Monday, August 14, 2006

In the Frozen North – it’s the motherhood issue

Imagine if you will for a moment a universe without the National Football League on network television. Imagine if you will for a moment a universe where you were forced to watch your local National Football League’s team’s cable on cable TV. Imagine if you will for a moment a universe with your favorite National Football League teams’ playoff games shown only on cable TV. This isn’t placing Major League Baseball or National Basketball Association playoff games on the domain of cable television, its taking those games football fans wait all year to enjoy and the games ending up on cable TV, not on an over-the-air carriers that currently carry all NFL playoff games.

How important National Football League games are to Americans is how important National Hockey League games are to Canadians. If you did a survey of American sports fans the NFL would top everyone’s list. In Canada, the NHL is listed one through 10 on everyone’s favorite sports list. In the land of the Maple Leaf, it’s Family, God, Country and the National Hockey League. A series of reports from Bill Houston, one of Canada’s premier industry insiders, the well respected sports media writer for Canada’s most important newspaper The Globe and Mail suggest the NHL is heading towards “The Twilight Zone”.

Houston reported first in Friday’s edition and then followed that on Saturday with a suggestion Bell Globemedia, the parent company for CTV Canada’s largest private national network, TSN and RDS Canada’s two largest sports cable network are getting ready to offer the NHL $1.4 billion. The agreement would include English, French, cable (French and English) and new media NHL rights for a ten-year period. The proposed agreement would start when the NHL’s current Canadian agreements with among other the Canadian Broadcasting Company ends after the upcoming NHL season.

Rick Brace, who at one time was the programming director for TSN and is now the President of CTV tried to downplay Houston’s report in Saturday’s Globe and Mail.

"We don't have a document to present to the NHL," he said. "We're just not there yet."

"That's a big number," Brace said. "We run numbers and we do that as a matter of course, and that's not something we've contemplated. We're just not there yet."

There are a multitude of issues that the NHL better consider if in fact they’re serious about handing over their rights to the CTV, including but not limited to:

Playoff coverage. The Stanley Cup playoffs are sacred to Canadians. Like the preverbal line in the sand, here’s where the proposed Bell Globemedia agreement will never work.

CTV will have no issue with devoting their Saturday night coverage to the National Hockey League. However the real value in securing NHL Canadian TV rights isn’t in regular season games, it’s the Stanley Cup playoffs where the big advertising dollars are generated.

Currently as Houston reported, the CBC generates in excess of $30 million in earnings from their two months of Stanley Cup playoff coverage. There is every possibility CTV could generate even greater profits from committing two months of their network coverage to the Stanley Cup playoffs – only one problem with that, CTV will NEVER commit to two months of Stanley Cup playoff telecasts. That would prove to be economic suicide for CTV.

CTV proudly promotes the network is home to 17of the top 20 rated Canadian television shows. All 17 are shows are produced by American television networks. The regulating body for television and radio in Canada (the CRTC) mandates if the same program is shown at the same time on an American and Canadian network both feeds have to be simulcast with the Canadian feed shown on the American cable network feed.

As an example American Idol, Lost, Law and Order, ER, four of the highest rated Nielsen programs on American television are all shown by CTV. CTV is able to generate a premium on advertising dollars generated for American based dramas and comedies simulcast in Canada. CTV national sales representatives create packages that include the key May sweeps and the April lead up to the end of the television season. From cliff hangers to series ending shows, there is absolutely no way CTV would ever consider giving up any primetime programming in April and May. CBC doesn’t have the same issue(s) showing at least one and often two NHL games most weeknights in April and May.

So then why not put the playoff games, the ones featuring Canadian teams (in Canada’s six biggest markets) live on cable TV and on a tape delayed basis on CTV. After all close to 85 percent of Canadian homes currently have cable TV. What about that 15 percent who can’t afford cable TV? What about students or families from disadvantaged homes who can’t afford cable TV. What about seniors and veterans living on a fixed income?

Back to our Twilight Zone analogy, imagine if you will the impact a picture of a living Canadian World War II veteran would have (the veteran can only afford a Black & White television) on the Canadians psyche.

If that isn’t damaging enough to the image of the NHL consider the issue turning into a political fireball overnight? Friday, the Ottawa Senators learned the property tax the team pays for Scotiabank Place their home arena is going to double from its current valuation of $717,000 to $1.6 million over a four-year period beginning next year. That would still leave the facility paying less than half what other similarly assessed properties pay.

If the NHL’s proposed agreement with CTV would allow local playoff games featuring Canadian teams it would be political suicide. NFL cable TV rights dictate any cable available in a home teams market, Monday night football or the new NFL Network series of late season Thursday and Saturday night games must also be televised in an over-the-air carrier in each market. There is an average of three to five additional over-the-air television states in each major American market. In Canada most major cities offer three networks (the CBC included). After agreeing to pay the NHL a rights fee in excess of $1.4 billion over then years, the last decision CTV will ever make is to offer games featuring Canadian teams in their home market on the local CBC affiliate because CTV is televising the finals of American Idol.

Back to that lasting image of the vet, sitting in his one bed apartment, black and white television, rabbit ears to ensure he’s able to receive the few over-the-air carriers available. He’d love to be able to afford cable, but on a fixed income he can’t afford the money it will coast him. He’s put his life on the line for his country and during the few remaining years he has left in the country he was ready to give his life for he no longer can see his Ottawa Senators’ playoff games because of the greed of National Hockey League owner. If Canada’s six NHL franchises believe they have it tough in dealing with their local governments today, just wait until the first tax bill after they sell Canadian NHL rights down the river.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Globe and Mail.