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.

  • Rocket

    I stopped using cable years ago and now just use the interwebs for errything. Thanks to the multiple lockouts and terrible local NHL team, I don’t (fully) financially support hockey. I don’t buy merch anymore either and I’m squarely in the NHL’s target demographic. I still watch Oilers games on the Internet through uh… Other means but I won’t be going back to cable anymore.

    I don’t blame people for being upset with this deal. It seems like every new deal Bettman does screws over the hard working fans. What’s up with that?

  • Rocket

    I see this as not a big deal to hockey fans. It make no difference to me which channel I watch a game on, other than the varying production qualities. But some people just like to complain.

    I hope the Rogers improves its production quality, as it is far behind TSN and HNIC. The local Oiler product borders on amateur hour.

    • pkam

      On air and off air talent is just commerce..with there being less work at TSN in all likelihood talent will move from TSN to Rogers.

      Labour resources will go to where the work is.

      Dont think for a minute TSN can or will keep everybody…..the only way this (production quality at Rogers that is) becomes and issue is if all the networks start producing more hockey and the market expands. Dont think that will happen ..yet or maybe ever

  • xeno

    I see there are several people who don’t understand a few things:

    1) The announcing crew for the regional Oiler telecasts are hired by the Oilers. Rogers has little to do with it. If you dislike Principe, write the Oilers.

    2) I just talked to a well known former TSN employee. He confirmed what I already knew, that there would be a lot of people moving over from TSN to Sportsnet. So whichever network hockey presentation you prefer is irrelevant. Rogers now has all the content and will therefore have their pick of TV talent. Their broadcast will improve over time.

    3) It’s true that the government is exploring a la carte channel unbundling. If this happens, TSN and Sportsnet would no longer be subsidized by all cable subscribers and would likely cost between $30 and $40 per month on their own. Obviously the channel with the most desired content would win out in that scenario.

    4) I also cut the chord about three years ago as I became frustrated with price increases every 6 months on my already hefty cable bill. With a good outdoor antenna you can receive all the local over the air channels in clean HD. So now that will include HNIC double header on CBC as well as a Saturday game on City TV and perhaps OMNI. City TV will also have a sunday night game apparently. UnblockUs does work well as has already been mentioned.

    • Dobbler

      So the Sportsnet crew is hired by the Oilers?? That makes no sense, why do they do the Olympics stuff for Sportsnet then? When TSN bought 1260 why did they get rid of all the Sportsnet guys if they’re just hired by the Oilers? Why is it just the 630 Ched guys that do the Oilers website stuff if Sportsnet guys are also Oilers employees?

    • Serious Gord

      As Craig simpson confirmed on 1260 ALL CBC on air people have their contracts expiring at the end of the year due to the upcoming futrue contract not being in place. One would assume that is also the case for TSN and Rogers. Thus EVERYTHING is in flux as to who will be working for rogers when the new contract comes into force. So lots of people looking for a smaller number of jobs. The result will be significant downward pressure on the on air salaries.

      With unbundling the costs will go down – not up. At least at first. Sports channels are in demand, some of the more obscure CANCON and other channels don’t draw flies. The CANCONs will either have to jump their rates or see incomes plummet (but a jump could kill subscribership even more). Meanwhile the sports channels will see huge demand and get to keep all of the subscriber payment rather than share it with the obscure channels like they do now.

      In time as the rogers channels leverage their hockey monopoly they may ramp up rates, but i suspect they don’t plan on doing that – rather they want to generate cross-platform revenues and use the TV as a bit of a loss-leader.

    • Sevenseven

      I thought point #3 of yours also sounded ridiculous, so I took a look on my own. According to the former vice-chair of CRTC, under a la carte unbundling, the most popular specialty channel (TSN at the moment) would be $9/month, not 30-40 as you claim.

      • Serious Gord

        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.

  • Rocket

    I HATE ROGERS, TSN is so much better. I cried when I heard I have to listen to Louie Debrusk explain the game of hockey to his audience like we are all children for the next 12years. May bad things happen to you Louie…… So that my suffering will end.

  • Johnnydapunk

    I think something like this happened in the 90s with the English Premiership football and Sky sports when they won the rights to broadcast the football over BBC and ITV. BBC Had a Saturday show called match of the day which exactly like the CBC HNIC showed a match every Saturday and sometimes had doubleheaders. Gradually the football disappeared from BBC and they were reduced to a highlights show Saturday and Sunday Nights.

    Gradually it because harder and harder to watch live matches on anything that wasn’t Sky sports, and slowly the prices crept up and it cost more in every aspect as Sky found new ways to increase revenue, things like charging Pubs a premium rate to broadcast games and basically making it so that you had no choice but to watch the football on Sky.

    I have a feeling this is going to be the beginning of a very long profitable run for Sportsnet and slowly all the sports you enjoy will be a Sportsnet broadcast and as there is going to be more and more exposure of the NHL, you will begin to see more and more advertising appear.

