressure on other potential revenue streams.

I fail to see how that is the customer's problem.

No. 9 wrote:
IMO, viewing over internet, mobile device, wireless streaming to TVs are going to be the areas where you see the pressure on pricing. Perhaps the result will allow me to still get Pirates games for $129 (which is my main purpose for purchasing) but I may lose access to the remainder of the league.

And if MLB wants to alienate its fans like that, it has every right to do so. I just don't see how that makes any business sense.

No. 9 wrote:
Again . . . I've written it before . . . I think that we are all on the verge (5-10 years) of huge changes in the way that TV on sports is being broadcast and priced. No matter how this antitrust suit plays out, I'm not expecting cheaper prices for home viewership.

Lower prices aren't the only benefit of breaking up monopolies. Another benefit is increased production of goods and, particularly in this case, increased access to services. Just ask consumers of college football after the Supreme Court ruled against the NCAA in NCAA v. Board of Regents of Univ. of Oklahoma.

No. 9 wrote:
And, despite what you may think of Selig and the blackout rules, it is my opinion that MLB is way out ahead of the other major sports in terms of technology and what it is currently offering its fans.

That's all well and good, but that doesn't excuse cartel-like behavior.

No. 9 wrote:
Final question . . . why isn't this lawfirm suing the NFL and DirecTV? It seems to me that the Sunday Ticket agreement is far more restrictive than any of the issues identified in the suit against MLB and the NHL. If I want to watch Chargers/Raiders on Sunday and its not shown in my area, then I must subscribe to DirecTV and purchase the Sunday Ticket package. I don't even have the capability of contracting directly with the NFL to watch it on the internet on my computer.

While that's unfortunate, I haven't seen you allege an antitrust violation by the NFL. Where is the unreasonable restraint of trade or interstate commerce that the NFL has committed?

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 2:54 pm 
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If the price of MLB.TV or Extra Innings increases because the owners are looking to maintain revenue streams and to maintain player salary levels, then consumers will not likely be happy.

Teams raise ticket prices all the time to raise additional revenue . . . at risk of alienating fans. Why would internet access and mobile device access be any different?

The NCAA is not the equivalent of the NFL, NBA, MLB or NHL. Not even close.

So, are you contending that it is an unlawful restraint on trade for MLB to blackout "local markets" to protect a particular franchisee's contract with a RSN? Should a MLB franchisee have the right to contract with an exclusive partner to televise games? If so, isn't the franchisor (MLB) interfering with the contract rights of a franchisee (any club) if it allows for the broadcast of games in an area supplied by the television partner? If MLB didn't have the blackout rules for MLB.TV and Extra Innings, wouldn't the RSN have standing to sue MLB for tortious interference with a contracted for business expectancy?

As for the NFL . . . look at the allegations by the Plaintiff against MLB. You state that you are in the "plaintiff's corner." Plainitff's allege an unlawful restraint of trade because (1) MLB unlawfully restrains "out of market" fans from watching broadcasts because they must purchase either Extra Innings or MLB.TV and (2) MLB blacks out those broadcasts in the local market which forces fans to purchase a cable subcription. So . . . the NFL has entered into an exclusive agreement with DirecTV to broadcast out of market games. However, I can't watch those games unless I have DirecTV and pu8rchase teh Sunday Ticket. What's teh difference?

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 3:33 pm 
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I see no causal relationship between the fact of a live tv broadcast and fan attendance at the Park, which I assume is the basis for a blackout. When that is extrapolated to the point where people living 100 miles away are denied the feed, it becomes ludicrous.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 4:00 pm 
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There are a lot of places around the country where MLB's blackout policy denies access to games even if someone has purchased MLBEI and/or some kind of sports package through their cable/satellite provider. I don't think this is ever the case with the NFL's blackout policy or Sunday Ticket.


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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 4:12 pm 
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Bertie wrote:
I see no causal relationship between the fact of a live tv broadcast and fan attendance at the Park, which I assume is the basis for a blackout. When that is extrapolated to the point where people living 100 miles away are denied the feed, it becomes ludicrous.


Bertie -
I don't think that fan attendance is the basis for the blackouts. In the NFL, local games are blacked out if the attendance doesn't hit a specific level. Baseball has no such restriction. I'm not aware of any baseball team that restricts locally broadcast games based upon attendance (or lack thereof). I think that the blackouts are designed to protect a particular club's television partner(s) and to maximize the potential value of a TV contract. Thus, if you live in Rockford, Illinois, you can only see the White Sox and Cubs on WGN or Comcast Sports Network. You can't purchase MLB.TV and watch the Cubs or White Sox due to blackout restrictions. WGN and/or Comcast Sports Network has contracted with the Cubs and White Sox to be the exclusive content provider for a particular area. If a Rockford, Illinois resident could watch the games on his computer on MLB.TV, the value of the TV contract would be less. WGN and Comcast can generate advertising revenue by promoting the fact that it will have "the customer's eyes" in a particular market. Since sports remains one of the last bastions where customers will sit and watch live (as opposed to building a DVR library), there is great value to being the content provider and the WGNs and Comcasts of the world will pay a pretty penny for the rights to carry live games. I think that is driving the blackout restrictions much moreso than trying to drive up attendance.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 4:20 pm 
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RTJR wrote:
There are a lot of places around the country where MLB's blackout policy denies access to games even if someone has purchased MLBEI and/or some kind of sports package through their cable/satellite provider. I don't think this is ever the case with the NFL's blackout policy or Sunday Ticket.


