RUSH: To the phones we go, to Harry in Tuscaloosa, Alabama. I’m glad that you called, sir. Thank you.
CALLER: Rush, turkey and football is about as American as you can get, and this year, as you mentioned earlier this week in your program, the game on Thanksgiving will only be broadcast by the NFL Network. I have been briefed on this matter, Rush, and the problem is the NFL Network only wants to be carried as a vacant package by the cable conglomerate. So, if you have cable, you’re not going to be able to watch this game. You’re only going to be able to watch it if you have satellite.
RUSH: Right and I have satellite so I don’t really care.
CALLER: Yeah, I don’t, Rush. But the only exception is if you’re in the visiting team’s hometown, it’s broadcast for free, and it’s also broadcast for free over the air in the home team city as long as the game is sold out.
RUSH: No, that’s not going to happen.
CALLER: Well, no, it is the case, Rush. The NFL has told me this. I’ve been briefed on the matter.
RUSH: Wait. The NFL told you there’s going to be over-the-air broadcast in the visiting team city of the NFL Network games?
CALLER: Yes, and the home city as long as the game sells out 72 hours in advance.
RUSH: Hmm. I’ll take your word for it. I will have to double-check that. I thought NFL was playing hardball and was not even going to do that.
CALLER: Well, they don’t want to alienate their fans. I’m surprised the NFL held out this far.
RUSH: Come on, they’re already alienating the fans. I’ve done some research on this since I last talked about it, and you know who most people are blaming for this? The cable companies! They’re not blaming the NFL. They’re blaming the cable companies.
CALLER: Well, it will be interesting to see how their views will change after Thanksgiving when people turn on the TV to find out there’s no NFL.
RUSH: Well, look, the Thanksgiving night game is the Indianapolis Colts at the Atlanta Falcons. That’s not the game that’s going to get everybody worked up. The game that’s going to get everybody worked up is the on the 29th, and that’s the Green Bay Packers at the Dallas Cowboys. That’s going to be the game that’s going to have everybody — they’re in 35 million homes, NFL Network is, 110 million homes are wired for cable. It’s Comcast and Time Warner which are providing the obstacle here, not willing to accept the financial deal that the NFL is demanding. The cable companies are saying, ‘Look, aside from these eight games that you have for us at the end of the season, all you’re doing is reruns the rest of the year.’ Well, you’ve got the draft and you’ve got some of the other things, but it’s all reruns, we already provide ESPN, ESPN News. I mean our viewers can get all the football they want —
CALLER: Well, Rush, the NFL’s been saying that Comcast, they have their own sports network TV, and it’s subpar, and they feel like they should be on the same package that Comcast sports network is on, which is basic cable.
RUSH: Yeah, well, I know they want basic, but the problem is that the NFL wants — it’s a figure that varies — but they want something like 60 to 70 cents per subscriber paid for by the cable company for carrying the network. Do you know what ESPN gets per subscriber?
CALLER: I have no idea.
RUSH: Take a guess. NFL Network wants 60 to 70 cents.
CALLER: I would guess 15 cents.
RUSH: Three dollars and nineteen cents, or something. The cable companies pay ESPN over three bucks —
RUSH: — per subscriber.
RUSH: There’s a lot going on here that, you know, cable television is an intricate business, and the way revenues are generated for providers in the cable company is a formula, and it differs for every network.
CALLER: Rush, one last point, though. Out of the top 25 highest ratings of all time on cable television, 24 have been NFL games.
CALLER: So they should have more leverage. They’re providing them ratings.
RUSH: Cable companies don’t care about ratings. They care about subscribers, and they’ve got the subscribers.
CALLER: I see.
RUSH: It’s the networks on the cable companies that care about the ratings. Cable companies don’t care about that, they’re strictly in it for money. This is getting to the point where I’ll tell you how much friction there is in here. The federal government is thinking of imposing binding arbitration and having a mediator, an arbitrator to look at the dispute and make a ruling and having it be binding between the NFL and Comcast and Time Warner cable, those are the two big holdouts because, you know, fans are writing their congressmen. Congressmen can’t do anything about it. They’re writing their state representatives. State representatives can’t do anything about it, and the state representatives and Congress feel a little helpless because they would love to be able to show their fans they could do something about this to resolve the dilemma. Anyway, it’s the 29th with the Packers at the Cowboys that’s going to cause this to come to a head. If it doesn’t happen by then, the last game of the season on Saturday night, the New England Patriots at the New York Giants, and that the Patriots are going for an undefeated season, the Giants will be fighting for the playoffs, probably a wild card berth, unless the Cowboys collapse, that’s going to be interesting to watch this. Look, I’m glad you called. I appreciate it, Harry.
