Pay-for-View TV: Sports’ New Way to Charge Admission : Entertainment: A congressman is seeking to prevent leagues from moving local games from free TV to cable.

Even as baseball’s pennant races start to simmer and professional footballers grunt their way through summer training camp, an increasingly hot sports topic in Washington is a question of fans’ rights.

Specifically, where does a couch potato’s cherished right to watch the home team on free TV give way to the team’s right to make a buck on cable or pay-per-view television?

It’s a major issue for sports teams at a time when the broadcast networks, with their advertising revenue flagging badly, may stop bidding so energetically for rights to carry games. Many insiders see pay-per-view as the only way that teams’ TV revenues can keep step with spiraling player salaries.

But forcing fans to pay for what they are used to getting free is politically dicey, to say the least.

“No question this is a growing storm on the telecommunications horizon,” said Rep. Edward J. Markey (D-Mass.).

Sports franchises have long tried to balance the impulse to wring maximum profits out of TV against the fear that angry fans could spur Congress into action. But this year, a couple of teams evidently crossed the line.

First the Minnesota North Stars, surprise finalists in the National Hockey League championship series, outraged their fans by making home playoff games available on a pay-per-view basis, at up to $12.95 a game. So many Minnesotans gritted their teeth and paid up that the playoffs were one of the most lucrative regional pay-per-view events ever.

Then the Philadelphia 76ers basketball team decided to switch nearly all of their regular-season games from free TV to cable. Only seven games will be shown on local broadcast TV next season compared to 41 games last season.

That was enough for Rep. Peter H. Kostmayer (D-Pa.). Decrying “a creeping . . . electronic elitism,” the suburban Philadelphia congressman last week introduced the Fairness to Fans Act of 1991, which would strip professional sports leagues of their federal antitrust exemption if they allowed teams to move local games away from free TV.

In line behind Kostmayer was Rep. Gerry Sikorski (D-Minn.), who proposed righting the North Stars’ wrongs by requiring major league sports championships to be carried on either free TV or “basic” (not premium) cable systems.

The chances of either measure becoming law this year are slight, congressional and industry sources say, but that doesn’t mean professional sports franchises aren’t under heavy pressure from Washington.

Markey, the chairman of the House subcommittee on telecommunications and finance, has met several times this year with National Football League Commissioner Paul Tagliabue to make it clear that Congress won’t stand for any thinning out of the NFL’s free TV schedule.

He has delivered similar messages to the commissioners of major league baseball and the National Basketball Assn. All three commissioners have promised that their leagues’ championships will remain on free TV at least through the year 2000.

Markey’s panel would be a likely forum for any debate over what he terms “sports siphoning.” The congressman contends that the growth of cable and pay-per-view threatens to divide the nation into “information haves and have-nots.” He also rejects the suggestion that football games aren’t essential information in a democracy.

“The social fabric is largely knit by our common experiences,” among which are sports events, Markey said. Knowing something about sports aids in assimilation, he added, because it “telescopes the time it takes people to overcome racial and ethnic and social barriers.”

Snip away the sociology, and the controversy amounts to “politicians getting Brownie points for taking a popular stand,” scoffed Scott Kurnit, who heads Showtime Entertainment Television, a pay-per-view unit of Viacom Inc. in New York.

“People have been paying for programming since the dawn of cable TV,” he said. “But now that the technology exists to charge for individual programs, all of a sudden it’s different.”

Those who aren’t familiar with Evander Holyfield or Hulk Hogan might be only dimly aware of pay-per-view at all, since the industry’s richest events to date have been professional boxing and wrestling matches.

According to Nielsen Media Services, 56 million, or 60%, of the country’s 93 million households are cable subscribers. And of those cable customers, only about one-third are wired for pay-per-view shows. At the end of 1990, pay-per-view accounted for only a $253-million slice of cable TV’s $18 billion in revenues, according to Paul Kagan Associates, a television research firm.

Pay-per-view’s profile will rise sharply in the months ahead, however, as NBC launches a huge promotional campaign to sell tickets to its pay-per-view telecasts of the 1992 Barcelona Olympics. NBC paid $401 million for the TV rights and hopes to help justify the cost ($101 million more than it paid for the Seoul Olympics in 1988) with pay-per-view packages priced from $95 to $170 that will supplement the 160 hours of free Olympics broadcasts.

