It was with much fanfare in the Fall of 2013 that Rogers scooped
the NHL's Canadian national broadcast rights from Bell Media,
for the tidy sum of $5.2 billion over 12 years (starting in the
2014-15 NHL season). Following Rogers' marquee rights purchase,
many had predicted that Rogers Sportsnet specialty channel would
leapfrog over Bell Media's TSN in the ratings game. In fact, it
was recently confirmed that Rogers flagship sports channel,
Sportsnet, has secured the overall number one spot for 2015.
Surprisingly, however, what catapulted Rogers to the top of the
ratings race was not its NHL deal. While Rogers enjoyed some
monthly ratings wins in the first year of the NHL rights deal, to
many observers' surprise, the ratings boost for 2015 overall
was attributed to the Blue Jays late season surge and playoff run.
As recent media coverage explains, the ratings
juggernaut kicked into high gear following a series of high-profile
trades executed by the Blue Jays in the summer. This had a dramatic
impact on television ratings: in September, the Jays averaged 1.61.
million viewers, nearly triple Sportsnet's 2014 Blue Jays
ratings. Even the late afternoon playoff games (which many Blue
Jays fans complained about) garnered more than 2.5 times the
ratings to Toronto Maple Leafs broadcasts on the same day.
It is difficult to gauge the impact of this ratings boost on
Rogers' bottom-line financial results: as a vertically
integrated broadcast distributor-programmer, any increase in the
fees that Sportsnet can charge to its affiliated Rogers cable
operators is essentially an accounting entry. Further, given that
Rogers owns the Jays, the rights fees paid by Sportsnet to the Jays
is yet another accounting sleight of hand.
However, it is likely that the Jays' performance will give
Sportsnet significantly more bargaining power vis-ŕ-vis
other broadcast distributors outside of Rogers' territory in
negotiations for the distribution of the Sportsnet channel. A recent analysis by Globe and Mail telecom
reporter Christine Dobby explains that Sportsnet received an
average of $2.38 in payments from various broadcast distributors
(cable, satellite and IPTV) per month per subscriber while the
equivalent revenue for TSN was approximately $3.07. As Dobby
explains, if Rogers could close that gap, it could enjoy up to
$70-million in additional revenue.
A longer term issue that will have to be addressed is the impact
of the CRTC's going-forward rules on bundling of channels into
large packages. Following its Let's Talk TV process, the CRTC
has now implemented rules giving consumers more flexibility to
avoid large packages and choose channels on a
"pick-and-pay" basis. This could have a dampening effect
on overall penetration of channels such as sports programming
services. The impact of these changes have spooked the public
markets, which have taken a substantial chunk of value off the
market caps of large media companies in the U.S. (see here for example) and in Canada (see here for example. These development shave the
potential to have a significant impact on the business model of
many cable services, including sports channels and ultimately the
price paid for the rights.
In another development, Rogers new 12-year term as the exclusive
owner of national NHL broadcast rights has piqued the interest of
the Competition Bureau. That is the topic for
another HPC post.
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