Michael Powell, a former chairman of the Federal Communications Commission and now the cable industry's top lobbyist, warned that if the cost of sports programming continues to rise it could lead to government intervention.
"We all ought to wake up and be careful ... so we don't blow this into smithereens at some point and invite the government to do it for you, which I think nobody would be a winner in," Powell said in an interview this week on C-SPAN's "The Communicators."
Powell, who chaired the FCC from 2001 to 2005, is now the head of the National Cable & Telecommunications Assn., the lobbying arm of the cable industry.
The last decade has seen a dramatic increase in the fees broadcast and cable channels pay for television rights for sports. Many of those costs are ultimately passed on to pay-TV subscribers.
Citing ESPN's new deal to keep "Monday Night Football," Powell said, "I can't control that the NFL has the power to demand a 73% increase for 'Monday Night Football,' which I find astonishingly insane." Powell said he wonders if there is a point where distributors say, "I can't handle it anymore."
Powell is the second prominent cable industry executive to warn that if sports programming expenses continue to skyrocket, it could lead to lawmakers poking around the industry.
Last month, cable industry pioneer and Liberty Media Chairman John Malone said sports rights are "essentially a high tax on a lot of households that don’t have a lot of interest in sports." He added that "the only way it is going to change in the short run is for government to intervene."
Many distributors have expressed a desire to offer sports channels -- at least local networks -- separately from the rest of their cable lineups. Sports programmers resist that because if the channels are in fewer homes it limits the potential ratings and advertising revenue.
One of the issues, though, is that there is not an increase in sports product as much as there is in the number of channels competing for that product.
"There are not new pro and college games being created," DirecTV executive Dan York recently told the Los Angeles Times. "You are getting the same product being reshuffled into smaller slices at higher prices. That's not a model consumers can continue to support."
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