Full opinion text
FINDINGS OF FACT, CONCLUSIONS OF LAW AND OPINION WILL, District Judge. In January 1991, we enjoined the National Basketball Association (“NBA”) from reducing to 20 from 25 the number of games involving the Chicago Professional Sports Limited Partnership’s NBA team, the Chicago Bulls (“Bulls”), that WGN Continental Broadcasting Company (“WGN”) could televise as a superstation. Our opinion and decision are reported in 754 F.Supp. 1336-64 (N.D.Ill.1991) (“NBA I”). We there set out at some length the history of the NBA and of superstation telecasts of NBA games by the three superstations, WTBS, Atlanta, WGN, Chicago and WWOR, New York. We also discussed the various other arrangements for broadcasting and televising NBA games including national and local television and national and local radio broadcasting. The national and local TV arrangements included both over-the-air and cable transmissions. In addition, we described the NBA and its teams’ operations and relations in general, the extent to which they operate individually and retain the net revenues from their individual operations, and the extent to which they operate jointly through the NBA acting as their agent. The net revenues from these joint operations are distributed periodically by the agent, the NBA, in equal shares to each member team. The joint operations include both national over-the-air and cable televising and radio broadcasting of NBA games but not local or regional over-the-air or cable televising or radio broadcasting of games involving a local team. We further pointed out that the NBA. through joint action of the teams has established numerous rules and regulations governing many subjects including how many players are allowed on the court, the height of baskets, timing limitations, the number of players a team may carry, the size of the court, facilities which the home team must provide, and a host of other game and operational rules. The league, again acting as agent for the member teams, also handles all sales, outside a team’s home arena, of merchandise and memorabilia utilizing team or NBA logos. Again the net revenues are distributed equally among the member teams. Finally, we also analyzed at length the application of the federal antitrust laws, as well as possible exceptions thereto including the Sports Broadcasting Act (“SBA”). We concluded, and the court of appeals affirmed, that, consistent with the United States Supreme Court’s holding in National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984), the NBA’s proposed reduction in the number of Bulls’ games over WGN was a naked and unreasonable restraint on output and distribution which violated the federal antitrust laws and was not exempted therefrom by the Sports Broadcasting Act. Except for a number of formal changes and the events which have taken place subsequent to our 1991 opinion and which we will discuss later, the NBA, the member teams and the relationship between them, including the many rules and regulations, remain substantially the same as described and found in our 1991 opinion, and we will not repeat them here but will adopt them as part of our current findings of fact. The parties have stipulated some 481 uncontested facts. We adopt all of them except numbers 4-6, 30-31, the last sentence of 88, 104-105, 110-111, 118-119, 122-125, 129-135, 145-150, 154-160, 223, 248-249, 251-252, 333, 368, 439^445, 447, which are either irrelevant to the issues before us, or which have previously been found in our 1991 opinion and are, therefore, repetitious. In addition to the foregoing, certain narrative additional facts may be found in the course of this opinion. Our 1991 decision and the injunction were affirmed by the Seventh Circuit. 961 F.2d 667 (7th Cir.1992) (“NBA IA”). When the Supreme Court denied certiorari, 113 S.Ct. 409 (1992), the decision and injunction became final. Following the entry of the injunction prohibiting the NBA from reducing the number of Bulls games WGN could carry from 25 to 20, the NBA agreed that for the 1991-92 season the number of games superstations could carry would be 30. That agreement was extended by the NBA for the 1992-93 and 1993-94 seasons. In all three seasons, WTBS and WGN televised 30 games. For the current 1994-95 season, the NBA has agreed only to the 25 games specified in the injunction. The earlier proceedings dealt only with the question of whether or not the NBA could reduce the number of Bulls games which could be televised over WGN from 25 to 20. The NBA now seeks a decision that, notwithstanding the earlier decision and injunction, it may prohibit any distribution of Bulls games by WGN or, if not, that it may impose a superstation fee or tax on the transmission of Bulls’ games by WGN. The Bulls and WGN, on the other hand, seek the right to televise up to 41 Bulls games on WGN. They contend that any NBA limitation on the number of Bulls’ games on WGN is a naked restraint in violation of the antitrust laws unless it can be shown to be procompetitive. They assert that there are three restraints at issue in this case: (1) a total ban on superstation telecasts of Bulls’ games; (2) the ban against any club televising its games over a superstation on the same night any NBA game is being televised over TNT or WTBS, the blackout restraint; and (3) the so-called superstation tax. In the course of its opinion affirming our decision and injunction, the court of appeals suggested a number of actions which the NBA might take in an effort to achieve its objectives, while at the same time avoiding the two decisions and the injunction, as weíl as the application of the antitrust laws. Notwithstanding that the NBA had voluntarily agreed to 30 Bulls games being televised over WGN in the three seasons, 1991— 92, 1992-93 and 1993-94, the appeals court’s suggestions as to how the NBA might prevent all such telecasts effectively eliminated the very real possibility of a negotiated settlement of the case. After stating, in its discussion of the SBA, that “Recognition that special interest legislation enshrines results rather than principles is why courts read exceptions to the antitrust laws narrowly, with beady eyes and green eyeshades,” NBA IA, 961 F.2d at 671-72, the court made a number of suggestions to the NBA as to how it might prohibit and prevent national distribution of Bulls’ games by WGN without violating the antitrust laws. Among the suggestions were the following: 1. Establish that the league is a “single entity” so that whatever it does is un-reviewable under Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984) and its progeny. 2. Transfer all team copyrights to the NBA. 3. Invoke the protection of the SBA by transferring all telecast rights of NBA games whether national or local to the NBA and then put a cap on the number of national telecasts of NBA games in the contracts with NBC and Turner. 4. Demonstrate that a limitation on the distribution of Bulls’ games on WGN “expands output, serves the interests of consumers and should be applauded rather than condemned.” NBA IA, 961 F.2d at 673. To do this, the court suggested that the NBA might try to establish that keeping popular games off superstations helped weaker teams attract support of their local audiences and increase their gate receipts, which is a principal source of team revenues, while at the same time attracting larger audiences, an expansion of output. 