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PRINT EDITION
Setting the stage for the biggest TV deal in hockey history
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In this excerpt from Hockey Fight in Canada: The Big Media Faceoff over the NHL, author David Shoalts describes how meticulous planning by the NHL led to the Rogers jackpot
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By DAVID SHOALTS
  
  

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Saturday, September 22, 2018 – Page S1

While the media industry was worrying about declining viewers, readers, listeners, cable subscriptions and broadcast and print advertising in the spring of 2013, the NHL was thinking a nice bump in revenue was just around the corner. NHL commissioner Gary Bettman and John Collins, the league's chief operating officer and head of marketing, who would negotiate the next national Canadian broadcast contract, were well aware of conventional television's problems. By this time ESPN, controlled by the Walt Disney Company along with ABC, was feeling the first pinch of being caught in the vise of cord-cutters and rising rights fees. It was a trend that would continue to this day, exacerbated by the slow response of media companies to the problem, with ESPN being the best example ... [Bettman and Collins] knew they were in for a big score simply because the big dogs - Bell and Rogers - were probably going to spend like never before. In previous years, there were always threats that either or both of the telecoms would take away Hockey Night in Canada from the CBC, but they never did. Now, though, the competition between Bell and Rogers and their sports networks was heating up because so much was at stake. With the broadcast industry under attack due to eroding viewership, the fact that sports programming could still hold its own because the best of it was live meant neither company wanted to let the other get a step up by grabbing the most popular sport in Canada.

"The NHL is the most important content in the country, not unlike the NFL in the United States," said Collins, who spent most of his career in the NFL before coming to the NHL in 2006.

"We thought we had a lot more leverage [than in the previous contract] and a lot greater opportunity, both in terms of coverage as well as financial opportunity."

By 2013, Gary Bettman was in his 20th year as commissioner of the NHL.

In those 20 years he took the NHL from a mom-and-pop business that pulled in revenues of $732-million (U.S.) in his first season on the job to $3.3-billion in 2011-12, just before the third lockout during Bettman's tenure.

Revenues hit $3.7-billion in 2013- 14, the first full season after the 2012-13 lockout. While Bettman and the owners stoutly argue the lockouts were necessary to gain economic stability, primarily with the forced introduction of a salary cap in 2005, the labour woes are considered one of the few major blights (the concussion and CTE issue being the other one) on his generally excellent record as commissioner. Bettman can also argue player salaries went from an average of $558,000 (U.S.) in 1993-94 to $2.55-million in the same period league revenues went up more than four-fold... Aside from his reputation as a smart, merciless negotiator, Bettman was known as a careful planner who sussed out every possibility in a course of action.

That meant a team of executives under Bettman and Collins spent the year leading up to the opening of negotiations with the CBC analyzing the situation. Everything from potential financial opportunities from the newer digital platforms to areas where the networks could improve their coverage of the league was examined (building the profiles of the players, long a Bettman favourite, was a big item).

Bettman and Collins had already been through the same process a few years earlier when the $2-billion contract with NBC was landed in 2011. One of the key findings in that process was that emphasis on the playoffs needed to be made on U.S. television. Collins said the main thing they wanted to fix was the blackout problem where the regional rights-holders in the U.S. held sway over the national broadcaster and the national broadcast was not shown in the cities of the two participating teams in each playoff series. Back in 1994, this led to an embarrassing situation in the Stanley Cup final when the New York Rangers finally won the NHL championship after a 54-year drought. Having the team that represented North America's largest media market make the Stanley Cup final after such a long absence was a huge boon for the NHL, which always struggled to shake its image as a regional attraction in the U.S. But promoting the league to that huge audience took a hit because the U.S.

rights contract in place at the time called for ESPN, the national broadcaster, to be blacked out in New York for the Rangers' home games in favour of the team's local broadcaster, the MSG pay network, which was seen in far fewer homes. So a lot fewer people than expected saw the Rangers win their first Cup since 1940 on home ice.

By the next season, Bettman had the television problem in hand, having surprised most who follow the NHL by securing a national U.S. contract with a major over-the-air network. Fox broadcast two games of the 1995 Stanley Cup final, splitting what turned out to be a four-game sweep for the New Jersey Devils over the Detroit Red Wings with ESPN, the league's cable broadcaster. It was the first time a Cup final game was shown on a major over-the-air U.S. network since 1980. Bettman won the job as commissioner by promising to spread the NHL's presence around the United States through expansion in order to get that elusive major U.S. television contract. Landing Fox was the first major accomplishment of Bettman's career. The first Fox deal was worth only $155-million (U.S.) but the size of both the contracts and the NHL have gone up since then.

One of the conclusions reached by Bettman and Collins was that like the United States a few years earlier, more promotion was needed in Canada for the NHL playoffs. Yes, the games dominated the schedules of CBC and TSN for more than two months every spring, but they thought the CBC in particular could do more to promote the playoffs on its other shows and other platforms. Bettman and Collins saw the NHL playoffs as the Canadian equivalent of the NCAA basketball tournament, which drew all kinds of attention in March every year and caught up even casual fans due to the popularity of the bracket pools.

"We were saying, 'Look, we're going to make the playoffs a real platform,' " Collins said. " 'Hopefully equal to March Madness and promote the hell out of it for six weeks.' " Another goal was to turn Sunday night into a Hockey Night for Canadians along with the traditional Saturday night broadcasts.

Collins, the old NFL hand, thought the NHL could spread itself around just like his former league did by expanding beyond the traditional Sunday-afternoon schedule to Monday nights, then Sunday nights and, finally, Thursday nights. "There was a lot of time spent, a lot of work and a lot of thought as to how we saw it.