    It’s just a matter of time before the team logos appear smaller and the ads become bigger and all the while we will play more for the pleasure of watching 3 periods of commercials interspersed with hockey.

  • STAN

    I’d love to see MacKenzie, Lebrun, Rod Smith and perhaps James Duthie move to SN just for their own careers, but it’s paradoxical because even with those solid broadcasters SN is bound to find a way to present them in the worst possible light (literally and figuratively).

    SportsNet is crap, from a one-time talented and trustworthy Darren Millard to the laughable Nick Kypreos, the aforemented Principe and the goofs who try to play broadcasters in Calgary and Vancouver.

    This deal makes a mockery of free enterprise. Monopolies rules and Rogers and the NHL know that better than anyone. Monopoly, collusion and consumer indifference, now THAT’s how you squeeze REAL money out of our flawed system.

  • Bishai in the Benches

    Allstar dream lineup for entertainment value:

    Coax Rod Philips out of retirement for play-by-play, Gene Principe (with an unlimited supply of props) as his colour guy, Ily Bryzgalov as the “in the game analyst” (even if he’s playing).

    “Panel” comprised of Milbury, McGuire, and Cherry, but without any moderation. Cherry can bash those two guys as much as he wants. Throw in Biznasty too, I feel like him and Cherry would be friends.

    Have an insider trader segment lead by Eklund, with special guests “every single person who includes the rights to Linus Omark in a Shea Weber trade proposal”

    Production team that brings in the inventor of the FoxTrax puck, cooperalls, and every design team that has ever used yellow as a main jersey colour.

    Just in case anyone from Rogers is reading, this is guaranteed to work. Bring me in as an advisor and pay me MILLIONS.

  • Dobbler

    HNIC has gotten worse over the years IMO. Don Cherry went from being an actual credible hockey commentator/analyst to a “sports entertainment personality”. People tune in to coach’s corner see what the blow-hard dinosaur is going to do, not to get any insight on the game.

    I don’t mind the sportsnet product. I’m glad that they’ll be able to get better people and improve it, but I watch most of my games on SN already and have no major complaints (minor compaint -> Gene Principe)

    On a side note…The white snow background makes the page numbers and “next” and “back” really hard to see.

    Okay, whining done!

  • Serious Gord

    guys, don’t worry about be happy. Keith Pelley who is now head of Roger’s media division, used to be in charge of TSN. Pelley was interviewed on Bob McCown and his goal is to use the NFL as his benchmark in terms of tv production. Sure the cable rates may go up but they will continue Saturday HNIC on CBC and they plan NHL on City tv. Looking at the NFL and the States, I don’t think cable rates skyrocketed. TV still makes a lot of money off advertising.

  • Serious Gord

    It’s a business and as long as people support it, they will explore any and every avenue to gouge the fans. If there’s one thing that the fallout from the past two lockouts has proven, it’s that people will whine and complain but when push comes to shove, they will still support the NHL.

    Personally, I love watching hockey but I don’t see myself buying any NHL merchandise or attending any games in the near future.

  • Serious Gord

    You just wrote that because most of the revenue comes from ads, Rogers won’t charge more for subscriptions. Disconnected from any semblance of monopoly behavior understanding. Not surprising considering I’ve heard you on the radio.

  • Serious Gord

    You just wrote that because most of the revenue comes from ads, Rogers won’t charge more for subscriptions. Disconnected from any semblance of monopoly behavior understanding. Not surprising considering I’ve heard you on the radio.

  • Serious Gord

    You just wrote that because most of the revenue comes from ads, Rogers won’t charge more for subscriptions. Disconnected from any semblance of monopoly behavior understanding. Not surprising considering I’ve heard you on the radio.

  • Sevenseven

    Not that I really care anymore, I got rid of cable and use game center and an american ip, but by my calculations, this deal costs them $887k per game. That really doesn’t seem like a huge stretch for them to cover. I wonder what they pay right now? And for the entire media rights? They’ll do okay. I wonder if I can watch the games for free on my Rogers cell phone?

  • Serious Gord

    “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.

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

    Oh yeah…..and all NHL hockey games should be broadcast on HBO so the commentators can get real…ask tough politically incorrect questions, swearing is mandatory, grill the players and coaches with hard hitting between period interviews….stop lobbing them soft balls and excepting their mind numbing cliched answers…High Octane girls could be nude…..and screw the 50/50 crap….there should on site betting windows in every arena…..and did I mention the Beer should be CHEAP!

  • Quicksilver ballet

    Part of me would dearly love to see 60 cent Canadian dollar again. Set the whole league back to square one again.

    Without the 7 Canadian teams to subsidize all the non hockey market US hockey teams, this league would be in ruins. Oh well, who cares anymore, Edmonton hasn’t had an NHL team for nearly a decade.

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

    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.