5. Attempt to establish that the elimination of all Bulls’ games on WGN will cause WGN and the Bulls to suffer no “antitrust injury,” i.e., loss that comes “from acts that reduce output or raise prices to consumers.” NBA IA, 961 F.2d at 670. In this connection, the court speculated on who, under antitrust law, are the “consumers” of TV sports broadcasts, sports fans who watch the games or advertisers who buy the opportunity to persuade viewers to purchase their products and suggested that this question “be explored further in the proceedings yet to come.” Id. 6. Have the league impose a superstation fee or tax which would produce income for the teams since it would be shared equally and would eliminate any “free-riding” by the Bulls and WGN. Not surprisingly, the NBA almost immediately undertook to implement the various suggestions. Within a few months, it moved to have the injunction lifted and vacated, representing that it had taken the steps suggested by the court of appeals. Except for the actions taken in an effort to adopt the court of appeals’ suggestions, however, the NBA remains today as described in our earlier opinion, a league of professional basketball teams, each individually owned and controlled except as affected by league rules. Moreover, a limitation on or a prohibition of distribution of any Bulls’ games over WGN is still a naked restraint. Accordingly, a logical approach to a decision in this case is, we believe, to examine the changes which the NBA has made and which it contends entitle it to prohibit the telecasting of any Bulls’ games over superstation WGN. If we conclude that such a blanket prohibition is not in violation of the antitrust laws, there will be no necessity to consider the lesser restraints which the plaintiffs challenge, the superstation blackout or the superstation tax. We proceed then to consider the significance and effect of the several changes. I THE SINGLE ENTITY THEORY In NBA I, we discussed, in detail, the organization of the NBA and its member teams. We examined the rule making authority and the economic significance of the league, along with the extent to which the teams cooperate and compete to promote their combined and individual interests and success. We concluded that the NBA is a joint venture of rival teams, necessarily cooperating in the production of games, yet competing for media attention, fan support, general managers, coaching staffs, players, championships, prestige and, last but not least, profits. NBA I, 754 F.Supp. at 1339-42. The court of appeals affirmed this analysis, yet suggested, without indicating what of significance had not been considered, that the parties should “join issue” more fully in the proceedings to follow. NBA IA, 961 F.2d at 672-73. The parties obliged, and we once again consider the structure of the NBA. The NBA relies upon Copperweld, 467 U.S. 752, 104 S.Ct. 2731, and its progeny for the proposition that, despite its 27 or more independently owned and managed teams, it is a single enterprise. It argues that Copper-weld, which held that a corporation and its wholly owned subsidiary are a single enterprise for purposes of § 1 of the Sherman Act, can be broadly applied to exempt the NBA from antitrust liability. We disagree. The holding of Copperweld is quite narrow, and rests solely upon the fact that a parent corporation and its wholly-owned subsidiary have a “complete unity of interest,” in which the “the subsidiary acts for the benefit of the parent,” and “the parent may assert full control at any moment.” Copperweld, 467 U.S. at 771-72, 104 S.Ct. at 2741-42. The NBA maintains that the “economic reality” of its operations demonstrates such a collective interest. An analysis of the facts, however, discloses that the singularity of purpose and control underlying Copperweld is conspicuously absent in the relationship between the NBA and its member teams. The NBA urges that subsequent case law, particularly, City of Mt. Pleasant v. Associated Elec. Co-op., Inc., 838 F.2d 268 (8th Cir.1988), has broadened the scope of Cooper-weld’s protection against antitrust violation to include other legally distinct, yet substantively unified, business organizations. Rather than supporting the argument that the NBA is in reality a single entity, however, these later decisions highlight facts that distinguish the NBA from those entities treated as single enterprises under antitrust law. Specifically, as Mt. Pleasant makes clear, a single enterprise does not exist when any of the joint members has “pursued interests diverse from those of the cooperative itself.” By diverse, the court went on to state “we mean interests which tend to show that any two of the defendants are, or have been, actual or potential competitors.” Mt. Pleasant, 838 F.2d at 276; see also Sullivan v. National Football League, 34 F.3d 1091, 1099 (1st Cir.1994). As noted above, and at length in NBA I, the teams comprising the NBA pursue the very type of diverse interests that Mt. Pleasant indicated must be absent. The NBA teams are actual competitors, not only on the baseline for points, but also off the court in the market for players, coaches, managers, advertising dollars, fan support, ticket sales, and overall revenues. They keep their own profits and generally earn far more for themselves than they do through their combined efforts as a league. Winning season games, playoffs and championships translates into greater financial prosperity for the victors. See Tr. 5998-6000 (Colangelo). One team’s gain on the court is thus generally another’s loss at the bank, and while some cooperation is necessary, the profit seeking interests of one team are often contrary to those of other teams. Similar to the lack of “complete unity of interest,” is the NBA’s limited control over the actions of the individual teams. Each team is independently owned and operated, elects its own directors and officers, hires its own employees, conducts its own accounting, keeps its own profits, makes its own financial and investment decisions, and generally succeeds or fails on its own. Some teams have an interest in the arena in which they play. Others do not. While the teams have consented to be bound by their joint venture agreement and certain rules and regulations adopted by the Board of Governors, the individual, corporate and, in one instance, the Boston Celtics, public team owners, do not report to the league, nor does the league have the power to review or disapprove their business decisions. Tr. 3962, 4405-13 (Stern). Moreover, the NBA Constitution specifically prohibits any one team from exercising control over another. JX 69 at 6044. The NBA claims that, regardless of each team’s independent management, profit motives, ownership and control, the individual teams have no economic significance of their own. In support, it argues that the teams are nothing if not a creation of the league, and that “no team, standing alone, has the productive capacity to produce a single NBA game, much less a season of integrated games leading to a championship.” A look at some historical facts, however, is revealing. The NBA was not the first professional basketball league, but instead was formed in 1949 by the merger of two pre-existing leagues, the Basketball Association of America (“BAA”) and the National Basketball League (“NBL”). SF ¶383. Therefore, rather than the teams being creations of the league, the NBA can more accurately be described as