Tuesday, May 22, 2007

You can’t blame NBC for what they did to the NHL on Saturday

On the surface it would appear NBC stuck it to the National Hockey League Saturday afternoon embarrassing the Frozen Pond like it hasn’t been humiliated in recent memory. Game five which turned out to be the pivotal game of the Eastern Conference finals with the Ottawa Senators winning and moving onto the Stanley Cup Finals saw the NHL’s worst nightmare come true. The league that sports is quickly forgetting had to be mortified when NBC left game five of the Ottawa Senators – Buffalo Sabres went into overtime, with NBC signing off immediately after regulation time forcing anyone interest in watching the overtime (save for Rochester and Buffalo’s NBC affiliate) moving the game to Versus, the network that sports fans can’t find.

"We were fully aware of NBC's programming commitments following Game5 between the Sabres and Senators, and the challenges overtime could present for viewers and our network partners," league spokesperson Jamey Horan offered in only statement the league has made concerning what took place Saturday. "However, our decision to schedule the game with NBC was done to provide the broadcast to the greatest number of viewers."

"NBC was obligated to provide its traditional coverage of the Preakness," said NBC spokesperson Brian Walker. "We protected the game in Buffalo and alerted viewers ... that overtime would be shown on Versus."

While no sports league deserves to be treated as shabbily as the NHL was on Saturday, the genesis of the NHL’s deal with NBC is at the root of the problem and frankly when combined with anemic ratings the NHL has produced its no wonder NBC gave the NHL the shaft Saturday.

And how badly did the NHL, NBC and their national cable TV partner handle Saturday’s debacle? The New York Times’ Richard Sandomir Tuesday reported: foul-up at Versus’ master control in Denver delayed by about two minutes the time before Versus took the Sabres-Senators handoff from NBC. Marc Fein, a Versus senior vice president, said, “Needless to say, it didn’t go as smoothly as we would have liked.”

John Shannon, the league’s senior vice president for broadcasting and a former hockey producer who has to be embarrassed by what took place Saturday told the New York Times: “We believed the checks, double checks and triple checks were in place. It was one simple, human error. We talked all day. Everything was coordinated. Our concern was that people were told to go to Versus, and it wasn’t there right away.”

The NHL started the 2006-07 season with the second year of their two year $130 million agreement with VERSUS. Versus picked up the option year of the contract and then negotiated a three year contract extension. The NHL and NBC will also began the second year of their two year network agreement, a contact similar to the relationship NBC had with the Arena Football League (NBC recently decided even if they weren’t paying the Arena Football League, they didn’t want to continue that partnership). NBC doesn’t pay the NHL anything for the league’s rights. Advertising revenue from NHL broadcasts is first directed towards covering NBC’s expenses. Any additional revenues are shared by NBC and the NHL.

Several months back the NHL and NBC agreed to an over-the-air network extension along terms that where similar to the current – no money down, pay as we want to agreement (Call it what it is – community theatre – we’ll pass the hat around revenue generating plan).

The NHL has done their best to spin their television ratings positively, a task that’s next to impossible.

According to the USA Today’s Michael Hiestand: NBC's NHL playoff games are drawing about 1% of U.S. households — meaning they have a good shot at barely topping NBC's old Arena Football League playoff ratings. The Buffalo-Ottawa overtime aired on Versus, which has about 30 million fewer households than the NBC-owned USA Network and MSNBC as well as ESPN, the NHL's former cable TV outlet.

As for Versus (the network that sports fans can’t find) last week’s top rated 15 cable sports programs included NBA games in the top nine spots, two NBA pre and post game shows (one starting at 1:15 AM), another NBA playoff games, an ESPN SportsCenter, ESPN’s Sunday night basketball game, and a NASCAR Busch series race – but not a Versus Stanley Cup game to be included.

The previous week (April 30 to May 5), the only NHL game included in the top 15 network rated sports programs was NBC’s 14th place finish leading into NBC’s Kentucky Derby coverage on May 5. As for the top rated 15 rated cable sports programs – the network that sports fans can’t find Versus and their Stanley Cup coverage was no where to be found. Since the start of the NHL playoffs, the NHL ratings have been consistent if nothing else – terribly disappointing. Stanley Cup games haven’t ranked in the top 15 programs any week and if any NHL games televised on NBC made it to the top 15 over-the-air network programs NHL games have been rated at the very bottom of the top 15.