Several NBA teams and two major league baseball teams have pay-per-view packages in their home markets.

One of the oldest and most successful programs is in San Diego, where since 1984 baseball’s Padres have offered up to 50 home games per season through the San Diego Cable Sports Network, owned by Cox Cable. Single games cost $7.95; multiple game packages are also sold. Subscriptions have averaged from 15,000 to 20,000 per game, network manager Marty Youngman said.

Among team sports, professional football is seen as the most fertile arena for pay-per-view. The idea behind ABC’s successful Monday Night Football format--focusing a week’s worth of promotion on a single game--would lend itself well to pay-per-view, experts say.

Another approach would be to offer a full schedule of one team’s games. That way, a transplanted New Yorker living in Los Angeles could watch the Giants play even if the local TV offering was the Rams game.

There has been speculation that the NFL could command as much as $20 a game on pay-per-view. But whatever the price or format, pay-per-view won’t happen before 1993, the league has pledged.

The NFL has special cause to believe that Congress would back up its threats with law. It has happened before. In 1973, Congress created “the blackout rule,” requiring that any game sold out at least 72 hours before kickoff be televised for hometown fans. Although the law expired after three years, the NFL still observes the rule voluntarily.

(The rule was ostensibly prompted by an outcry after Miami fans were subjected to a blackout of the 1971 Super Bowl, held in Miami. But it also helped that Congress was considering the legislation at a time when its own hometown team--the Washington Redskins--had just appeared in the Super Bowl and was headed for another good season.)

According to Markey, the legal principle for regulating sports broadcasts is embedded in the Telecommunications Act of 1934: The viewing (or listening) public should be left “no worse off after the introduction of new technology than they were before.”

If the introduction of television, for example, had meant the elimination of radio, that wouldn’t have been fair to radio listeners who couldn’t afford TV. The same reasoning applies to free TV customers who cannot afford cable or pay-per-view.

To Kurnit, however, such government interference in the marketplace inhibits progress. “Without people who own the rights being able to charge for them, we would be stuck with three networks and a couple of independent stations,” he said.

“What’s the difference between a (team owner) charging for his intellectual property and McDonald’s charging for a quarter-pounder?” Kurnit asked.

One difference being articulated in Washington these days is that McDonald’s doesn’t enjoy the kind of antitrust exemption that enables sports teams to bargain collectively for television contracts. Neither does a fast-food outlet benefit from such taxpayer-supported projects as municipal stadiums and the freeway exit ramps serving them.

“The whole notion of publicly supported sports being accessible to only the wired and the wealthy is wrong,” Sikorski, the Minnesota congressman, wrote in an essay for the Minneapolis Star-Tribune during the North Stars pay-per-view controversy. “We the people own the airwaves, the airways and the right-of-ways used by both the free broadcasters and the cable companies.”

North Stars owner Norm Green was excoriated on sports talk shows and in newspaper columns and editorial cartoons as the epitome of greed. But not everybody saw it as an open-and-shut case.

Kevin Cattoor, general manager of Midwest Sports Channel, which produced the North Stars’ pay-per-view games, pointed out that the team finished the regular season with a losing record, very poor attendance and projected losses of $6 million. The North Stars were widely expected to go down meekly in their first playoff series against the Chicago Blackhawks.

With little to lose, it seemed like a perfect time to experiment with pay-per-view, Cattoor said, and the deal was struck to present the home games that way. Road games were still available on free TV.

Surprisingly, the North Stars beat Chicago. They won the next series, too, against the St. Louis Blues, and then reached the finals by upsetting the Edmonton Oilers, reigning Stanley Cup champions.

With each victory, the clamor increased to open the home games up to free TV. John Thomas, North Stars senior vice president for sales, said the team declined to do that because it didn’t want to break a commitment to its pay-per-view partners.

Besides, the money was terrific. When the North Stars faced the Pittsburgh Penguins in the championship series, pay-per-view sales hit 47,000, for a gross of $600,000 a game. (Pittsburgh ultimately won, four games to two.) Between pay-per-view and arena revenues, the playoffs wiped out most of the North Stars’ red ink.

“They were on the verge of losing $6 million, and they saw an opportunity to cut their losses,” Cattoor said. “I’m sorry, but they’re entitled to do so.”