a creation of the teams, who can dissolve it at any time by a three-fourths vote. JX 69 at 6061. Equally instructive is the fact that a separate professional basketball league, the American Basketball Association (“ABA”), competed successfully with the NBA from 1967 to 1976. SF ¶¶ 414-23. Professional basketball teams have, therefore, “produced” games both prior to and independent of the NBA, and conceivably could do so without the NBA again in the future. Unlike the parent and subsidiary in Copperweld, the NBA is at its core a joint venture of “two or more entities that previously pursued their own interests separately.” See Copperweld, 467 U.S. at 790, 104 S.Ct. at 2752. There is no doubt that the NBA, like any sports league, has cooperative characteristics. Mutual agreement is necessary to create the “product” of competitive basketball games and to insure its quality. Moreover, the member teams undoubtedly derive genuine financial benefit from their combined efforts. The NBA confuses, however, the necessary and beneficial cooperation of a joint venture, with the unified interests of a single entity. When independent actors join in order to achieve mutual benefit, or even to accomplish what they could not on their own, the result is not automatically exempt from antitrust scrutiny. NCAA, 468 U.S. at 133, 104 S.Ct. at 2976. Rather, it frequently mandates particular scrutiny as in the case of competitors who join together to fix prices. Thus, while the unique needs and structure of the NBA demand that we carefully review its joint agreements for procompetitive effects, they do not support the conclusion that the NBA is a single entity. Although we are the first court to consider the organizational status of the NBA under § 1 of the Sherman Act, we are not the first to consider whether sports leagues should be treated as single entities. Scholarly debate has been plentiful and arguments similar to those presented to us have been made in relation to other sports organizations. See McNeil v. National Football League, 790 F.Supp. 871 (D.Minn.1992). We have reviewed these discussions and find the better reasoned ones support the result reached here. Of particular relevance' to our decision, we note Sullivan v. National Football League, 34 F.3d 1091 (1st Cir.1994), in which the First Circuit recently rejected substantially identical arguments about the application of Copperweld to the significantly more integrated National Football League. After over nine weeks of trial, more than 1400 exhibits, and lengthy submissions, we find no material factual changes in our original analysis, nor in the NBA, that lead to anything but the conclusion previously reached—the NBA is a joint venture of competing teams capable of colluding in violation of § 1 of the Sherman Act. II. THE EFFECT OF THE TRANSFER OF THE TEAMS’ COPYRIGHTS TO THE NBA Both our earlier opinion and that of the court of appeals pointed out that, while the NBA contended the contrary, the individual teams apparently owned the copyrights to their games, programs and other copyrighted products. We noted that, while two teams obviously own the copyrights to any particular game, either of two joint owners of a work may grant a non-exclusive license to a third party without the permission of the other and that all NBA teams do exactly that in connection with the television and radio broadcasting of their games and the sale of other copyrighted products involving more than one team. We also noted that the NBA in all of its contracts acts only as an agent for the teams, not as a principal or copyright licensor. This includes television and radio over-the-air and cable contracts, souvenir, memorabilia and all other contracts with manufacturers and distributors of copyrighted products. Acting as agent is important to the NBA and the member teams because, as agent, the NBA is not subject to federal and state income and other taxes on the many millions of dollars it receives each year under all the various contracts. In an effort to prevent individual teams, like the Bulls, from licensing distribution of their copyrighted games without NBA consent, the commissioner recommended and the teams, with some dissents, voted to transfer all of their copyrights to the league. Theoretically, at least, the league now owns all team copyrights. Because the NBA rules have for many years permitted teams to license local and regional over-the-air and cable television as well as radio transmission of their games, and to sell copyrighted products in their own stadiums, the NBA promptly authorized the individual teams to continue to do so after it acquired the copyrights. It should be noted that it did not, however, purport to license them under the copyrights which it now ostensibly owns. As previously noted, in its multi-million dollar contracts with NBC and cable TV companies, as well as with the manufacturers and distributors of other copyrighted products, the NBA has always acted as agent for the various teams. Since ostensibly acquiring ownership of the copyrights, the NBA has entered into a number of new contracts including ones with NBC and the Turner TNT cable network and superstation WTBS. Notwithstanding that the NBA now purportedly owns the copyrights, and would presumably license the distribution of copyrighted games, the new contracts carefully identify the NBA, not as a licensor or principal, but again as agent for the teams. When we questioned counsel for the NBA during oral argument about this apparent inconsistency, the possible tax implications and whether or not the copyright assignments were substantive or merely nominal, it was suggested that we should recognize that the NBA owned them and could prohibit any team from entering into any contract involving copyrighted NBA products, even though the league itself did not purport in its own contracts to act as the owner and licensor of the copyrights. And so far as any tax implications were concerned, we were advised that they should be no concern of ours in evaluating the significance or lack thereof of the copyright transfers, but that the NBA would handle any tax questions when and if the issues arose. Tr. 8153, 8162 (Rauchberg). The ultimate fact is that there has been no change in either the teams’ rights to enter into contracts involving local and regional TV or radio transmission of NBA games and the sale of other copyrighted products, or in the league’s continuing in all of its contracts to act as agent for the teams and not as the owner and licensor of the copyrights. The court of appeals in its opinion pointed out that “We want to know the effects of the TV policy on consumers’ welfare, not whether the league possesses sufficient contractual rights that it has become the ‘owner’ of the copyright.” NBA IA, 961 F.2d at 674. We conclude from all of the foregoing that the nominal transfer of the various teams’ copyrights to the NBA does not immunize it from the application of the antitrust laws. In this connection, it should be noted that the NBA claims that, as nominal owner of the copyrights in all NBA game telecasts, it has a congressionally-granted right to license or not to license whomever it chooses, and its decision to license some telecasters and not others is beyond antitrust challenge. The NBA further argues that joint ownership does not change the nature of these rights, and in support of this statement quotes the Supreme Court in