If I live in Jacksonville and bought the Sunday Ticket and the Jags don't sell out their game, the game is blacked out in that region regardless of whether I subscribe to the Sunday Ticket.

Also, the NFL shows certain games on the NFL Network and, from what I've been told, those games are not part of the Sunday Ticket. No NFL Network? No game. Even if you have purchased The Sunday Ticket.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 4:24 pm 
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RTJR wrote:
There are a lot of places around the country where MLB's blackout policy denies access to games even if someone has purchased MLBEI and/or some kind of sports package through their cable/satellite provider. I don't think this is ever the case with the NFL's blackout policy or Sunday Ticket.


You are correct. If I have a cable subscription or DirecTV with a "sports package" that gives me access to RSNs across the country, it does not also give me access to MLB games that are broadcast by that RSN (unless it is a local market). You can't bypass the Extra Innings charge by paying $6.95/month during baseball season for a "sports package" through cable or DirecTV.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 4:24 pm 
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No. 9 wrote:
Bertie wrote:
I see no causal relationship between the fact of a live tv broadcast and fan attendance at the Park, which I assume is the basis for a blackout. When that is extrapolated to the point where people living 100 miles away are denied the feed, it becomes ludicrous.


Bertie -
I don't think that fan attendance is the basis for the blackouts. In the NFL, local games are blacked out if the attendance doesn't hit a specific level. Baseball has no such restriction. I'm not aware of any baseball team that restricts locally broadcast games based upon attendance (or lack thereof). I think that the blackouts are designed to protect a particular club's television partner(s) and to maximize the potential value of a TV contract. Thus, if you live in Rockford, Illinois, you can only see the White Sox and Cubs on WGN or Comcast Sports Network. You can't purchase MLB.TV and watch the Cubs or White Sox due to blackout restrictions. WGN and/or Comcast Sports Network has contracted with the Cubs and White Sox to be the exclusive content provider for a particular area. If a Rockford, Illinois resident could watch the games on his computer on MLB.TV, the value of the TV contract would be less. WGN and Comcast can generate advertising revenue by promoting the fact that it will have "the customer's eyes" in a particular market. Since sports remains one of the last bastions where customers will sit and watch live (as opposed to building a DVR library), there is great value to being the content provider and the WGNs and Comcasts of the world will pay a pretty penny for the rights to carry live games. I think that is driving the blackout restrictions much moreso than trying to drive up attendance.


Here is what is ironic and always has been my argument. Why should WGN or Comcast care where you watch the feed from their game? If they would let the commercials go through, it wouldn't matter because their advertisers are getting seen my the audience (and probably more than the cable subscribers). The only people it would affect is the local cable companies who get to slip in seven or eight local commericals per game. But with technology the way it is, they can arrange it so you see THOSE commercials too.

It's all a cash grab and that's what baseball has become.

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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 4:43 pm 
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No. 9 wrote:

If I live in Jacksonville and bought the Sunday Ticket and the Jags don't sell out their game, the game is blacked out in that region regardless of whether I subscribe to the Sunday Ticket.


Blackouts due to poor ticket sales/ non-sellout is a completely different scenario.

No. 9 wrote:
Also, the NFL shows certain games on the NFL Network and, from what I've been told, those games are not part of the Sunday Ticket. No NFL Network? No game. Even if you have purchased The Sunday Ticket.


This is true, but the NFL has in the past allowed TV stations in the local markets to simultaneously broadcast the game without a blackout.


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 Post subject: Re: MLB Faces Antitrust Suit Regarding Its TV Blackout Polic
PostPosted: Tue May 15, 2012 5:07 pm 
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BB -
I think that the answer to your question lies in the fact that the RSN wants as large of a footprint as possible. For example, let's say that there is a sizeable St. Louis Cardinal fanbase in Springfield, Illinois. At least in theory, cable customers in that region will desire having Fox Sports Midwest be available. Fox Sports Midwest will then try to become part of the basic cable contract for the Springfield, Illinois area. Fox Sports Midwest then will get a subscription fee for everyone who is a cable subcriber - regardless of whether they are watching the channel. Fox Sports Midwest would (I think) make far more money (and be willing to pay a premium for broadcast rights) if it receives $1.00/cable subscriber/month in the Springfield area versus only making money off of those who specifically purchased the product to watch baseball.

I watched this phenomenon pretty closely when the Big 10 Network was fighting with cable companies over whether the Big 10 Network would be part of the "basic" cable package versus offered as part of a sports premium package. The Big 10 Network refused to contract with any cable provider that failed to include the Network as part of the basic package and, from what I understand, receives $.50/cable subscribing household/month. That's $6.00/year from any cable subscribing household - regardless if that household ever watches the network. Nearly every (if not all of them) cable company that originally objected ultimately gave in to customers' demand and it is now part of the basic cable package.

I'm guessing that a RSN makes far more money by collecting subscription fees across the board as opposed to from a select group of highly interested viewers. I'm betting that is why the RSN cares about protecting a particular market area. Just a hunch but it seems to follow logically.

S

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