And why did NBC make the move to the Preakness? Because it was doing what was best for its shareholders – it was a good business move. The Preakness ended up with a 5.4 overnight rating, translating to 5.4% of households in urban markets, while Ottawa's win got a 1.2 overnight. NBC's NHL playoff games are drawing about 1% of U.S. households. Bottom line, Preakness coverage was five times greater than the NHL coverage. What possible rationale could NBC offer its advertisers and shareholders for staying with the NHL game – none, it would have been bad business.

And historically all one has to do is consider what the Lords of the Ice had to say before the current NHL season started had to say about the league’s dismal TV ratings. Clearly either the NHL is blind to the obvious or has come to accept what the league has evolved into – a Tier II sport no longer part of the so called ‘big leagues’.

NHL executive vice-president Bill Daly claimed ratings were more of a mixed bag. "In Canada, they were up rather significantly on TSN and CBC. In the States, local ratings for the majority of our teams were stronger than they were in 2003-04. Nationally... ratings were down," he said

The league’s showcase, the Stanley Cup finals went seven games this year, as it did when the NHL teams last competed for a Stanley Cup, the 2003-04 season.

Television ratings for Game 7 of this year’s Stanley Cup finals dropped 21 percent from the final game of the National Hockey League's last championship series two years ago.
The broadcast of the Carolina Hurricanes' 3-1 series- clinching victory over Edmonton on NBC Monday night was watched in 3.3 percent of the 110.2 million U.S. households with televisions, the network said.

In 2004, the decisive seventh game of the Stanley Cup finals between the Tampa Bay Lightning and Calgary Flames drew 4.2 percent of viewers on ABC. When the New Jersey Devils won Game 7 of the 2003 Stanley Cup Finals, it had a 4.6 rating on Walt Disney Co.'s ABC. The five final games televised on NBC averaged a 2.3 rating, as compared to the 2.6 generated when ABC televised the final five games of the 2004 Stanley Cup playoffs, down 11%.

The ratings from VERSUS weren’t just bad, they were an embarrassment for the league. The first two games of the Finals were on VERSUS and produced identical 0.9 ratings. That translates to about 621,000 households.

Ed Snider the Chairman of the Philadelphia Flyers did his best to spin the league’s terrible ratings. But then again given the incestuous relationship between Snider and VERSUS, what else could he say.

"When we first started on ESPN2, we had low ratings, too," Snider told the Philadelphia Inquirer, who is chairman of Comcast Spectacor, a subsidiary of Comcast, which owns VERSUS. "Plus, VERSUS is now in six million more homes [from last year at this time], and I think much of that has to do with the NHL, and I think it will continue to expand. I'm very happy with VERSUS and NBC."

In July the NHL wasn’t concerned about the new MLB TV agreements, but should have been much more concerned about the impact the ratings the recently completed World Cup will have on mindset of network executives when they are asked to consider paying for NHL rights.

By comparison, the first game played by the United States in the World Cup soccer tournament was a much bigger ratings hit. The June 12, 3-0 loss by the U.S. team to the Czech Republic earned a 2.4 cable rating on ESPN2, which translates to 2.14 million viewers. What made it more impressive is that the game was played at noon Eastern Time on a Monday, when many people are at work.

The first two games of the 2006 NBA Finals had strong numbers, not anywhere near the great ratings numbers the NBA enjoyed during the Michael Jordan era, but daunting when compared to the first two games of the Stanley Cup finals. Game 1 between Miami and Dallas on ABC had a 7.8 rating (8.56 million households) and Game 2 had an 8.0 rating (8.79 million households).

"All in all it was a transitional year on U.S. television that we feel we can build on," Daly said. "VERSUS was able to increase its distribution by approximately five million households, and we believe distribution will continue to grow next year as Versus. Significant efforts are also being made to make Versus more accessible in establishments like hotels, restaurants and bars. It will continue to grow and get better."