Interstate Circuit, Inc. v. United States, 306 U.S. 208, 227, 59 S.Ct. 467, 474, 83 L. Ed 610 (1939) (“[Ojwners of the copyright of a motion picture film acquire the right to exhibit the picture and to grant an exclusive or restrictive license to others to exhibit it.”). The NBA’s reliance on Interstate Circuit is ill-placed. Although the Supreme Court recognized that copyright holders may grant an exclusive or restrictive license to others, the Court also noted that monopoly rights associated with a copyright have certain limits, restraint of trade in order to suppress competition being one of them. The Court stated, “[a]n agreement illegal because it suppresses competition is not any less so because the competitive article is copyrighted. The fact that the restraint is made easier or more effective by making the copyright subservient to the contract does not relieve it of illegality.” Id. at 230, 59 S.Ct. at 476. In fact, “[i]t is ... well settled that concerted and contractual behavior that threatens competition is not immune from antitrust inquiry simply because it involves the exercise of copyright privileges.” Data General Corp. v. Grumman Systems Support Corp., 36 F.3d 1147, 1185 n. 63 (1st Cir.1994), citing Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, — n. 29, 112 S.Ct. 2072, 2089 n. 29, 119 L.Ed.2d 265 (1992). The NBA’s decision to restrict the availability of games in the national television market has the potential to restrain trade beyond that contemplated by the copyright laws. The ultimate purpose of a copyright is to promote artistic creativity for the public good. See Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 2043, 45 L.Ed.2d 84 (1975). To accomplish this end, the immediate effect of the copyright laws is to secure a fair return for the author’s labor. Id. Thus, the “ ‘rewards which flow to the [copyright owner] and his licensees from the suppression of competition ... must be reasonably adapted to secure pecuniary reward for the [copyright owner’s] monopoly.’ ” United States v. Paramount Pictures, 334 U.S. 131, 144, 68 S.Ct. 915, 923, 92 L.Ed. 1260 (1948) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 400, 68 S.Ct. 525, 544, 92 L.Ed. 746 (1948)). The NBA is entitled to recover a fair return for its grant, as agent of the teams, of licenses in the telecast of basketball contests, but it is not entitled to exploit its copyrights by using that monopoly power in order to limit distribution and consumption of its product or to inflate artificially its value. Here, the restricted grants of games to NBC and Turner Broadcasting and the proposed elimination of all Bulls games on WGN have the effect of decreasing the number of games available in the national television market. Decrease in output is anticompetitive, not only because viewers have fewer games to watch, but also because decreased supply typically increases prices. See NCAA, 468 U.S. at 100, 104 S.Ct. at 2959. In addition to the increase in market value of the games, the prices of advertising during the games also rises. Such a result cannot be justified or excused simply by copyright ownership. Even if the copyright laws could protect the restriction in output contemplated by the NBA agreements, the NBA cannot seek shelter in the copyright laws unless it is acting in a way which is necessary to protect its property interest in its supposed copyright monopoly. See Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 20, 99 S.Ct. 1551, 1562, 60 L.Ed.2d 1 (1979). Absent specific justifications for the restraints, the restriction in competition will not be shielded from the antitrust laws. As will be discussed later, the NBA has presented no evidence that it has suffered any economic loss as a result of the superstation telecasts of NBA games or would have sold more games to NBC, Turner or any other national TV distributor, or received more income if WTBS and WGN had not each distributed 30 NBA games for the past three years. The restraint is clearly not necessary to protect the teams’ or the NBA’s interests in their copyrights. III. THE EFFECT OF THE TRANSFER BY THE NBA OF ALL TELEVISION RIGHTS TO NBC AND THE APPLICATION OF THE SPORTS BROADCASTING ACT In NBA I, we concluded that the NBA was not entitled to antitrust protection under the SBA because “[t]he Bulls, not the NBA, both owned and licensed the rights to the five games that were transferred to WGN and which the 5-game reduction would eliminate. This was not a sale or transfer by ‘any league of clubs’ but rather by the Bulls themselves, though subject to league approval, and the antitrust laws therefore apply.” NBA I, 754 F.Supp. at 1350. We also concluded that while the SBA exempted from antitrust laws agreements to transfer telecasts, it did not exempt agreements to restrain or prohibit transfers of national broadcast rights. The court of appeals affirmed in NBA IA and agreed that the SBA applies only when a league has transferred rights to sponsored telecasting and therefore it did not apply to the NBA’s efforts to limit distribution by the Bulls of their games on WGN. The appeals court then suggested several ways the NBA might structure its agreements in an effort to come within the provisions of the SBA. In dicta, the court of appeals disagreed that the SBA distinguishes between transfers and prohibitions of transfers, exempting only the former from the antitrust laws. NBA IA, 961 F.2d at 670 (“We therefore disagree with the district court to the extent it thought that the Sports Broadcasting Act applies only when the league arranges for (or permits) telecasting of every contest”). Notwithstanding, it agreed that the SBA did not exempt the NBA’s attempt to reduce distribution of Bulls games over WGN from the antitrust laws. At a meeting of the NBA Board of Governors, the teams passed several resolutions, apparently in an effort to capitalize on the suggestions made by the court of appeals. See JX 114. Relevant are the following resolutions: (1) the members of the NBA amended the NBA’s by-laws to provide that the copyright in all NBA game telecasts was reserved to the NBA, rather than to the individual teams. (2) The members of the NBA authorized the NBA to enter into a new national television contract with NBC that: (a) transferred from the NBA, as agent for its member teams, the exclusive right to televise all NBA games; (b) provided permission from NBC to the NBA to license to national cable networks (including superstations) the right to telecast up to 85 games, with a limit of 15 appearances by any one team; and (c) provided permission from NBC to the NBA to exercise (or authorize its member teams to exercise) all rights to local and regional commercial broadcast television and local cable television; (3) the members of the NBA authorized the individual teams, in accordance with the permission to be granted by NBC to the NBA, to “exercise all rights to local and regional commercial broadcast television and local non-broadcast television” as those rights were to be defined in the new NBC contract; (4) the members of the NBA repealed their prior rule that limited to 25 the number of NBA game telecasts that any individual team could license to a local broadcast station whose signal is nationally delivered (e.g., superstations); and (5)the members of the NBA determined that if, despite the transfer contained in the NBC contract, a team were permitted to license national telecasts