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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#151 Serious Gord
November 27 2013, 06:40PM
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And there will be only one albeit larger analyst team instead of the current three.

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#152 Serious Gord
November 27 2013, 06:40PM
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And there will be only one albeit larger analyst team instead of the current three.

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#153 Fresh Mess
November 27 2013, 06:54PM
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Fresh Mess wrote:

Look harder. It's not my claim. It's the claim of industry analysts. Right now the cost of TSN on average works out to roughly $5 per month. Every Canadian IPO subscriber who wants anything beyond the local OTA stations HAS to subscribe to TSN in order to get whatever channel they want. It is bundled in the first or second tier of every carrier.

Therefore TSN is heavily subsidized. The question up for debate is how many households would be willing to pay for it a la carte.

sorry, meant BDU subscriber, not IPO

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#154 Cynic
November 27 2013, 07:19PM
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"They are not pointing a gun at your head to force you to subscribe it, are they?"

You don't really understand how cable TV works, do you? It's only been 40 years, so I get that you've still got your head up your --- on this particular file.

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#155 Gaz
November 27 2013, 07:45PM
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@Serious Gord

I'm not disagreeing that withsuppky outstripping demand, price (ie wages) experience downward pressure. In the specific case though, when the commodity is labour, as stated before, it has been empirically proven that wages do not react the same as other goods to imbalances in supp!y, particularly in the short-run.

I don't think its that big of a deal. Some guys will move to Sportsnet, which will need more people to cover more games. Meanwhile, TSN will pay their top-tier guys very well to break news and do the once a year events.

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#156 Gaz
November 27 2013, 08:11PM
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@Fresh Mess

I wouldn't have expected you to respond to my comment any other way.

You go on thinking you're right, and I'll do the same, and that'll be that!

Now where's DSF? His absence causes too much infighting.

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#157 Fresh Mess
November 27 2013, 08:31PM
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Gaz wrote:

I wouldn't have expected you to respond to my comment any other way.

You go on thinking you're right, and I'll do the same, and that'll be that!

Now where's DSF? His absence causes too much infighting.

Has nothing to do with thinking I'm right. You made a veiled accusation of me formed by baseless constructs of your own mind. Perhaps I may not fit in to your tidy subjective ideas of political correctness, but that doesn't give you the right to try and slander me.

How about this: The funny thing Gaz, is that people who make comments like you just did also tend to support the Zionist oppression in the holy land, based on tenuous historical ideology. ----

how would you respond to a baseless and slanderous comment like that?

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#158 NsxZero
November 28 2013, 12:50PM
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I hope TSN is still able to run the NHL highlights on their website. Sometimes I find myself automatically typing in tsn.ca when I start up my browser..

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