Sportsnet can’t dig out of hole created by NHL contract

As the media giant sheds pricey on-air talent, the league has been unsympathetic. Where will the bleeding end?

Bruce DowbigginAudacious.

That’s perhaps the best word to describe Rogers Communications’ attempt to supplant CBC and TSN as the go-to network for the National Hockey League in Canada in 2013.

It committed $5.2 billion over 12 years to buy national rights to Hockey Night in Canada and the rest of the TV and digital product on offer from the league.

Disastrous.

That’s probably the best word to describe the outcome of the gamble. With the announcements the past few weeks that a significant slice of the on-air talent was being let go (apparently for economic reasons), it’s now clear that Rogers’ plans – shepherded by then-Rogers Media president Keith Pelley and his second in command Scott Moore – are an embarrassing failure.

The predicted uptick in digital revenues that would supplant money lost by declining TV advertising never materialized. With a $25-million bump in each year of the deal, finding new money in the market has become unsupportable.

The contributions of controversial Chinese communications company Huawei through advertising delayed the impact but now even that’s not enough.

Disaster.

Even for those who lost their piece of the lucrative deal.

While the news that Nick Kypreos, Doug MacLean and John Shannon were joining Bob Cole, Bob McCown, Daren Millard, Damian Cox, Gord Cutler and others as ex-employees came as a shock to many, the culling was determined a year ago in a meeting little reported at the time.

Last summer, Rogers brass apparently summoned Moore for a showdown, informing him that 80 per cent of their costs were tied up in properties. They’re believed to have demanded he cut the salaries and payroll he’d generously awarded staff. The man who’d been the face of the NHL deal since Pelley left for the European PGA Tour in 2016 reportedly told his bosses that he was a builder, not a tear-down guy.

With that Moore walked off to enjoy himself in a long-delayed holiday, leaving the people he’d recruited to fend for themselves. (He subsequently found a new gig working with LeBron James.) Everyone who remained was reportedly going to be asked to tighten their belts, some by as much as 20 per cent on their contracts.

A few bodies left last summer but the real damage came this summer. Rick Brace – the caretaker who replaced Moore – headed into retirement, replaced by former Facebook employee Jordan Banks. And the scythe swung. (Because he still brings in revenues, Don Cherry is being spared – for now.)

Part of the problem for those losing their jobs was the generosity extended by Moore and company. When Rogers won the bitter contest for the NHL rights, Pelley and Moore sought to create a new generation of go-to authorities and play-by-play announcers to erase memories of CBC’s long-term hold on HNIC. They also wanted viewers to reject TSN’s stable of Bob McKenzie, Darren Dreger and James Duthie and turn to Sportsnet for breaking stories and big events.

To guarantee that Sportsnet didn’t poach its stars, TSN apparently tore up the existing contracts for its analysts and announcers, in some cases doubling their salaries on deals that extended from five to 10 years. If Sportsnet was going to win this gamble it would be with their own timber.

Fortunately, Sportsnet was able to inherit some CBC stalwarts like Cherry, Ron MacLean, Elliotte Friedman and Scott Oake to ease the transition. For the rest, however, they had to search the limited Canadian media landscape of sports talk radio and newspaper writers. To attract names such as Cox, Stephen Brunt, Michael Grange and Jeff Blair, they often bid against themselves.

One industry insider says that Sportsnet awarded $550,000 a year to a newspaper veteran when his last offer at this old employers was under $300,000. Deals given to Kypreos and Doug MacLean were apparently priced at the mid-to-high six figures, even though their market value was about half that.

For a short time, it was great to be able to put two words together on air. Then bad luck hit Rogers. In the Sportsnet-NHL contract’s first year, no Canadian teams made the 2016 playoffs – the breadbasket for TV revenues. Ratings cratered, ad revenues suffered. (Only one year – 2017 – has seen more than three Canadian teams make the post-season; none have made the Stanley Cup Finals.) Digital viewer numbers were acceptable; digital revenues were not.

And fans never shook the habit of turning to TSN on draft day or trade deadline day. Rogers’ expensive experts could never seize the advantage of having all the prime games.

NHL commissioner Gary Bettman was unsympathetic, demanding that Sportsnet continue expensive initiatives it promised as part of winning the contract.

Eventually, Moore was summoned for the fateful meeting last summer.

A depleted Rogers must now try to find new money where little exists. The austerity imposed by the phone salesmen in the executive suites has extended to Major League Baseball’s Toronto Blue Jays. The fire sale of Blue Jays players is a result of the taps being turned off by the bosses. Even though the Jays operate in the fourth largest urban market in MLB – with 37 million Canadians in their back pocket – they now operate like the Kansas City Royals.

While TSN has used some of the $5.2 billion it didn’t have to spend to win the contract in 2013 on regional rights for Canadian teams, it has been gutted program-wise from April until NHL regional packages resume in October. It has poured money into the Canadian Football League to fill that gap, hoping that, and golf and tennis content, would keep the lights burning.

And CBC?

It gets all the grief from fans unaware it doesn’t own NHL rights and receives none of the revenues it once claimed under its legacy HNIC package. (CBC got nothing but advertising placement in exchange for handing over its facilities and legacy to Rogers.)

Bettman’s hardball negotiations have devastated the Canadian TV market. Why he didn’t spread out the rights as the National Football League does is a mystery. He’s now regretting giving NBC exclusive rights in the U.S.

When does he recant the Canadian strategy and unburden Rogers of this albatross?

It’s a case of sin in haste and repent at leisure.

Troy Media columnist Bruce Dowbiggin career includes successful stints in television, radio and print. A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he is also the publisher of Not The Public Broadcaster.

© Troy Media


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