The “Football Follies” series of films contains classic highlights of players bumbling, stumbling, and fumbling their way across the gridiron. While highly entertaining – such as ex-Minnesota Viking Jim Marshall’s fumble recovery and ensuing 65 yard run to the wrong end zone – they also provide excellent examples of how not to play football.
Recent government forays into consumer regulation provide similar examples of how not to intervene in markets.
Take, for example, the public relations war surrounding the NFL Network. Last month’s game between the Dallas Cowboys and Green Bay Packers featured two 10-1 teams, with the winner becoming the frontrunner to reach the Super Bowl. But many fans used to seeing such contests couldn’t watch it.
Last year, the National Football League opted to move some of its games off of broadcast TV and onto its NFL Network, available only on cable and satellite services.
From the network’s inception, the NFL has prodded cable providers to include it on their basic tier of channels, as the two main satellite companies have done. But the major cable providers objected to the hefty price the NFL is seeking. They’ll carry it, they say, but only on the sports tier, which entails an additional expense and thus reaches far fewer viewers.
This has all the elements of a classic battle between marketplace titans – including the unfortunate attempt by one party to get government intervention on its side.
Such behavior is known as rent seeking, where businesses attempt to gain through government what they can’t win through market competition.
The NFL, probably the most muscular of all sports leagues, is no stranger to competition. But rather than battle it out on the field, the league has turned to the Federal Communications Commission and the Texas Legislature in order to force the cable industry’s hand.
This is not surprising, since the FCC has made it its business recently to involve itself in such matters. It is currently considering prohibiting providers from “tying” programming and instead forcing them to offer channels a la carte, and just last week began the process of regulating the market share of cable companies.
The FCC, though, has no monopoly on overreach. Earlier this year, the Texas Legislature came dangerously close to re-regulating Texas’ world-class electricity market – failing to do so only because of a technicality. Government regulators routinely interfere with insurance market transactions. And a Texas legislative committee held hearings earlier this week on the NFL Network dispute.
Regulators simply cannot deal with such issues better than the marketplace, where billions of consumers negotiate with millions of suppliers every day to reach optimal solutions.
The response of consumers to the NFL Network problem shows the superiority of market-based solutions.
Many fans watched the game with other friends who had satellite service. One such satellite customer in East Austin opened up his yard to all comers with a big-screen TV and free food. Others actually switched their television service to a different provider that carried the NFL Network.
Probably the most common response by fans was to watch the game in sports bars, which reported huge crowds and revenues that night.
Let’s not forget this is all about money. Sellers want to maximize revenues, consumers want to minimize costs.
Rather than taking money from one pocket and putting it into another, regulators ought to remember that fans are quite capable of taking care of themselves when it comes to figuring out the best way to watch a football game, or to buy electricity or insurance. It is folly to think otherwise.
Bill Peacock is the Director for the Center for Economic Freedom with the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.