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