We saw Sunday night as a real opportunity," Collins said.

The NHL bosses also thought Saturday night itself could stand a lot of improvement. This may sound strange considering Hockey Night in Canada had been a Canadian institution since 1952 but Collins and Bettman thought there was much to be done. Their biggest complaint about the CBC's production on Saturday nights was that there weren't enough games on television.

Hockey Night ran doubleheaders every Saturday night, generally with an eastern team featured in the first game, which started at 7 p.m. Eastern time, and a western team in the second game, which would start at 10 p.m. But CBC divided the country into viewing zones for each team and only two games per night would be seen in each zone. For example, in Toronto and Southern Ontario, viewers would get the Toronto Maple Leafs' game since it was the home team in that zone plus a game with at least one of the western teams like the Canucks, Oilers or Flames. The only time those viewers did not get a Leafs game was if the team had a rare Saturday night off.

If the Leafs were on a western road trip, their game was usually the second game of the doubleheader and people saw the Ottawa Senators or Montreal Canadiens in the first game. But the viewers were not able to watch any more than two games on the CBC. If the Senators were playing at the same time as the Maple Leafs, for example, their game was blacked out in Southern Ontario. The only way to see more games was to buy the NHL's payTV package. This made as much sense to Bettman and Collins as Game 7 of the 1994 Stanley Cup final being blacked out in New York on ESPN.

"We talked about Saturday night, the busiest night in the league for hockey, and yet in the most passionate market in the world for hockey you're showing two games," Collins said. "There had to be a way to make all the other games around the league available for the fans that wanted it. We felt like that was a huge opportunity for us and the CBC could no longer insist on two games and black everything out, including all our digital platforms. It was like analogue in a digital world. It just didn't fly anymore."

Collins also saw Hockey Night in the same terms as many observers did, a beloved institution that was uniquely Canadian, which gave it great power as an advertising vehicle. Companies who placed commercials on the Saturday night show were putting their product in front of entire families.

"There was nothing like Hockey Night in Canada," Collins said.

"You talk about Monday Night Football in the U.S., but in its glory days I don't think it had the cultural relevance that hockey means in Canada, what Hockey Night meant on Saturday nights for the entire family.

"Monday Night Football was special but it was a different kind of special. It was guys' night out sitting in a bar, watching the game. Hockey Night was a family sitting down together, a unifying force."

Most of the NHL's analysis and preparation for the negotiations were done on the assumption the Canadian national contract would continue under the old model of multiple networks on multiple nights. In the existing deal, which expired after the 2013-14 season, the CBC had Saturday nights while TSN did its national broadcasts on Wednesday nights. There were a few exceptions, where each network would show an important game on another night, but that was the general schedule. It was also why Collins and Bettman could contemplate opening Saturday night to more than two games and more than just the CBC as a broadcaster without cutting too deeply into the sale of NHL Centre Ice, the league's pay package.

The NHL has always designated certain nights of the week for national broadcasts, in this case Wednesday and Saturday, with Sunday added as part of the new deal in 2014. This left the other nights of the week open for the pay package. Also, the home team's games were blacked out on Centre Ice in each market, so they were never part of the deal anyway.

As the negotiating period drew near, the idea that the NHL would continue with more than one broadcast partner took hold among those in and around the NHL community. The assumption was that CBC would either find the money to pay almost double the existing annual fee ($200-million was the consensus) for a Saturday night package or it would work out a partnership with one of the big players, likely Bell Media. Then Bell Media would pay its own huge fee for the Wednesday nights it already had plus another night, with Rogers coming in for another whack of money to take over Sundays. The digital rights would likely go to either Bell or Rogers.

The NHL negotiators kicked around a great number of ideas, including those, but did not tie themselves to anything. There was another approach to how the rights would be packaged that Bettman and Collins found intriguing but one that had yet to be tried by any of the major North American sports leagues.

They called this the "gatekeeper" model. This was the notion that all of the NHL's broadcast rights - television, radio, digital and mobile - would be sold to one company. While the buyer would have the right to sell off parts of the deal, such as games it did not want to accommodate on its schedule, the idea was that this company would be large enough and have the infrastructure to handle all of the platforms.

Hence the gatekeeper moniker; if you wanted access to the NHL, you had to go through this company.

"The first option was to 'slice and dice' as Gary [Bettman] liked to say," Collins said. "We would try to create these individual packages and try to get maximum value for these packages and ultimately have more people engaged with NHL hockey than we had before. Everybody would be spending their production dollars and promotion dollars making the game even bigger.

That was the first option.

"If we weren't going to get maximum value for that, then the other option was to go with the gatekeeper model. That's where we offer exclusive rights for all the content with a view towards being able to maximize distribution by letting that gatekeeper figure out how. Now you're talking a subscription for mobility, digital distribution. But the gatekeeper model we saw as a second option to try and capture the value we saw in the marketplace."

From the book Hockey Fight in Canada: The Big Media Faceoff over the NHL, ©2018, by David Shoalts. Published by Douglas & McIntyre. Reprinted with permission of the publisher. For more information, visit http://www.douglas-mcintyre.com. The Toronto book launch is on Sept. 26, 6 p.m. to 8:30 p.m. at Dora Keogh Irish Pub, 141 Danforth Ave.

Associated Graphic

As David Shoalts outlines in his new book Hockey Fight in Canada, NHL commissioner Gary Bettman built a reputation as a merciless negotiator and was known as a careful planner who sussed out every possibility in his quest to build up the NHL.

THE ASSOCIATED PRESS


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