of NBA games to a superstation, it would be required to pay a fee to the NBA representing “the fair market value of superstation telecasts in the national market.” The effect of these resolutions and the new NBC contract (see JX 100), so far as the individual team’s local and regional television arrangements are concerned, is that they are exactly the same as they were before the rights to televise all 1107 regular season NBA games were ostensibly given to NBC. For while NBC theoretically received the rights, it simultaneously gave back the rights to all but 25 or 26 and the NBA promptly authorized the individual teams to continue with existing or to enter into new contracts with respect to local and regional over-the-air and cable televising of their games. The NBC contract did not impact on the NBA-Turner enterprises contract either, since the latter only contracted for 70 of the 85 excepted national cable regular season games, 45 on TNT and 25 on WTBS. As Duncan Ebersol, President of NBC Sports stated during the trial, he was concerned only about the 25 or 26 regular season plus the play-off games he was contracting for and, so long as he was protected from competition with respect to those games and no other national over-the-air network could televise NBA games, he didn’t care what language the attorneys put into the contract with respect to the other non over-the-air telecasts. So long as it continued to have exclusive rights to televise the games it selected and have no other games being televised at the same time, or another over-the-air network like CBS or ABC televising NBA games, NBC was content. That, even though the new NBC contract specifically authorizes 25 Bulls games on WGN so long as the injunction remains in effect as well as the non over-the-air televising of 85 other regular season NBA games. On September 22, 1993, the members of the NBA authorized the league to enter into an agreement with the Turner broadcasting system’s TNT and WTBS networks. This contract confers upon Turner the exclusive national cable network rights to telecast 70 of the 85 NBA regular season games that the NBA, under the NBC agreement, is authorized to license to national cable networks. As part of the NBA’s agreement with Turner, 25 regular season games will be telecast each season on Superstation WTBS and 45 regular season NBA games will be telecast each season on TNT. JX 200. ■ Although we concluded in NBA I, and the court of appeals agreed, that the SBA did not apply, we must now consider whether the resolutions adopted at the Board of Governor’s meeting bring the NBA’s restriction on superstation broadcasts within the confines of the SBA, thus exempting it from antitrust scrutiny. The plaintiffs contend that the SBA does not apply because the member teams still control the rights and thus the transfers are not by the league of teams. During the first trial, much emphasis was placed on the fact that the NBA did not own the copyrights in the telecasts although it contended that it did. In response to this concern, the member teams formally resolved to transfer all copyrights in the games to the NBA. The plaintiffs claim that this was a sham because the resolution placing copyright ownership in the NBA did not change any of the substantive rights of the league or the member teams since the NBA immediately authorized the teams to sell copyrighted products, including TV and radio transmission of their games, just as they had before the ostensible transfer. They contend that this is evidenced by the fact that the member teams, not the NBA, continue to receive the income from the licensing of all telecasts, local, regional and national. They argue that this transfer was solely in form, and not in substance, and in effect the teams as the principals, with the NBA only their agent, are still transferring the rights to local, regional and national televising of NBA games. Accordingly, they argue, the SBA does not apply. Section 1291 of the Sports Broadcasting Act provides: The antitrust laws ... shall not apply to any joint agreement by or among persons engaging in or conducting the organized professional team sport[ ] of ... basketball ..., by which any league of clubs participating in professional ... basketball ... sells or otherwise transfers all or any part of the rights of such league’s member clubs in the sponsored telecasting of the games ... engaged in or conducted by such clubs. 15 U.S.C. § 1291. After our decision in NBA I, the league appointed a planning committee to consider what further action the NBA might take. In its third report, the committee noted that “[a]s a practical matter, the NBA has, for more than a decade, already exercised full control over the incidents of ownership of the copyright in all telecasts of NBA games.” JX 110 at 22. This, notwithstanding the fact that we and the court of appeals both found that the individual teams held the “full copyright interest in all games that the league has not sold to the networks.” NBA IA, 961 F.2d at 671. The committee, therefore, had no problem recommending that the member teams formally transfer the copyrights to the league because such a transfer would not change any past practices, but instead would simply confirm what the league and the teams already believed—that the league owned the copyrights. On the other hand, in an apparent effort to distinguish the league’s ostensible ownership of the copyright rights from the individual teams licensing the local and regional televising of their games, the committee did not recommend that the member teams transfer the broadcast rights to the league, stating that “such a step would constitute a significant departure from the traditional League practice of permitting and authorizing each team to enter into local telecast contracts and to retain the revenues from such contracts.” JX 110 at 24. The committee was concerned that such a transfer might be considered a material change in the team’s contracts with local telecasters, might mean that the league would be responsible for the performance of these contracts, and might have adverse tax consequences because the NBA could then be taxed on the receipt of the substantial local and regional license fees. We have considerable difficulty with the concept that broadcast rights are separate and distinct from copyright rights. The two, we believe, are inextricably intertwined. One cannot broadcast a copyrighted program without having a license from the owner of the copyright. At the time of NBA I, we understood that the teams as principals and copyright owners had entered into contracts and licenses through their agent, the NBA, with both NBC and TNT for the national over-the-air and cable televising of a limited number of NBA games. The individual teams as principals and copyright owners had also entered into contracts and licenses for the local and regional over-the-air and cable televising of most or all of their games subject only to the exclusive rights of NBC. Finally, the Atlanta Hawks and the Chicago Bulls as principals and copyright owners had each entered into a contract and license with superstations WTBS and WGN, respectively, to transmit a limited number of Hawks games over WTBS and Bulls games over WGN, again subject to the exclusive rights of NBC. This understanding was apparently shared by the court of appeals as evidenced by its statement previously quoted. To the extent that