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Rogers-NHL deal voted Canadian Press Business News Story of the Year

Rogers President and CEO Nadir Mohamed (right) poses for a photo with NHL Commissioner Gary Bettman behind the Stanley Cup after a news conference in Toronto on Tuesday, Nov. 26, 2013. The Rogers Communications deal to lock up the National Hockey League television and multimedia broadcast rights has been voted the 2013 Canadian Press Business News Story of the Year. THE CANADIAN PRESS/Chris Young

TORONTO - Few things get to the heart of Canadians like hockey, so when Rogers Communications scored a multi-billion-dollar deal that will shake up how the sport is broadcast, you can bet the country paid attention.

The ink was hardly dry on the 12-year contact, in which Rogers locked up National Hockey League television and multimedia broadcast rights, when fans began asking how their beloved "Hockey Night in Canada" show, and the culture of the game, would be affected.

But reverberations from the $5.2-billion sports deal will be felt beyond the rinks in 2014 as Canada's biggest media companies grapple with a world that's increasingly turning off real-time television broadcasts.

The savvy hockey partnership, which begins next season, eclipsed other major headlines in an annual survey of editors and broadcasters for The Canadian Press Business News Story of the Year.

The November deal was chosen by 48 per cent of respondents, nearly double the votes for the battle over the Keystone XL and Northern Gateway pipelines, which received 25 per cent. BlackBerry's latest swing at a recovery took 23 per cent.

"Rogers has delivered an American-style, big money TV deal, certainly a first for a Canadian network," said Christopher Pride, a radio host at CJRW in Summerside, P.E.I.

"This may be the beginning of a major cultural shift in how this country views hockey."

Even if you don't watch sports, chances are the Rogers-NHL partnership will change how you view cable television and, potentially, how much you pay for the privilege.

Sports entertainment is the Holy Grail for broadcasters because it's one of the few places where advertisers will still pay top dollar for a 30-second spot in an era of Netflix, PVRs and on-demand programs.

Ten years ago, live shows like "American Idol" drew big viewership numbers but those franchises have dwindled in popularity, leaving networks with few options.

"Sports programming is the last bastion of appointment viewing," said Vijay Setlur, a sports marketing instructor in Toronto.

"The NHL is a big piece in the puzzle for Rogers."

Sports became a priority for the telecommunications giant after it acquired the Toronto Blue Jays more than a decade ago and learned a lesson about fan loyalty. Rogers has been in the game ever since and most recently acquired The Score sports channel, and rebranded it as Sportsnet 360 to fit into its roster of sports-angled TV and radio assets.

All of these deals have come at a major price and if lessons from the United States are any sign, the bill will be paid for by more than just sports fans.

Networks like ESPN pay massive amounts of money to leagues for rights to their games. Two years ago, the cable channel dished out $15.2 billion to extend an agreement with the NFL through 2021. Much of those expenses are pushed down to cable operators when networks charge them to carry their signal.

In the U.S., sports programming has been responsible for nearly doubling the price of the average monthly cable bill from US$40 to $78 between 2001 and 2011, according to marketing research firm SNL Kagan.

While the price climb has been less dramatic in Canada, cable packages became a centre of controversy in 2013 as the federal regulator pushed for more consumer choice, and weighed the possibility of a "pick-and-pay" model that would let viewers opt out of unwanted channels.

It's still unclear how Rogers plans to distribute the heaps of NHL content it will own, raising the possibility the CRTC could intervene, said a report from ratings agency Moody's.

"Despite the Canadian government's support of free markets, should Rogers' plans adversely affect consumers, regulators will respond," the ratings agency said in a note issued in December.

Digital streaming distribution is one area where Rogers has tested the water. The company already sells digital access to its Sportsnet World programming, which includes international soccer, rugby and cricket, for about $275 a year.

Rogers has considered a streaming subscription for Toronto Blue Jays games or its Sportsnet channel, senior vice-president of content David Purdy said in early 2013.

So far, that package has yet to materialize, although a hockey bundle would almost certainly be offered as well.

To keep from appearing as a predator, Rogers has invited its competitors underneath the velvet rope to secure their own mini-agreements for NHL content, although the offers are hardly ideal.

One of the biggest losers is the Canadian Broadcasting Corp., which has been the television home of Hockey Night in Canada since 1952, and the radio partner for even longer.

For the next four years, Rogers will allow the CBC to broadcast the same Saturday night hockey feed that will be shown on its own networks. The catch is that CBC will have to rebroadcast the same commercials as the Rogers channels — and CBC won't pocket any of the ad revenue.

As a consolation, Rogers says it will show commercials for upcoming CBC shows across its networks for the duration of the agreement.

The loss of "Hockey Night in Canada" is expected to slam the financials of the cash-strapped CBC, and the fallout is certain to cause a decline in CBC viewership, less money for its TV show budgets, and job losses over the next four years.

TVA in Quebec will handle all of the Canadian French-language multimedia rights.

The sting is sharper at Bell Media (TSX:BCE) and its TSN cable network where it once appeared that a relationship was forming with Rogers over past sports ventures, including a pact for a majority stake in Maple Leaf Sports & Entertainment Ltd.

"They partnered together on the Olympics and ... on the MLSE because the content was so rich and compelling and the price was so high," said Brian Cooper, head of sports sponsorship consultancy firm S&E Sponsorship Group, in an interview after the deal.

"TSN owns a lot of great championships in basketball, soccer, and they own a lot of golf masters ... but in this country, there is only one sport that really matters."

Ultimately, TSN is left with the crumbs of the hockey deal — a regional agreement for 10 Leafs games next season and a variety of other regional games over the coming years.

But for many hockey fans, the financial details are a mere sidenote in a debate over the future of the "Hockey Night in Canada" franchise, which is synonymous with its fiery commentator Don Cherry.

"One of the first things that comes to people's mind is what's going to happen with Don," said Cary Kaplan, president of Cosmos Sports, a branding and marketing firm.

Cherry, who turns 80 in February, has shown no signs that he's ready to throw in the towel. As recently as November he said the fate of his segment, "Coach's Corner", was uncertain.

Rogers (TSX:RCI.B) has deflected speculation about its plans for the series, certainly a move to avoid the potential fallout from loyal viewers.

"It will be very hard for anybody to remove Don Cherry," Kaplan said.

"In some ways, in people's conscious, Don Cherry is as big as the deal itself."

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News from © The Canadian Press, 2013
The Canadian Press

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