Talks between Rogers and the NHL are unfolding against a radically different backdrop than when the two sides struck a landmark 12-year deal in November, 2013.Fred Lum/The Globe and Mail
The clock is ticking on the future of NHL hockey at Rogers Sports & Media.
On Jan. 1, the media division of Rogers Communications Inc. opened its exclusive negotiating window with the National Hockey League on a new deal for the national Canadian TV rights. The current arrangement, a blockbuster 12-year, $5.2-billion deal that transformed hockey viewing in Canada and the fortunes of Rogers’s Sportsnet cable channel, expires at the end of the next NHL season.
Both the NHL and Rogers have praised the partnership and expressed a desire to forge a new one. But the talks are unfolding against a radically different backdrop than when the two sides struck the landmark deal in November of 2013 that placed Rogers in the position of Canadian gatekeeper – the exclusive holder of national rights to the NHL’s broadcast content on all broadcast and digital platforms.
The deal helped save Rogers’s Sportsnet specialty channel from what its previous leaders say was an almost certain demise. But both the company and the league are facing pressures that make a repeat of that arrangement unlikely. Skyrocketing rights fees are squeezing Sportsnet’s profitability. And the NHL recognizes it needs to balance the push for more revenue from rights fees with wide distribution – what commissioner Gary Bettman has called “fan-friendly” TV viewership options.
If the two sides don’t come to an agreement during the exclusive period, which is expected to last two months, the league can shop its rights to other programmers.
(The deal is only for the right to air or stream games nationally; Rogers and Bell Media have separate deals with the seven Canadian NHL teams for regional packages of games that they air or stream across specific areas of the country.)
The company declined a request for an interview with The Globe and Mail. In an e-mailed statement, Rogers spokesperson Zac Carreiro said: “Rogers’s partnership with the NHL has been incredibly successful and integral to Sportsnet’s leadership as the number one sports media brand in Canada.”
Those who led Rogers Media when the company signed the original deal are still bullish on it. Keith Pelley, who was then the president of Rogers Media and is now the president and CEO of Maple Leaf Sports and Entertainment (MLSE), noted recently that Sportsnet was confronting a potential existential crisis in the fall of 2013 with the prospect that its archrival, TSN, might scoop up the national rights to NHL games. “If TSN had taken all of the hockey, then it was kind of like Sportsnet would likely have been out of business,” he told journalist Stephen Brunt on a podcast last month.
Mr. Pelley noted that, without a popular property such as the NHL on its schedule, the channel would have had little leverage in negotiations with the companies that distribute it on cable-style services such as Telus Optik, Bell Fibe or Rogers Cable.
Rogers has been extremely successful exercising that market power. In the 2013 broadcast year, prior to the beginning of its NHL contract, Rogers Media earned about $34.10 from each customer who subscribed to all three of its Sportsnet services (Sportsnet, Sportsnet One and Sportsnet 360); by 2023, that figure hit $92.55 according to filings with the Canadian Radio-television and Telecommunications Commission (CRTC).
The company is also in a much better position than it was in 2013 to supply programming to itself as it moves to complete its acquisition of a majority stake in MLSE, which will give it control of the Toronto Maple Leafs’ regional rights and the rights to all Toronto Raptors games (though it has pledged to sell half of the rights to Bell Media for “fair market value”).
NHL hockey helped boost the combined revenue of Rogers’s Sportsnet operations to $737-million in the 2023 broadcast year, the most recent period for which annual figures are available from the CRTC, from $371-million in the 2013 broadcast year.
As TV viewers have cut the cord, many have opted to directly subscribe to Sportsnet‘s streaming service, which retails for either $24.99 or $34.99 a month ($199.99 or $249 a year), depending on whether they want to watch out-of-market NHL games. That is far more profitable for the company than offering it through a cable operator. But consumers are also quicker to cancel streaming services if there is not enough popular programming to keep their interest – or, for sports fans, to start and stop depending on whether their teams are competitive.
And the hockey deal is squeezing Sportsnet’s profit, according to filings with the CRTC. Rights acquisition costs for Canadian programming, which includes the NHL deal, have escalated sharply over the decade, hitting $349-million in 2023, up from $84-million in 2013.
The pretax profit for its three Sportsnet services has stayed flat in that period, inching up to $88-million in 2023 from $87-million on 2013.
Still, the NHL seems intent on increasing what it charges for its rights.
In its most recent national U.S. media-rights deals, a seven-year pact announced in the spring of 2021, the league reportedly secured a sharp increase from the US$200-million annually it had charged NBC under its previous arrangement. It now earns a reported US$625-million annually, with its games split between ABC, ESPN, TNT and HBO Max.
Last year, the National Basketball Association signed an 11-year, US$76-billion deal for the U.S. rights to nationally broadcast its games with The Walt Disney Co., NBCUniversal and Amazon Prime Video, an increase of about 160 per cent from the US$2.7-billion a year it earned under its previous deal.
“I believe our valuable rights have only gotten increasingly valuable,” the NHL’s Mr. Bettman told The Globe and Mail in an interview last fall. “If you look at Sportsnet, before they had our rights, TSN was No. 1. They got our rights, and immediately Sportsnet became No. 1 and has been for the last 11 years. So we’ll see. I think we’re in a very good position. To the extent that the marketplace is expanding, that’s a good thing as a rights holder.”
Still, leagues are increasingly trying to balance their traditional desire for increased revenue from rights sales with what is known as reach – attracting as large an audience as possible – with the widening awareness that putting too much content behind a paywall stifles growth. The NBA’s announcement about its new deal noted it would offer “dramatically increased exposure on broadcast television.”
Mr. Bettman acknowledged the league will need to be mindful of the competing pressures to drive revenue while still expanding the game’s appeal, as well as staying nimble to respond to the economic disruptions roiling the media landscape. He suggested that allowing Rogers to sell off its package of Monday night national games to Amazon’s Prime TV service for the final two years of the NHL-Rogers pact would enable the league to test what sort of engagement it could get on a platform that is widely distributed in Canada – “as fan-friendly as you can be” he called it – but not top of mind for NHL fans in the country.
“It’s going to be a balancing act,” he said. “I can’t predict what over-the-air is going to look like in five years, what linear cable and satellite are going to look like. So, what you want to do is make sure you understand what the technology options are, how you would most effectively use them to serve your fan base, and see how it all unfolds.”