the NBA now argues that the formal transfer of the copyrights from the member teams alone brings it within the exemption of the SBA, the plaintiffs are correct that this transfer, on its own, accomplished nothing so far as the SBA is concerned. The SBA specifically relates to the sale or transfer “of the rights of such leagues’ member clubs in the sponsored telecasting of the games ... engaged in or conducted by such clubs.” Under the SBA, ownership of the copyrights by the league is irrelevant and unnecessary, since the statute contemplates that the league will be transferring the rights of the member clubs and not rights it owns. At the time it entered into the contract with NBC, the NBA was authorized by the 1993 resolutions to transfer, as agent for the member teams, the television rights to all NBA games to NBC, so long as NBC gave back the rights to 85 games which could be sold to national cable networks including su-perstations, and also gave back'the rights to over-the-air and cable local and regional televising of team games which the NBA immediately authorized the teams to sell. As a result, the only change in the prior arrangements was that the member teams were no longer authorized to enter into contracts for telecasts of games with superstations, that provision having been repealed except that the contract recognized the Bulls and WGN’s rights under the injunction to televise 25 games. Accordingly, when the NBA entered into the agreement with NBC, as it had in previous NBC contracts, it “transferred at least part of the rights of the league’s member clubs in the sponsored telecast of the game[ ] of ... basketball-” Thus, on its face, the transfer falls within the language of section 1291 of the Sports Broadcasting Act. This, however, does not end the inquiry, for not only must the league have transferred certain rights, but it must also meet the other requirements of the Act, one of which is that the agreement not prohibit the broadcast of games in certain areas. Section 1292 of the Sports Broadcasting Act provides: Section 1291 of this title shall not apply to any joint agreement described in the first sentence in such section which prohibits any person to whom such rights are sold or transferred from televising any games within any area, except within the home territory of a member club of the league on a day when such club is playing a game at home. 15 U.S.C. § 1292. This section “partially removes the exemption [of section 1291] ..., thus making a restriction on the televising of games illegal, except Svithin the home territory’ of a club playing at home.” WTWV, Inc. National Football League, 678 F.2d 142, 144 (11th Cir.1982). The NBA-NBC agreement is inconsistent with section 1292. The agreement between the NBA and NBC purportedly transfers the exclusive rights to televise all regular season NBA games to NBC. JX 100 at 1. According to the agreement, NBC agrees to broadcast on its national over-the-air network “no fewer than twenty-five (25) and no more thian twenty-six (26) regular season Games-” Id. at 10. NBC also agrees not to televise, or authorize or license any other party to televise, any other NBA game by any means of broadcast or non-broadcast television. Id. Notwithstanding the supposedly exclusive grant, the agreement then retransfers to the NBA the rights in all the remaining (some 1081 or 82) games not shown by NBC, subject to certain limitations. Under the agreement, NBC permits the NBA to license to cable networks, including superstations, up to 85 games, permits the NBA to enter into agreements for subscription and pay-per-view transmission of games, and permits the NBA to exercise, or authorize member teams to exercise, all rights to local and regional broadcasts. Id. at 1-2. Thus, under the plain terms of the contract, no more than 111 games can be televised nationally. While the contract does not specifically prohibit the broadcast of the some 1,000 remaining games outside the local and regional areas, the effect of the transfer of rights to NBC, with a transfer back of the rights to all but 25 or 26 games, subject to the 85 game limit on the number of national telecasts that the NBA may license elsewhere, is precisely that. Both the transfer of up to 26 games and the subsequent limit on the national broadcast of the remaining games are part of the same agreement, and the ultimate effect of this agreement is to drastically limit the number of games shown in the national marketplace. Section 1292 specifies that such an agreement is not covered by section 1291, and thus is not exempt from antitrust analysis. Accordingly, under the plain language of the SBA, antitrust immunity is not granted to joint agreements, such as this one, because the SBA only allows restrictions within the home territory of a club playing at home, and does not grant a blanket exemption for broad reductions in output as the NBA-NBC contract seeks to do. This interpretation and application of section 1292 is supported by the legislative history of the Act. The SBA was enacted in 1961 to overrule the effect of United States v. National Football League, 196 F.Supp. 445 (E.D.Pa.1961). In that case, the court invalidated a contract between the NFL and CBS which awarded CBS the exclusive broadcast rights to all NFL games, but required CBS to black out telecasts of a team’s games into the team’s home territory whenever the team was playing at home. Judge Grim’s decision had the practical consequence of preventing the NFL from entering into agreements to sell the pooled television rights of its member clubs, and section 1291 was drafted to allow the sale or transfer of these rights to networks. See S.REP. No. 1087, 87th Cong, 1st Sess. (1961), reprinted in 1961 U.S.C.C.A.N. 3042. • The potential breadth of the antitrust exemption granted by this section was recognized by its drafters and opponents. Concern was expressed that the original bill, codified in section 1291, provided a blanket antitrust exemption for pooled telecast agreements which potentially could extend far beyond the limited purposes which the Act was enacted to accomplish. As a result, an amendment to the Act was proposed and later codified as 15 U.S.C. § 1292. As the legislative history demonstrates, the specific purpose of section 1292 was to eliminate SBA application to contracts providing for blackouts of games, except blackouts in the home territory of teams in order to protect home ticket sales. Prior to the enactment of the SBA, the following dialogue took place at the hearing before the antitrust subcommittee of the House of Representatives: MR. HOLTZMAN. Mr. Chairman, the very language of the bill says: Shall not apply to any joint agreement by or among persons ... and so forth. It would seem to me that this would give carte blanche to black out at any time. Would you agree, Mr. Carothers? MR. CAROTHERS. I think it would. I think the language is broad enough to do that. But that is so far removed from our objectives. Telecasting of Professional Sports Contests: Hearings on H.R. 8757 Before the Subcomm. on Antitrust of the House Comm, on the Judiciary, 87th Cong.,. 