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 a freelance writer. He currently works for Oilers Nation, Sportsnet, the Edmonton Journal and Bleacher Report. He's co-written three books and worked for myriad websites, including Grantland, ESPN, The Score, and Hockey Prospectus. He was previously the founder and managing editor of Copper & Blue.
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#151 book¡e
November 27 2013, 09:09AM
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@Ca$h-Money!

Agreed, this is part of an overall strategy.

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#152 BraveNugeWorld
November 27 2013, 09:15AM
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Lowe Expectations wrote:

Remember, a big part of this is the push for people to have rogers plans for smartphones, tablets etc in order to get the streaming of games. I think the streaming side is the untapped market Rogers will be going after. TV in it's current format is slowly dying.

Totally agree with this, although the death may not be that slow. Twelve years is a long long time. How many people will have a cable package of any kind in ten years? I'd be pretty shocked if I did.

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#154 Romulus' Apotheosis
November 27 2013, 09:34AM
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Serious Gord wrote:

Let me be more precise then - they had monopoly on the choice part of the national market - Saturday night and the finals. - for fifty plus years. That's like having a monopoly on NFL Sunday and the Super Bowl.

Saturday is true monopoly and that will continue. However, I would imagine most viewers are content with the form if not the content of HNIC and wouldn't want to see it dramatically altered.

The playoffs obviously have been split with TSN, but the finals are (as you say) in CBC's hands. But considering it is a single event, I'm not sure what the alternative would be.

It would be impractical to have, say all of CBC, SN and TSN cover the same event with different feeds, on air talent and commentary and split the viewer share.

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#155 Spydyr
November 27 2013, 09:38AM
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Romulus' Apotheosis wrote:

Saturday is true monopoly and that will continue. However, I would imagine most viewers are content with the form if not the content of HNIC and wouldn't want to see it dramatically altered.

The playoffs obviously have been split with TSN, but the finals are (as you say) in CBC's hands. But considering it is a single event, I'm not sure what the alternative would be.

It would be impractical to have, say all of CBC, SN and TSN cover the same event with different feeds, on air talent and commentary and split the viewer share.

Actually Sportsnet has said they will air other games on Saturday night. HNIC will no longer have a monopoly on Saturday with their national game.

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#156 jake
November 27 2013, 09:49AM
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Compared to revenue sharing under the present agreement to air games in Canada by TSN CBC, SN, I wonder how much more $ teams (in particular US based teams that are struggling) will get as a result of this Canadian broadasting rights deal. I guess another way of asking is how much does this benefit Canadian teams: to reach the cap floor, to reach the cap ceiling, to attract higher end talent, to retain higher end talent...etc etc...in a salary cap era? - it likely doesen't.

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#157 Old Retired Guy (A.K.A. Die-Nasty)
November 28 2013, 12:02AM
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borisnikov wrote:

Another thought. Our Dads' and Granfathers' games of hockey, even the game we watched in childhood, is officially dead with this deal. The escalation of salaries will continue and the line between sport & business will grow ever more blurred.

That hockey was long gone ....long before this deal.

In the 1993-94 season the top players in the league were making 3 million or less, including Gretzky, Messier, Lindros, Lemieux, etc........two years later Lemieux was making 11 million...the year after that Joe Sakic was making 16 million+.......somewhere in that time frame hockey became more a business than a sport....

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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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