Regular season ratings for games on VERSUS, especially when compared to how games were received on ESPN and ESPN2 painted an even darker picture. VERSUS this year drew an average of only 117,000 households, according to Nielsen, compared with the 416,000 homes that watched hockey broadcasts on ESPN and the 209,000 homes that watched games on ESPN2 in 2003-04. Consider this point -- more people watched the 13 WNBA broadcasts on ESPN2 last year than the NHL on VERSUS this year.

"We need to grow the ratings. The NHL knows that, and we know that," VERSUS president Gavin Harvey told ESPN.com. "We think that's something that needs to be judged over a couple of years."

Of all the great decisions the NHL made in re-launching the league, the worst choice those entrusted with managing the NHL made was moving their national cable coverage from ESPN to VERSUS. ESPN was interested in televising NHL games last year, but wanted an agreement similar to the one the league agreed to with NBC, a revenue sharing agreement with no money paid upfront to the league.

"It wasn't as if ESPN didn't want us at all," league spokeswoman Bernadette Mansur told ESPN. "It was just a question of how much they were willing to pay."

Mansur part of Gary Bettman’s team since Bettman became commissioner in 1993 did her best to stay on message when she discussed NHL ratings with ESPN.

"The ratings comparisons are not an accurate barometer of how many NHL fans we have," Mansur believes. "The younger 12-to-18-year-old male demographic isn't necessarily watching the games on television as much as they are following them on the Internet or using other technology to find out about their favorite teams."

The NHL has delivered a better on ice product and teams are much more competitive as a direct result of the new CBA. The mistake the NHL made was in moving their national cable rights to VERSUS. VERSUS expanded to 69 million homes -- an increase of 6 million -- during the season, that number is still 21 million short of ESPN's reach. An even bigger issue, ESPN and ESPN2 are cable stalwarts, found everywhere. Good luck if you were an NHL fan last year and you wanted to find an NHL game on cable TV. VERSUS was tough to find on their best days, impossible to locate most of the time.

For whatever reason Gary Bettman believed each franchise receiving $2.1 million from American national cable rights (the 30 NHL franchises shared $65 million) made more sense for the league then the benefits of continuing their longstanding relationship with ESPN. Poor judgment on Bettman’s part led to move from the recognized sports leader ESPN, to VERSUS a network that considers the National Lacrosse League, the Tour de France, World Team Tennis and Bull Riding as major sports properties. If you’re the up NHL its great to be the leader for a group of obscure niche sports.

And here’s what made Saturday’s fiasco even worse. The NHL’s undying dedication to Versus is yet another example how blindly the NHL seems committed to the network that sports fans can’t ever find. NBC owns the USA Network, CNBC and MSNBC (each more than 90 million homes). That’s 25 million more homes than the reach that Versus has. Did it not make more sense to have an understanding with NBC if they were going to make the switch they did they would move the game to an NBC cable affiliate that reached many more homes that Versus? The NHL made the latest in a series of nonsensical decisions in going with Versus.

And that problem is about to get a great deal worse when either Anaheim or Detroit host games one and two of the Stanley Cup finals. The NHL is in 60 percent of the homes in both Detroit and Los Angeles. Versus have exclusive rights to games one and two of the Stanley Cup finals in the United States. Games three through seven are all scheduled for NBC (assuming NBC doesn’t hand the games back to the NHL).

The NHL’s high hopes for the Versus network ended long ago. It may have made sense for the NHL to offer Versus market exclusivity when they signed their initial contract but at the end of the day given Versus growth from 65 million to 71 million homes in the two plus years Versus has been the NHL’s cable partner at the very least the NHL should have protected fans in any markets hosting games in the Conference and Stanley Cup finals by ensuring a teams regular television partner could offer the game(s) in their market.

Amazing as it may seem, Red Wings and Ducks 40 percent of the homes in Detroit and Anaheim respectively have been unable to access Versus and therefore watch their teams pursuit of Lord Stanley – par for the course for the Tier II National Hockey League. And for the NHL – you reap what you sow – the only real issue who needs to be held accountable for the shame the NHL is saddled with as the league gets ready to host its championship.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: the USA Today, The New York Times and the Toronto Star.

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