1st Sess. 30 (1961) (Statements of Lester Holtzman, subcommit-, tee member, and Hamilton Carothers, counsel for National Football League). The committee members were also concerned that, under the language of the proposed act, the NFL could black out games to a team’s home area even when the team was not playing at home. Id. In response to these concerns, the subcommittee proposed an amendment which was in all relevant respects identical to the language now contained in section 1292. Thus, this section was specifically drafted to exclude contracts limiting or prohibiting sponsored telecasting other than in the home team’s area. Here, the effect of the joint agreement between the NBA and NBC is to black out throughout most of the nation all but the 25 games • shown on NBC and the 85 games which may be shown on national cable networks or superstations. The remaining games will be broadcast only to viewers in the local or regional areas of the two teams engaged in the particular contest. The SBA specifically excludes such contracts from antitrust exemption. The NBA is attempting to use a very narrow SBA antitrust exemption to avoid scrutiny of its restrictions on the number of NBA games which can be broadcast nationwide. As we have commented previously, antitrust exemptions should be narrowly construed. See, e.g., Group Life & Health Insurance Co. v. Royal Drug Co., 440 U.S. 205, 231, 99 S.Ct. 1067, 1083, 59 L.Ed.2d 261 (1979). In addition, the Supreme Court “has strictly construed antitrust exemptions even where a broader interpretation was reasonable.” See WTWV, Inc., 678 F.2d at 145 (citing Federal Maritime Commission v. Seatrain Lines, Inc., 411 U.S. 726, 732-33, 93 S.Ct. 1773, 1778-79, 36 L.Ed.2d 620 (1973); United States v. McKesson & Robbins, Inc., 351 U.S. 305, 315-16, 76 S.Ct. 937, 943-44, 100 L.Ed. 1209 (1956)). Here, the very narrow purpose behind the SBA was to exempt pooled agreements between the NFL and the networks which contain blackouts only of games in the home team’s territory. The agreement at issue in this case far surpasses this narrow exemption. In fact, the NBA has created telecasting arrangements which were considered during the legislative hearings and for which changes were made to the proposed legislation in order to prohibit the result the NBA seeks to reach by its agreement with NBC— a substantial reduction in the number of games available to the public. As the language and the legislative history indicate, the SBA was never intended to provide antitrust immunity to agreements which restrict output in this manner. Construing the antitrust exemption at issue in this case as Congress clearly intended, we conclude that the SBA does not exempt the NBA-NBC agreement from antitrust analysis. The end result of the NBA’s efforts to take advantage of the court of appeals suggestion that in its contract with NBC it might be able to invoke the SBA is that NBC has become a co-conspirator with the NBA teams in the effort to restrain and reduce the national distribution of NBA games. This is incongruous in light of the express statement by NBC’s Sports President that NBC was interested only in protecting its exclusivity in the 25 or 26 games it selected. Yet the NBA now contends that the NBC contract provisions and the SBA protect its restraint and limitations without regard to whether or not they are pro-competitive or can be shown to benefit consumers. It is particularly ironic when one considers that after both the new NBA and Turner contracts were entered into, with one exception, there was no material change in the status quo as it was when the court of appeals and we found that the SBA did not protect the NBA’s efforts to restrain the distribution of its product over superstations by reducing them from 25 to 20. NBC again has the exclusive right to televise nationally 25 or 26 regular season games. TNT again has the right to transmit nationally over its cable system 45 regular season games and superstation WTBS again has the right to 25 regular season games. And the individual teams continue to have .the same right to contract for the local and regional TV transmission of their games. Only the elimination of 30 Bulls games over superstation WGN by the so-called su-perstation ban is new. This is an extraordinary exercise in elevating form over substance to the detriment of the consuming public, and is an even more significant naked restraint than the elimination of 5 games which we and the court of appeals previously found was not protected by the SBA. IV. A “QUICK LOOK” RULE OF REASON ANALYSIS AND THE NBA’s PRO-COMPETITIVE JUSTIFICATIONS In NBA I, we held that the NBA’s decision to reduce the number of games that a single team could broadcast over supersta-tions in the national market from 25 to 20 was a naked restraint on output. At that time, the NBA offered numerous explanations as to why this reduction was merely ancillary to a lawful purpose and necessary to promote competition. We thoroughly considered all those justifications and found them wanting in factual support, and the court of appeals agreed. In April 1993, the NBA Board of Governors passed new resolutions which seek to further reduce superstation telecasts and eliminate any ability of individual teams to have their games telecast in the national market. Now, as before, the NBA argues that its actions are ancillary and procompetitive and therefore do not violate the antitrust laws. As discussed previously, the 1993 NBA Board of Governors’ resolutions, as implemented through the NBA’s contract with NBC, provide that for the next four years: (1) NBC will broadcast no fewer than 25 and no more than 26 regular season games, including no more than 8 games involving any single team; (2) the NBA is permitted each year to license a maximum of 85 regular season games to be shown on national cable networks and/or superstations, but no more than 15 games of any one team; and (3) the member teams may contract for the TV and radio broadcasts of any of their regular season games in their local and regional areas, but may not contract with a station whose local signal is distributed to more than 5 million television households outside of their home territory. JX 100 and 114. These resolutions, like the ones adopted in 1990, represent a horizontal agreement among competitors to divide markets and restrain output. Instead of attempting to reduce the number of Bulls games telecast on WGN by 5, the NBA now seeks to exclude WGN altogether, place an overall limit on superstation telecasts, prohibit individual teams from contracting with superstations, and ultimately reduce the number of games televised nationally as well as the number of consumers who can see them. The result, if approved, will be that out of the some 1,107 or more regular season games played in the NBA, only a maximum of 111 will be televised nationwide, 26 over the air on NBC and 85 on cable and/or superstations, and of those, only a total of 23 may feature any single team. SF ¶¶ 434 and 373. For the Bulls alone, this restriction would mean, in the absence of this court’s injunction, at least a 29 game reduction from the 52 Bulls games that were shown nationally over various telecast outlets during the 1992-93 season. SF ¶ 872. As in NBA I, the recent NBA resolutions clearly reduce output well below current market demand. WGN alone is prepared to contract to distribute up to 41 Bulls home games. Along with reducing national output, this collective restriction also has the potential effect of reducing local exposure. WGN, for example, has far greater exposure in the Chicago market than any other available substitute TV station. To the extent that WGN is prohibited from telecasting Bulls games, since