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

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.

  • Serious Gord

    The Conservative government is requiring cable company’s to offer pick and pay packages as per coming legislation from the CRTC and the Competition Bureau. Prices will rise per channel but you’ll be able to turf Oprah and W and all the other crap that you do not want to see on your TV. Prices to the consumer have to equal demand also. The place where Rogers is going to see an increase in Revenue is in the mobile devices and tablets. 40% of all Canadians now own a tablet. Heck I want one for Xmas so I can watch the Oilers when I am away from my tv.

    SN stepped up. The ax will fall at TSN and CBC and at SN as all those TV personalities are amalgamated. TSN is not going to pay MKenzie and the other hosts to do a fraction of the work they do now. If they did it would be dumb.

    CBC in partnership with SN will see the end to a few of the CBC’s lesser lights. I think we’ll see the amalgamation soon after the last puck is dropped this season.

    Center Ice will grow. The online content will grow. Blogs will grow.

    NBC will look at this deal and you can bet your bottom dollar that NBCSports is going to be looking at how the template that SN implements works in Canada.

    I am a big fan of all things hockey. I love my Oilers. But I love the game even more. SN deal is a boon to guys like me. Love it.

  • Lowe But Now High Expectations

    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.

  • book¡e

    I would add that part of this is Rogers using this desalination as a means to gain market share in the cable/online market which may mean they recoup their costs through a larger customer base as opposed to higher prices.

    They would do this with hockey watching perks for Rogers customers that would not be available to Bell customers.

  • Rob...

    As is, I’m painfully aware of how much I pay to watch this dog’s breakfast of a local hockey team. If the price goes up just to watch more garbage play I’ll turf the channels, catch highlights online and be done with it.

    I already skip through the intermissions and play stoppages, so I couldn’t care less which network shows the games, but I won’t pay more for the privilege.

  • 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.

    • Old Retired Guy (A.K.A. Die-Nasty)

      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….

      • chuckcouples

        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.

    • Crondor

      “The theory of exodus proposes that the most effective way of opposing capitalism and the liberal state is not through direct confrontation but by means of what Paolo Virno has called “engaged withdrawal,”mass defection by those wishing to create new forms of community. One need only glance at the historical record to confirm that most successful forms of popular resistance have taken precisely this form. They have not involved challenging power head on (this usually leads to being slaughtered, or if not, turning into some—often even uglier—variant of the
      very thing one first challenged) but from one or another strategy of slipping away from its grasp, from flight, desertion, the founding of new communities.” ― David Graeber, Fragments of an Anarchist Anthropology

      In other words, lets stop watching the NHL and start a new league!

  • book¡e

    I’m not convinced that it will cost the consumer more. The cost of advertising on sports events has increased significantly. This is because it’s one of the very few opportunities to actually capture Viewers. Most other advertising opportunity on TV have been challenged by PVR’s. People watch sports live so advertising is much more effective on live a broadcasts. I think this new deal represents the fact that sports market advertising is become very lucrative. We will see but I wouldn’t agree that price increases are inevitable.

      • book¡e

        Yes, the consumer pays through product purchases, so you pay through your beer and shampoo purchases, but I didn’t say the overall budget of advertising for firms will increase (rather that they will be more expensive for NHL games – this may mean that they spend less elsewhere), so prices for those products may not change.

        Regardless, we are talking about the price for viewing NHL games here and I am arguing that we may not see an increase due to this deal.

  • Romulus' Apotheosis

    This comment:

    “I think he has a big appeal, but Rogers is much more interested in the smooth, professional, modern sports image,” said Brander. “I’m sure they don’t know and they’re looking hard at it. I don’t think we’re going to see more of Don Cherry, but I would expect him to be phased out.”

    Doesn’t jibe with reality. HNIC with Cherry and all its flaws is a much more “smooth, professional, modern sports image” than anything SportsNet has ever produced.

    SN productions always look like they are shot in the back of dimly lit full-sized van.

  • vetinari

    This was some of the worst news I could imagine. The fact gene principe and his (juvenile, tired, unfunny schtick) is going to be shoved down our throats for the considerable future, teamed up with the fact that, unarguably the best talent in hockey by a country mile is being shut out, is………….attrocious.

