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, 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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#1 RexHolez
November 27 2013, 08:04AM
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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

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#2 Supernova
November 27 2013, 08:06AM
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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.

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#3 Jordan Nugent-Hallkins
November 27 2013, 08:08AM
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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.

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#4 Lawndemon
November 27 2013, 08:10AM
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If Dreger, McKenzie, and Duthie talk about hockey and nobody is there to hear them, do they still make a sound?

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#5 borisnikov
November 27 2013, 08:11AM
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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¢.

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#6 Wintoon
November 27 2013, 08:11AM
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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?

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#7 vetinari
November 27 2013, 08:14AM
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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.

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#8 Shaker
November 27 2013, 08:15AM
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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.

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#9 kgo
November 27 2013, 08:16AM
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This is awesome, I pray they fire all the dinosaurs at CBC except for Cherry!!!

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#10 Romulus' Apotheosis
November 27 2013, 08:21AM
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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.

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#11 freeze
November 27 2013, 08:21AM
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I bet we see a lot more of those distracting, superimposed ads on the glass during every game.

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#12 Spydyr
November 27 2013, 08:23AM
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The consumer will pay the end cost of the $5.232 billion and the profit Sportsnet will make on top of that.That is how business works.

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#13 book¡e
November 27 2013, 08:24AM
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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.

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#14 borisnikov
November 27 2013, 08:24AM
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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.

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#15 Clarko
November 27 2013, 08:28AM
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kgo wrote:

This is awesome, I pray they fire all the dinosaurs at CBC except for Cherry!!!

Don Cherry is the definition of a dinosaur!

I like Maclean and Friedman for commentary and like the Hughson/Simpson duo for broadcasting, but not a big fan of the rest.

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#16 Spydyr
November 27 2013, 08:29AM
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Chris Jones has been named head coach of the Edmonton Eskimos.

He can't be worse the last one, can he?

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#17 pelhem grenville
November 27 2013, 08:29AM
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JW...as I understand it, this deal won't kick in til the start of the 2014-15 season

lotsa time for all to freakout til then no?

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#18 Rob...
November 27 2013, 08:30AM
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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.

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#19 Spydyr
November 27 2013, 08:33AM
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book¡e wrote:

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.

Tell me in the end who pays for the advertising ?

Perhaps it is the consumer?

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#20 kgo
November 27 2013, 08:35AM
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Clarko wrote:

Don Cherry is the definition of a dinosaur!

I like Maclean and Friedman for commentary and like the Hughson/Simpson duo for broadcasting, but not a big fan of the rest.

Friedman is gold for sure....but I would pay 1 billion $ personally just to Fire Scott Oake

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#21 boxman
November 27 2013, 08:35AM
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Any idea Jonathon how much the annual take will be for the Oilers?

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#22 Wax Man Riley
November 27 2013, 08:39AM
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Supernova wrote:

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.

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.

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#23 book¡e
November 27 2013, 08:40AM
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Spydyr wrote:

Tell me in the end who pays for the advertising ?

Perhaps it is the consumer?

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.

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#24 Ca$h-Money!
November 27 2013, 08:44AM
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Wax Man Riley wrote:

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.

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.

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#25 book¡e
November 27 2013, 08:45AM
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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.

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#26 Lowe Expectations
November 27 2013, 08:46AM
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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.

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#27 michael
November 27 2013, 08:47AM
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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.

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#28 Crondor
November 27 2013, 08:48AM
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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.

“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!

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#29 VIP Zeb
November 27 2013, 08:49AM
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I doubt cable bills could get any higher, if anything I'm hearing that bundling channels is falling to the way side. Fans are accessing games online on sites that stream for free, and accessibility to different ways to watch games will only increase. I'm not sure this is a smart move by Rogers and this risk could seriously impact their success in the future as technology evolves.

The NHL is also risking branding themselves with what once was a second rate broadcaster. I watch Oilers games almost exclusively and I'm not totally fond of Sportsnets game presentation or panel. TSN always did things right, with the best panelists, constant coverage, great game presentation, etc. I would watch the odd non Oiler game on TSN just because of the presentation.

The only 2 people I would keep on the entire CBC broadcast are Friedman and McLean.

Its true that the NHL sold out on it's best Canadian broadcaster for $$$. TSN is likely too smart to pay up that kind of money because they're run well and recouping the money is impossible. Its unfortunate the NHL didn't have any loyalty. Everything is about the money, like Jonathan said. It sucks and I'm pretty certain the game production quality isn't going to get much better than the same old Kypreos, Mark Lee, PJ Stock and Glenn Healy rubbish.

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#30 Gerald R. Ford
November 27 2013, 08:53AM
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I'm looking forward to TSN's year-end highlights show called: "Stuff We Used to Show You".

The Canadian Competition Bureau is forcing Sobey's to close the only grocery store in my neighborhood because of the Safeway takeover, but Rogers can, apparently, own the universe, and no one blinks.

Sometimes, Canada = no sense

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#31 -30-
November 27 2013, 08:57AM
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Not sure how bundling will work since the CRTC is pushing to unbundle television channels and allow you to pic them a la carte.

The government has been knocking cell providers telling us that we pay too much. I wonder if the screws will be put to the cable providers who up until now have had a license to print money in Canada.

If the Oilers go to premium channels that I don't have I will gladly listen to it on the radio or find a stream on the net.

