The other night, I got home after class and turned on my Sportsnet Now streaming channel to watch that evening’s broadcast of the Edmonton Oilers game. However, I was instead greeted with a message stating that the game was unavailable due to “regional or national blackout restrictions”. Given that I am a rational adult, I immediately blew my lid and angrily cussed out Gary Bettman and the entire NHL for trampling upon my rights as a paying customer. But once I came around, I got curious as to the reasoning behind these ‘blackout restrictions’ and how they work from an intellectual property perspective.
As it turns out, ‘regional blackouts’ are ostensibly used by the NHL to protect and grow each hockey team’s local market. Every NHL team has a number of ‘regional games’ whose broadcast rights are sold to a local television network and are only made available within the team’s designated broadcast region. Regional blackouts are determined based upon the physical location of the viewer and not the location of the game being broadcast. For example, a viewer located in Alberta would only be able to watch regional Oilers games (whether home or away) through the local television network that holds the broadcast rights for these games, which in this scenario happens to be Sportsnet West. Viewers located outside of the designated broadcast region are only able to view these restricted games through a premium Sportsnet subscription service, which can prove quite costly.
The NHL will also sell the broadcast rights to ‘national games’ which are made available across Canada. National games are not subject to the league’s regional blackout policy and can be viewed by anyone who subscribes to the national broadcasting network. Likewise, there are no regional restrictions on Stanley Cup playoff games or other special events, such as outdoor NHL games, the All-Star Game, and the Entry Draft. However, national games may also be subject to blackout restrictions where the non-exclusive broadcast of the local television network is favoured over that of a national network.
It is interesting to note that blackout restrictions are a product of the broadcasting contracts put forth by professional sports leagues and are therefore not regulated by the Canadian Radio-television and Telecommunications Commission (CRTC) under the Broadcasting Act. However, there have been instances of litigation regarding blackout restrictions across North America. While many of these cases have been argued in the context of anti-trust law, the rights which allow sports leagues to implement blackouts are largely derived from copyright law. In terms of Canadian legislation, the leagues are provided with the exclusive right to reproduce or license the broadcast of televised sporting events under section 3 of the Copyright Act. The rights held under this legislation are strong and cover works that are fixed simultaneous to transmission. Although the CRTC has demonstrated a willingness to address viewer concerns in the past, a lack of jurisdiction precludes the administrative agency from interfering with private licensing agreements.
But do the blackout restrictions actually work as the NHL claims they do? Personally, I have my reservations. Rather than subscribe to multiple expensive broadcasting services, it seems as though many viewers are ‘cutting the cord’ and choosing to sacrifice access to a significant slate of restricted games instead. For years, sports fans have been calling upon professional leagues to provide ‘à la carte’, direct-to-consumer streaming options where customers are billed only for the games they want to watch. While leagues such as the NHL have resisted these calls to action, many consumers have tuned out or resorted to illegal streaming services to watch their favourite teams play. Therefore, I do not believe that the current broadcasting strategy is particularly effective in expanding viewership or protecting local markets.
So why do blackout restrictions exist if they do not serve to protect and grow local markets? In my view, the strategy of implementing blackouts is one of pure economics. It’s no secret that broadcasting rights in the world of sports is big business. For example, Rogers Sports & Media (the parent company of Sportsnet) currently pays over $430M per year for the rights to broadcast national NHL games in Canada. In addition, Rogers also contracts for regional broadcast rights with various Canadian NHL teams, contributes advertising revenue, and holds the naming rights for two separate arenas (in Vancouver and Edmonton). Given the money at stake, the NHL has a vested interest in maximizing the cumulative earning potential of this revenue stream. In contrast, enabling viewers to access every NHL game via one convenient source would only generate income through that source, rather than the various networks and streaming services that are currently able to capitalize on NHL broadcast rights. Furthermore, the current framework provides each NHL team with the autonomy to negotiate and secure their own broadcasting deals in relation to regional games – a feature that is very profitable for the sport’s most popular and powerful franchises.
Although the NHL’s current blackout policy has proven to be lucrative in terms of broadcasting revenue, I would argue that blackout restrictions are quickly becoming cumbersome and antiquated. While modern consumers want unfettered access to every NHL game of interest through a single subscription service, public frustration with blackout restrictions has been simmering for decades. In my opinion, the legal landscape with respect to copyright and broadcasting rights in professional sports is long overdue for improvement. Taking everything into account, I would argue that legislative reform is needed in order to recalibrate the rights provided under intellectual property law and to shift the focus of enactments such as the Copyright Act to include the plights and demands of consumers. I believe that this strategy would better serve the intended purpose of Canadian copyright law, as stated in Théberge: to promote balance between the economic interest of the copyright holder and the proprietary interest of the purchasing public. In addition, I believe that the challenges posed by blackout restrictions could be brought within the purview of the Broadcasting Act as the CRTC may be the most efficient administrative body to deal with these issues.
Communications Law