Fallout from new Canadian TV deal uncertain, but expect prices to rise

Jonathan Willis
November 27 2013 07:47AM

With the news yesterday that Rogers and the NHL had agreed on a 12-year, $5.232 billion Canadian television deal, the overwhelming reaction was uncertainty. We don’t know how this will effect TSN or CBC, we don’t know how Rogers will cover the game, and we don’t know if the hockey-watching experience will be better a year from now than it is today.

What we know for sure is that NHL hockey is going to be on Rogers. What we also know, with barely less certainty, is that it’s going to cost more to watch.

The Experts

Jim Jamieson of The Province talked to two business experts: UBC’s James Brander and SFU’s Linday Meredith. The full article is here (and well worth reading) but note the similarity in comments both made.

First, Brander:

The first thing I noticed is the big price tag, and obviously Rogers has to recoup that.

And Meredith:

We’ll see a lot of bundling or extra charges for premium channels. I’m sure Rogers will be pushing hard on all those buttons because they’ve got a lot of money to recoup. Whether it means having to buy stuff you don’t want or premium channels, your cable bill will be going up.

The Logic

It’s pretty straight forward. The NHL’s national television rights cost lots more now than they used to (Chris Botta of Sports Business Journal put the total value of the old deals at roughly $190 million); this new deal increases that to an average of over $400 million per year. Even assuming that NHL hockey was a cash cow for CBC and TSN (which seems likely, given the spike in price), it’s a pretty decent bet that a massive increase in the cost of the product for the provider is going to result in price increases for the consumer.

Commissioner Gary Bettman and the executives at Rogers Communications can pay lip service to the idea that, on some level, this deal was the best deal for fans but it would be a mistake to see it as more than lip service.

The NHL is focused on one thing: money. They’ve demonstrated it time and again, especially with their willingness to force labour stoppages to squeeze as much money as possible out of the sport. Rogers was willing to pay up for the television rights; consequently, the NHL was all too happy to do a deal with Rogers.

Likewise, Rogers is a business with the primary focus of making money. A lot of that money, doubtless, will come from expanding the amount of product available and milking advertisers for all that they are worth. But it would be silly to assume that every available revenue stream won’t be tapped, and that’s likely to include increased prices for the consumer.

A shiny new television deal is unquestionably good for the business of the NHL. It may yet prove to be good for fans, too, if Rogers can deliver a superior product. Right now there’s no way of knowing whether the product will be better or worse, only that it’s likely to cost more.

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Jonathan Willis is Managing Editor of the Nation Network. He also currently writes for the Edmonton Journal's Cult of Hockey, Grantland, and Hockey Prospectus. His work has appeared at theScore, ESPN and Puck Daddy. He was previously founder and managing editor of Copper & Blue. Contact him at jonathan (dot) willis (at) live (dot) ca.
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#151 Old Retired Guy (A.K.A. Die-Nasty)
November 28 2013, 12:43AM
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pkam wrote:

It is an entertainment, not daily necessity, right?

So if it is good value for the price, then I am in. If it is not, I'll move to other entertainments.

So why do we even have to worry about the price going up? They are not pointing a gun at your head to force you to subscribe it, are they?

When there is not enough demand (consumer), the price will drop, won't it?

This is Canada.....Center Ice should be FREE like universal healthcare!

And Beer should be cheap.....the beer industry in Canada should be heavily subsidized...like the CBC is!

And Pot should be legalized.....like prescription pain killers....in case your team sucks for 7+ years!

*Nice start to page four

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#152 chuckcouples
November 28 2013, 12:44AM
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@Old Retired Guy (A.K.A. Die-Nasty)

Why has no one mentioned that the rights that Rogers purchased were only for national broadcasts? TSN still owns the local rights to both the Jets and the Habs as well as some Leafs games. The Canucks and Senators contracts with Rogers run out after this season. TSN also owns all of Hockey Canada's rights as well as the rights to all the IIHF events. There is still going to be a lot of hockey to be seen on TSN over the next 12 years.

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#153 Old Retired Guy (A.K.A. Die-Nasty)
November 28 2013, 12:54AM
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Oh yeah.....and all NHL hockey games should be broadcast on HBO so the commentators can get real...ask tough politically incorrect questions, swearing is mandatory, grill the players and coaches with hard hitting between period interviews....stop lobbing them soft balls and excepting their mind numbing cliched answers...High Octane girls could be nude.....and screw the 50/50 crap....there should on site betting windows in every arena.....and did I mention the Beer should be CHEAP!

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#154 Quicksilver ballet
November 28 2013, 04:15AM
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Part of me would dearly love to see 60 cent Canadian dollar again. Set the whole league back to square one again.

Without the 7 Canadian teams to subsidize all the non hockey market US hockey teams, this league would be in ruins. Oh well, who cares anymore, Edmonton hasn't had an NHL team for nearly a decade.

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#155 Spydyr
November 28 2013, 06:34AM
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Dipstick wrote:

They didn't get rich by sitting on their asses complaining.

I get up at 4:30am to work five days a week at 5:30am.

I asked the city to pay for a building for a business. They said they only do that for billionaires. I was SOL.

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#156 NsxZero
November 28 2013, 12:50PM
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I hope TSN is still able to run the NHL highlights on their website. Sometimes I find myself automatically typing in tsn.ca when I start up my browser..

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#157 EHH Team
November 28 2013, 01:11PM
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Serious Gord wrote:

First off; where do you get off telling me or anyone to shut their "yap"?

Second you know nothing of my qualifications/knowledge of monopolies and their pricing dynamics and other behaviors in a market.

For the record:

I minored in economics in university;

have worked on and or chaired on various economic policy committees for the provincial and Canadian chambers of commerce, the Conservative party of Canada and the Wildrose party.

One of those CofC committees developed the policy that called for the end of the Canadian wheat board monopsony (it was not a monopoly as many laypeople assume) that the Cdn minister of Ag at the time said was instrumental in laying the ground for its abolition

as well as policies on removing the CBCs special status and it's HNIC monopoly;

appeared before two provincial royal commissions where I submitted an extensive brief calling for the end of the various Ag marketing board monopolies;

have been involved in marketing and market budgets for my Own company for 12 years and other companies and marketing groups since 1990 some with annual budgets into the millions;

and that's just off the top of my head - there is more.

The point is: disagree with my opinion if you wish, better yet give some concrete reasoning/reasons of your own,

But don't question my qualifications.

What are your qualifications?

Thank you for your CV. Now I understand more clearly why I generally disagree with your opinions.

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#158 Jimmy
November 30 2013, 04:22PM
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Its never a good idea to put all your eggs in one basket.There is no doubt in my mind that rogers will create a new revenue stream from this deal. As mentioned earlier, Rogers, or robbers as they are known in Ontario, is all about making as much cash as they can. They are deceptive, untrustworthy and dishonest. (Ask anyone who has a cellular contract with these guys.) Consumers may like what they see for now, but Robbers has no interest in consumers, only money. New sports packages will arrive in the future, and you better be ready to pay.. there is no other option. Don't count out the fact that Robbers could start a "pay per view" model in the new future for rivalry games and playoffs. Something like the Winter Classic would be perfect for there "pay per view". Overall I believe this is a bad deal for consumers and hockey in general. These guys (NHL and Rogers) don't care about the game or those who watch it. In fact I wouldn't doubt that Bettman and the CEO of rogers aren't writing themselves big fat bonus cheques right now.

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