Own Goal: Rogers HNIC Gamble Crashes And Burns
(Updated with Rogers comments on the material in this piece.)
Audacious. That’s perhaps the best word to describe Rogers Communications attempt to supplant CBC and TSN as the go-to network for the NHL in Canada in 2013. It committed $ 5.2 billion over twelve 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 announcement the past few weeks that a significant slice of the on-air talent was being let go for economic reasons, it’s now clear that Rogers’ plans— shepherded by then-Rogers Media president Keith Pelley and his 2IC 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, the crisis in finding new money in the market has become unsupportable. The controversial Chinese communications company Huawei delayed the impact, but now even that is 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 at this time in a meeting little reported at the time.
Last summer Rogers brass summoned Moore for a showdown. Informing him that 80 percent of their costs were tied up in properties. They demanded he cut salaries and payroll he’d generously awarded staff. The man who’d been the face of the deal since Pelley left for the European PGA Tour in 2016 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. (Moore has subsequently found a new gig working with LeBron James.) Everyone who remained was going to be asked to tighten their belt, some by as much as 20 percent on their contracts.
A few bodies left last summer, but the real damage was left till 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 & Co. When Rogers won the bitter contest from TSN 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 longterm hold on HNIC. They 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 tore up the existing contracts for its analysts and announcers, in some cases doubling their salaries on deals that extended from five to ten years. If Sportsnet was going to win this gamble it wold be with their own timber.
Fortunately Sportsnet was able to inherit some CBC stalwarts like Don Cherry, Ron MacLean, Elliotte Freidman 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 K. Deals given to Kypreos and Doug Maclean were priced at the mid-to-high six figures level, not their market value— which was about half that figure.
For a short time it was great to be able to put two words together on air. Then bad luck hit Rogers. In the contract’s second 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 postseason; none have made the Cup Final.) Digital numbers were acceptable; digital revenues were not.
Worse, 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 had 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 in the market. The austerity imposed by the phone salesmen in the executive suites has extended to the Blue Jays, too. The fire sale at Rogers Centre is a result of the taps being turned off by the bosses. Even though the Jays are the fourth largest urban market in MLB— with 35 Canadians in its back pocket— they now operate like Kansas City.
Rogers issued this response to the comments in this story: ““Sportsnet is Canada’s home of hockey and the NHL continues to deliver strong results for us. Our partnership is strong as we look forward to delivering another great viewing experience to fans this season, and the claims are categorically untrue.”
While TSN has used some of the $5.2 billion it was said it took to win the contract in 2013 on regional rights for Canadian teams it has been gutted program-wise from April till NHL regional packages resume in October. It has poured money into the CFL to fill that gap, hoping that and golf/ tennis content would keep the lights burning.
CBC? It gets all the grief from fans unaware it doesn’t own NHL rights and none of the revenues it once claimed under its legacy HNIC package. (CBC received nothing but advertising placement in exchange for handing over its facilities and legacy to Rogers.)
Which leaves Bettman, whose hardball negotiations have devastated the Canadian TV market. Why he didn’t spread out the rights as the NFL 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.
Bruce Dowbiggin @dowbboy is the publisher of his website (http://www.notthepublicbroadcaster.com). He’s also a regular contributor to Sirius XM Canada Talks Ch. 167. A two-time winner of the Gemini Award as Canada's top television sports broadcaster, he is also a best-selling author whose new book Cap In Hand: How Salary Caps Are Killing Pro Sports And Why The Free Market Could Save Them is now available on brucedowbigginbooks.ca.