it cannot prevent its local signal from being carried nationwide, the Bulls will have to license their games to a much less desirable local TV outlet and suffer a loss in local viewership. Likewise, the NBA’s concerted refusal to deal with WGN and its limited, dealings with superstations, continue to represent a form of group boycott. See NBA I, 754 F.Supp. at 1356 (citing, Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 214, 71 S.Ct. 259, 261, 95 L.Ed. 219 (1951) (under the Sherman Act boycotts are boycotts even when they target customers rather than competitors)). In substance, therefore, the NBA is attempting to do even more drastically exactly what we concluded it failed to justify doing previously—artificially limit the output of NBA games in the national television market. As such, our analysis here is like that in NBA I, and is similarly governed by the Supreme Court’s holding in NCAA. We note, at the outset, that facially restrictive agreements between competitors that tend to reduce output and limit market forces, such as those at issue here, are ordinarily found illegal per se. Broadcast Music, Inc., 441 U.S. at 19-20, 99 S.Ct. at 1562-1563. Under the guidance of NCAA, and the analyses in NBA I and NBA IA, however, that type of cursory examination may be insufficient when reviewing the actions of industries, such as sports leagues, that require restraints on trade in order to produce any product at all. This is particularly true when the restraint in question is arguably ancillary to a lawful purpose, or tends to enhance rather than inhibit competition. As we have already recognized, the NBA has many such cooperative characteristics. Accordingly, before we can reach any conclusion as to whether or not the NBA’s most recent restrictions on superstation telecasts violate the Sherman Act, it is necessary to consider whether these restraints ultimately benefit rather than harm the consumer. We therefore apply the “quick look” version of the Rule of Reason, with the goal, as always, of determining “the competitive significance of the [challenged] restraint.” NBA I, 754 F.Supp. at 1358 (quoting National Society of Professional Engineers v. United States, 435 U.S. 679, 692, 98 S.Ct. 1355, 1365, 55 L.Ed.2d 637 (1978)). If we can find no satisfactory connection between the NBA’s national telecast restraints and an enhancement of mar-ketwide competition, no inquiry into market power will be necessary, and we can condemn the NBA’s restrictions on output “without ado.” NBA IA, 961 F.2d at 674. As the Seventh Circuit has already stated, “any agreement to reduce output measured by the number of games telecast requires some justification—some explanation connecting the practice to consumers’ benefits—before the court attempts an analysis of market power.” Id.; see also Polk Brothers Inc. v. Forest City Enterprises, 776 F.2d 185, 189 (7th Cir.1985). We turn then to the proeompetitive justifications proffered by the NBA. As an initial matter, we conclude that there is no support for the proposition, which the NBA seems to urge, that the restraints on superstation telecasts are lawful because they are somehow necessary for, or ancillary to, the NBA’s production of competitive basketball. A review of the history of the NBA does not support the claim that the proposed restrictions on superstation output are necessary for the production of competitive basketball. Moreover, the fact that some agreements between the teams may be procompetitive, and therefore justified, does not make all other league restraints immune from antitrust scrutiny. We repeat up front what we admonished in NBA I, “the antitrust laws were enacted for ‘the protection of competition, not competitors.’ ” NBA I, 754 F.Supp. at 1359 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 1521, 8 L.Ed.2d 510 (1962)). Therefore, any of the NBA’s arguments that are premised on the fact that the challenged restraints may “contribute to the success” or help maximize the revenues of the teams or the league are misplaced, unless they benefit consumers by leading to greater output and distribution. Initially, the NBA argues that the teams’ agreement with NBC not to permit competition in the national television market actually fosters an expansion in output by encouraging new teams to join the league, who in turn produce more games, which in turn increases the number of games available for spectators and for local telecast. The NBA cites the 1987 league expansion into Miami, Orlando, Charlotte and Minneapolis, along with the imminent addition of the Toronto and Vancouver franchises, to demonstrate how new teams expand the NBA’s market exposure and broadcast output. The weakness in this argument is that the NBA has not demonstrated any causal connection between league expansion and restrictions on superstation telecasts. On the contrary, the four newest NBA teams have been successful, and interest in further expansion has developed, during a period when superstation telecasts have been increasing. JX 114 at 16; SF ¶¶ 151— 53. Similarly, the NBA argues that the new limitations on superstation televising of games will increase the national distribution of the NBA product by improving the league’s ability to negotiate contracts with the network and cable stations. The NBA maintains that in 1993, unlike in 1989, NBC and Turner “bargained for” and obtained the NBA’s promise that it would only license a limited number of games in the national market, and in exchange agreed to provide substantial coverage of NBA games. These allegedly bargained for limitations, however, are more contrived than real, and clearly do not promote greater NBA distribution. Neither NBC nor Turner, as the evidence showed, would have contracted for fewer games without the limitation. Each bought exactly the maximum number of games it wanted and neither was seriously concerned about WGN’s telecasts of Bulls games. Tr. 1791-1805 (Ebersol). A look at the actual number of games contracted for reveals that the agreements with NBC and Turner result in a net loss, rather than a gain, in national NBA telecasts, even without counting the 30 games the NBA seeks to take away from WGN. Specifically, the 1993 contract with NBC provides that between 25 and 26 games will be shown each of the next four seasons. JX 100. This represents, at best, a one or two game increase over the 24 games shown on NBC during the 1993-94 regular season, the 25 games telecast during 1992-93, and the 24 games carried during 1991-92. SF ¶¶217-19; PTX 753. More striking is the comparison between the 1993 contract with Turner and the output of TNT and WTBS over the previous four years. The new agreement provides that during the next four seasons TNT will telecast 45 games and WTBS will show 25. JX 200. From 1989 to 1993, however, TNT telecast 51 games each year, and WTBS telecast 21, 30, 30 and 30 games respectively. SF ¶ 152; JX 143. The new contracts, therefore, rather than increasing national output, create a reduction of as many as 11 games from recent seasons, with an additional 30 game loss if WGN is eliminated. Further, testimony at trial revealed that although both NBC and Turner wished to negotiate the best deals possible, they entered into the -current contracts fully aware that WGN might be allowed to show up to 41 games and the permanent injunction provided for at least 25. No concessions were demanded, and no alterations in contract price