    • Dobbler

      Mean Gene shtick is annoying at times. It appeals to my grandma. Youngin’ just don’t enjoy the fine science of punery they way they should. I like Geno as a person, and I don’t mind him when he’s just doing his interviews or some analysis, and if did it without the jokes I’d say nothing negative. If he dumped the comedy would he be more appreciated? I for one like hi, but his jokes blow.

      Why do people not have an issue with Ron MacLean doing the same thing? I love his punery, but he’s like a master Jedi or something. Best part of coaches coroner is watching Grapes face when MacLean owns him with the off the cuff gem at the end.

  • vetinari

    I generally preferred the TSN coverage to the Sportsnet coverage, especially for special events like trade deadline day and draft day.

    I like the idea of no blackouts and out of market games, but not if they get too silly on their (likely) price increase.

    Also, from a cap standpoint, I guess that some GMs will breathe a little easier knowing that the cap will probably rise over the next few years with this guaranteed bump in revenue.

  • A question that I have is what happens to those of us who have Shaw as a cable provider? Do we see increased availability/coverage? If so, do we have to sign up for some elaborate new package in order to see the games they offer?

  • For me, the honest to god truth is that I feel we pay far to much already to watch the NHL. I’m a fairly pragmatic guy, and if I don’t see any personal value or gain in something, I just don’t opt in and go along with it. Hockey is great but the gradual commercialization of it has definitely jaded my loyalty. I can live without professional sport if need be. I’m sure I fall in to a very small minority of readers here by sharing that thought. My 2¢.

  • Jordan McNugent-Hallkins

    I already pay too much for the premium sports channels, this could be tiresome. Hopefully Sportsnet can step up its game, I always found the TSN panels and presentations a higher quality.

  • Quicksilver ballet

    Interested to see how Center ice / game pass will work with no local blackouts.

    The only reason I keep cable is for sports. But if I could pay $x for a subscription to the oilers and watch the Games with no blackouts I would do that In a second.

    • A-Mc

      I am, for all intents and purposes, living in a 1 tv house. If i want to watch a hockey game, i need to take over the TV from the Woman of the house and our 4 year old (who wants nothing more than cartoons on 24/7, even when he’s not home).

      Every season i gripe about blackouts. If in some way, this rogers deal can remove blackouts from the streamed product the NHL offers, i am 10000% for this. I would pay the $$ to watch hockey, IN ALL MARKETS, as long as i could get around blackouts for Oilers games.

      Blackouts need to go…

      PS: I’m referring to subscribing to the streamed online product so that i am free to watch all games as opposed to fighting for the TV to watch them over cable. PLZ REMOVE STREAM BLACKOUTS!

    • Bryzarro World

      I thought like you did but just over a year ago I cut off my cable and it is one of the best things I’ve done. Mostly garbage on anyway and I can find anything on the net. You can stream every sport or show and easily hook up to a tv if you don’t like the comp screen. Screw cable…

    • Wax Man Riley

      NHL Gamecenter and a $5/month subscription to unblock-us.com and you get all the non-playoff (aka Oilers) hockey you can handle.

      Works like a charm and gets you American Netflix too.

      • book¡e

        I do this. Gamecenter with no blackouts gets me every single NHL game for $99. Between US Netflx & Hulu I get all the TV I can handle.

        I realised at one point that the only reason I still had TV was for sports. When you think about an $80 tv bill you realise you are spending $1000/year on TV…. just wasn’t worth it. With two young kids at home I just don’t have the time to justify it.

        I just hope this new ownership arrangement doesn’t lead to big changes in GC.

        On the broader article, I’m not sure I agree with the experts. I think this is a defensive play by Rogers; I think they see that lots of people keep TV only for the sports, and so they understand the huge advantage that comes with controlling sports. In Canada, other than one off events like the Olympics, Sports = Hockey.

  • Quicksilver ballet

    Between the lockouts, my team not being even close to competitive for years, and now this… I’m pretty sure my NHL days are coming to an end