RUSH: This is Pat, Grand Rapids, Michigan. Nice to have you on the EIB Network. Hello.
CALLER: Hi, Rush. Mega Vietnam-veteran-retired-economic-professor dittos.
RUSH: Thank you, sir.
CALLER: Rush, I want to take you back about an hour in the show when you were talking about the cable and the NFL.
CALLER: It sounded like you were putting your free-market capitalism on hold when the NFL and the cable companies get involved. I hope I didn’t hear you wrong.
RUSH: Yeah. I know I’m on fumes today, but what did I say that made you think I was putting my capitalism on hold?
CALLER: Well, because you were talking about the government getting involved to settle this thing?
RUSH: I wasn’t advocating that. I’m just telling you the government’s thinking about a binding arbitrator. I think it’s absurd.
CALLER: Oh, thank you, because that is absurd. They’re private companies.
RUSH: People are writing their congressman, they’re writing local legislators asking them to do something, quote, unquote, about the cable company. The cable companies are taking the PR hit here.
CALLER: Yeah, this is a free-market world. If these guys want to fight it out, let ’em fight.
RUSH: Exactly right.
RUSH: No, I’m not for the government. In fact, I made the point there’s nothing Congress can do about it. Now, I don’t even know under what auspices somebody’s appointed the arbitrator.
CALLER: Oh, my father built one of the very first cable systems in the country.
RUSH: A-ha! So we have a capitalistic I think bias here.
CALLER: Yes, I do.
RUSH: Thanks for the full disclosure.
CALLER: Yeah, we go way back to when we got in trouble with the Vikings because we used to pump their signal from Iowa back into Minnesota, when people didn’t want to go sit in the cold. (laughter) We got sued, and I think we had something to do with the original distance signal rule. That went all the way to the court.
RUSH: I have no doubt.
CALLER: Yeah, anyway, thanks, Rush.
RUSH: You know, the cable companies, look, I want you to hang on, because I have a question for you, you’re a retired economics professor.
RUSH: And I want to ask you a question from the standpoint of cable guys, because the cable guys are livid about something that they would love to have that the NFL will not let them have.
RUSH: Pat in Grand Rapids, Michigan, welcome to the EIB Network. Hello.
CALLER: Hi, Rush. You were talking about cable and the NFL.
RUSH: Yeah. Here’s the question, here’s the thing, this is the question I had for you.
RUSH: It is this. The NFL offers every football game played on Sunday in the afternoon, not the night game, on the NFL Sunday Ticket to DirecTV. The cable operators are livid. They want that package and they claim it is restraint of trade. They get the network offerings that are local-market determined, but they don’t get the Sunday Ticket. Now they’re being asked to pay what they think is an inflated price for the NFL Network. And, of course, there are a lot of fans, not everybody can get satellite, not everybody can afford it, not everybody can put a satellite up, because you’ve got trees and so forth. It’s very expensive, like $750 million that DirecTV is paying for it. So put that into the equation and the cable guys being upset over the fight over the NFL Network.
CALLER: Well, it’s just basic economics, Rush. If I’m a cable provider, and I have to pay three dollars for a show to provide it to a customer, what’s going to happen to my pricing? Now, and the other thing is, DirecTV doesn’t have the infrastructure that cable does, okay? With DirecTV, I grant you, satellites are not cheap, and putting them up is not cheap, but the infrastructure difference between cable and satellite is horrendous. What does satellite do? They come out, they give you a box, you turn it on, you plug in your phone so you can dial movies over the phone, but the bottom line is that’s their infrastructure, the antenna on your roof and the box on the top of your set. If you compare that to the tens of hundreds of thousands of miles of cable and cable amplifiers, and you start looking at the economics of one versus the other, it becomes very clear why cable can’t pay what DirecTV or satellite broadcasters can pay. It’s a cost thing.
RUSH: Right. But what the cable guys are saying is how come it’s exclusive? DirecTV will pay whatever they have to to keep this, and it’s exclusive.
CALLER: What’s wrong with that? It’s a free market, Rush, it’s like telling me that Microsoft — remember the Microsoft lawsuit, okay, people have a right to their product, and they have a right to sell it to whom they want to, and if you don’t want to pay the price, you don’t get it. I can’t go buy a Cadillac for $495.
RUSH: I understand that, and the cable company didn’t want to pay what DirecTV is paying for the Sunday Ticket.