-30-

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#32 bleedblue
November 27 2013, 08:59AM
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I hear the cable provider is discounting Oiler games and are charging AHL rates.

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#33 Oiler Al
November 27 2013, 09:08AM
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kgo wrote:

This is awesome, I pray they fire all the dinosaurs at CBC except for Cherry!!!

Cherry is the biggest and oldest senile dino on the show. Time for the old fart to retire. He has been spewing the same lexicon for 20 years... nothing new from him.

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#34 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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#35 Serious Gord
November 27 2013, 09:12AM
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I think it was a terrible deal for both the nhl and fans - but not for the reasons you outline. Essentially what the nhl has done is move its Canadian media rights (calling them national TV rights is far too narrow a definition) from one monopoly - the CBC to another Rogers. (Yes I know that the CBC has four years - but Rogers has control of that content and once Rogers gets its national broadcast arm (city tv) up to speed the CBC is done).

And replacing one monopoly with another means that while access will be far greater than the current - a good thing - long-term, like all monopolies quality will decline and cost will go up. For TWELVE YEARS.

Now from Gary bettmans perspective this is a great deal. He gets to show the owners the money and it will be a 12 year guaranteed cash flow thus enabling some owners to liquidate and get their money out now. And Gary can retire - or move over to be commissioner of the nba with what will be seen at the time as a Great legacy.

But it will be a mirage. With all of the multi-platform opportunities Rogers will make a killing - and with a monopoly they will be able to pay their on air people far less. It is not a fluke that the NFL has not signed over all of its media rights to one network. They want competition now and in the future. And they have benefitted greatly because if it (how fantastic is the production values of Sunday night football?).

So short-term gain for bettman, the nhl, AND fans. But that will quickly turn to disappointment and frustration for the balance of the twelve years and mountains of moolah for Rogers.

And let's not blame Rogers for that.

While I have been a huge supporter of GB - he did save the oilers after all - I think this will tarnish his legacy and that's a shame.

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#36 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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#37 Romulus' Apotheosis
November 27 2013, 09:17AM
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@Serious Gord

CBC doesn't currently have a monopoly on Canadian media rights.

TSN broadcasts national canadian NHL games.

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#39 bleedblue
November 27 2013, 09:26AM
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Its time for the Communist Broadcasting Corp to go away. And drop Cherry off at the Tyrell Museum for display.

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#40 They're $hittie
November 27 2013, 09:27AM
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Who would you rather cover

Props for TSN

Trash for Sportsnet

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

CBC doesn't currently have a monopoly on Canadian media rights.

TSN broadcasts national canadian NHL games.

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.

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#42 They're $hittie
November 27 2013, 09:28AM
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Hockey is now ruined, more Gene Principe

GOOD GRIEF

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#43 Ducey
November 27 2013, 09:34AM
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You are missing the real story. Rogers and Bell own Maple Leaf Sports and Entertainment.

Rogers is going to shove the Leafs down our throats 24/7 in order to increase the value of MLSE.

Expect to get Leafs games for free, but to pay for Oilers, Flames, Canucks, Jets, and Canadiens programming.

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#44 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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#45 Romulus' Apotheosis
November 27 2013, 09:36AM
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They're $hittie wrote:

Hockey is now ruined, more Gene Principe

GOOD GRIEF

Come now… Gene is hilarious and a side-show. It's the commentariat that deserves scrutiny here.

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#46 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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#47 Serious Gord
November 27 2013, 09:43AM
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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.

CBC will only be the Saturday night carrier - they pay nothing for it and get nothing from the nhl. Rogers now will run HNIC. All the CBC gets is any over the air ad revenue. Thus one monopoly replaces another.

In the playoffs the CBC got the pick of the Canadian team litter TSN got the crumbs.

In the nfl et al shorter term contracts for just segments of the market are sold. Thus the kind of confusion you outline are avoided yet the competitive juice remains... Selling it all to one company for such a long time in such an rapidly changing system is a very very myopic thing to do.

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#48 Romulus' Apotheosis
November 27 2013, 09:43AM
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Spydyr wrote:

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.

As per the continuing conversation, it will continue to be a monopoly, i.e., controlled by Rogers (though as we've been discussing, it will appear on numerous platforms -- CBC, SN, City, etc), whereas before it was controlled by CBC.

The issue isn't the platform but the right's holder.

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#49 Romulus' Apotheosis
November 27 2013, 09:49AM
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Serious Gord wrote:

CBC will only be the Saturday night carrier - they pay nothing for it and get nothing from the nhl. Rogers now will run HNIC. All the CBC gets is any over the air ad revenue. Thus one monopoly replaces another.

In the playoffs the CBC got the pick of the Canadian team litter TSN got the crumbs.

In the nfl et al shorter term contracts for just segments of the market are sold. Thus the kind of confusion you outline are avoided yet the competitive juice remains... Selling it all to one company for such a long time in such an rapidly changing system is a very very myopic thing to do.

You're confused in the same way Spyder was, see my reply to him

I didn't say otherwise (i.e., that TSN got to pick playoff rounds).

I don't have a problem with your argument against the monopoly, however, the NFL market is a completely different ball game, and IIRC the Superbowl is always broadcast by one provider because it is more efficient to produce and effective at leveraging market share.

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#50 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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