CALLER: And that’s all it is. Because if cable TV does pay what DirecTV pays, their subscribers’ rates would go through the roof, and the cable companies come out to be the big, bad guy, but this fight has been going on since day one about, you know, how bad the cable guys are. In the early days, the phone companies and utility companies wouldn’t even rent space to the cable company to hang their wires on the pole. They had to be sued to get space just to hang the wires. This stuff goes back to day one. Cable is nothing more than a community antenna, okay? And they have infrastructure costs. DirecTV and some of these other people, look at the phone company now, the phone company is going to give you TV eventually, they’re going to give you digital TV over your phone line.
RUSH: Most of us that use Apple, Macintoshes already have that.
CALLER: Exactly. But what was their additional infrastructure cost to do that? Almost nothing. So what’s going to happen to all this coax laying in the ground? That’s why cable is going to diminish and become nothing more than a broadband tool. It won’t really be a TV like it was 20, 30, 40 years ago. When my dad started it in 1957 we built the seventh system ever built.
RUSH: Let me ask you a question about coax. Is that a one-time investment or do you have to replace it every now and again because it wears out?
CALLER: It’s pretty much a one-time investment, but what wears out are the line amplifiers and the huge number of technicians, plus those babies are out in the weather, not that the phone companies aren’t, but you’re talking about —
RUSH: Well, you know, this stuff cuts both ways, though, because I can remember back in the eighties when I lived in Kansas City, ’79, ’80, when cable was first made available in my neighborhood, I craved it, because most places I’d lived did not have it, and they were making exclusive deals with cities for franchises, there were kickbacks going back and forth both ways on getting these things, and you were stuck with your cable company. You didn’t have a choice, and if your cable company didn’t provide you what another cable company did, you had to move.
CALLER: You still have that, Rush, you still have cable companies bidding for franchises in various cities. It’s the cities who got greedy, not the cable companies.
RUSH: And then you had all the telecommunications acts where people like McCain, ‘We’re going to lower your cable rates, skyrocketing cable rates,’ and every time federal legislation was passed, magically cable rates kept skyrocketing.
CALLER: Exactly. I mean think about it, just go back to the free-enterprise days, Rush, back in the sixties, our cable company, which was located in southern Minnesota, could pick up out of the air, free, from Iowa, the Minnesota Viking game.
RUSH: I know.
CALLER: And people would drive 70 miles south in the dead of winter rather than sit in that old stadium to watch the game and the Vikings got a little ticked and filed this huge lawsuit —
RUSH: Look. We can relive all this history. I remember going to the movies in my little hometown, Cape Girardeau, Missouri, the Esquire Theater, and this is in the sixties, because that’s when I was a kid, and the theater owner started every movie production, every show, with a little I guess a 45- or 50-second, maybe it was a minute film that he had made urging everybody who saw it to avoid cable coming into our little town because he was afraid it was going to wipe out his theater business, the people would stay home and watch movies rather than go to his Esquire Theater. Then the local TV station owner was also opposed to cable because he said, ‘My signal is just going to be pirated. They’re just going to do nothing but steal my signal. They’re not going to do one thing to produce it, not going to invest in one dime to create the programming that they are going to steal out of the air and charge people for.’ There was a huge battle in a lot of parts of the country to stop cable, but it was a wave that nobody was going to be able to stop. But don’t misunderstand, I not only love and appreciate free market, I get frustrated at people who don’t. You said, and unfortunately this is right, every question I asked you, Pat, you began your answer, ‘Rush, it’s just basic economics.’
Well, the sad fact is, basic economics is not understood by a whole lot of people, because it isn’t properly taught. Economics education in this country is inept at the econ 101 level. So when you, ‘Well, Rush, this is basic economics’ — So the reason I asked you about the DirecTV deal, Sunday Ticket versus cable and the NFL Network, is, is that there are people on the warpath trying to get Congress to get those games not only off of Sunday Ticket, but, if not off Sunday Ticket, but also on cable. There are people — and these are educated people — Greg Easterbrook at the Brookings Institution, is really, really, really angry that the Sunday Ticket is denied him. He can’t get a satellite reception because of trees where he lives. He would love to have the Sunday Ticket, and he thinks it’s being denied him by the market, and so he’s in favor of — he thinks it’s a monopoly. He thinks DirecTV has a monopoly on Sunday Ticket. But it’s just what you said. The NFL has a product. They can sell it to whoever they want. The fact is, anybody in the country can watch National Football League any Sunday, either over the air, on cable, or DirecTV, or even the Dish Network, I don’t know if they have it or not. Look it, Pat, I appreciate it.