Wheeling and dealing, winning and losing

Hockey fans not only love the game but are intrigued by “the big deal.”

 

It’s no wonder everyone keeps an eye on their various screens when the trade deadline rolls around late in the NHL season.

 

For those of a certain age — it’s almost like our JFK moment — we all remember where we were on Aug. 9, 1988 when we heard Wayne Gretzky was traded from the Edmonton Oilers to the Los Angeles Kings in a multi-player deal that also involved the transfer of $15 million US to the Oilers.

 

It’s been a while since we’ve seen the type of blockbuster deal that was announced earlier this week. And this wasn’t about players. It was about Rogers Communications Inc. essentially becoming Canada’s gatekeeper of hockey broadcasts for the next dozen years in a 12-year deal with the NHL that pays the league $5.2 billion.

 

BCE Inc.’s TSN is out of the picture after this season, with the exception of regional broadcasts and providing news coverage of hockey.

 

CBC is still in the game, as Rogers will sub-license it to show hockey games on Saturday nights and throughout the playoffs, and the Hockey Night in Canada brand will live on. That’s how it will work for the first four years of the new contract anyway.

 

Professional sports revolve around money, and the money gets bigger as the years go by. CBC, as a public broadcaster, got to the point where it couldn’t offer the kind of dollar amounts that were being discussed in this latest round of negotiations with the NHL. It was a little too rich for BCE’s blood too, apparently.

 

It’s believed CBC was paying about $100 million a season in the current six-year contact that expires at the end of this season. That compares to about $300 million to $500 million that Rogers will be paying for its NHL rights until the 2025-26 season.

 

“The NHL, frankly, set very high standards, very high financial expectations for these negotiations, and while we thought we brought something very special to broadcasting, CBC was not, candidly, in a position to spend taxpayers’ money in the high stakes,” CBC/Radio-Canada president Hubert Lacroix said at a news conference Tuesday as the deal was discussed.

 

CBC is not paying any money to secure rights to the NHL games it gets through Rogers, though it’s also not taking in any of the advertising revenue. Lacroix said similar types of partnerships with private broadcasters are likely in the future as money becomes more of an issue for the public broadcaster in this era of government spending restraint. As our reporter Nicholas Kyonka reported (for subscribers only) in his coverage of the NHL/Rogers deal, CBC’s parliamentary appropriations have been cut by $115 million since 2012.

 

The size of the contract between Rogers and the NHL even dwarfs the agreement the league signed with NBC in 2011, which was believed to be worth about $2 billion over 10 years and was thought to be the richest TV contract to date for the NHL at the time.

 

In the recent past, circumstances have shifted to give the NHL much more leverage in negotiations with broadcasters than it ever had. As well, something is afoot that gave Rogers a very big incentive to nail this deal for the long term.

 

Analysts told The Wire Report that it seems Rogers is positioning itself for a future pick-and-pay TV model in Canada. Someday, they predict, people will choose to pay for just one specialty sports channel, as opposed to the several they get in bundles. A Rogers Sportsnet with national hockey broadcasts would give it the advantage among Canadian consumers over a TSN without, one would think.

 

Speaking of pick-and-pay, we sent Anja Karadeglija to Montreal to speak with Cogeco Inc. CEO Louis Audet. He’s already been offering this type of service to customers in Quebec. Amid expectations that the federal government will soon require such offerings throughout the country, Cogeco is going ahead and expanding it into Ontario.

 

TV service providers aren’t resisting the move to pick-and-pay, as far as we can see. “Our margins didn’t suffer overly, and our client satisfaction is higher,” is how Audet explained planning a pick-and-pay system beyond Quebec before being legally required to.

 

Rogers, it should be noted, recently released results of a survey it commissioned to have done by Harris/Decima that indicated most Canadians would welcome the flexibility that comes with a pick-and-pay system. We don’t doubt the survey results, but it’s interesting how willing this major cableco was to publicize such figures.

 

Many assume Canadians are willing to pay more if they have greater choice. But I’ve always thought that Canadians don’t mind the volume of channels they have in their plans; they just don’t like paying for ones they don’t watch.

 

Media consultant Kelly Lynne Ashton noted that the government’s push to pick-and-pay “is supposed to reduce consumers’ bills.”

 

Pick-and-pay has at least some similarity to a hockey season; there will be some winners and some losers.

 

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Doing away with the old?

This week included a couple of stories about things that might no longer exist at unspecified points in the future, namely home-phone service and satellite television.

Anja Karadeglija took a look (for subscribers only) at the decline in recent years in the usage of, and money made from, home phone services. This might not be surprising, but it’s interesting to note that the voice-over-IP business, which many see as representing a newer kind of technology, is also sluggish as people increasingly turn to wireless services.

As for satellite TV, I’m a user of this myself but must admit I feel behind the curve lately with Bell’s Internet-protocol TV, called Fibe TV, now being available in Ottawa, where I live.

It seems a touch outdated to be capturing signals from outer space with a dish attached to your house when all sorts of sophisticated wiring runs through the ground, making a more direct connection possible and allowing greater interactivity with your TV service, not to mention more options for on-demand viewing.

However, when I talked to Shawn Omstead, Bell’s vice-president of television products, for the article I did on this subject, he said satellite connections are simpler to manage than wired connections, and can allow service providers to implement new features more quickly. As a result, Bell customers with a satellite dish, as opposed to Fibe, might get first crack at ultra-HD 4K television when that becomes available.

In contrast to technology that could be on the way out, we covered a report this week from a U.K.-based group, Informa Telecoms & Media, which urged telecommunications firms to “virtualize” their networks in order to keep up with new technology and growing demands on their networks.

Telecoms are no doubt aware of the need to adapt to the innovations and growing adoption of technology that strains their networks. That’s why companies like Telus Corp. have been in court fighting the industry minister’s decision to limit the amount of prime spectrum they can buy in the 700 MHz auction, coming up early in the new year. The government filed some documents in court this week that argued that the industry minister is well within his rights to limit incumbents’ spectrum purchases and save more for newer entrants to the market in order to stimulate competition in the wireless sector.

I’m not sure this counts as irony, or I’m just listening to too much Alanis Morissette, but it did seem ironic when Scotiabank analyst Jeff Fan told the International Institute of Communications’ annual conference earlier this week that pro-consumer initiatives of the federal government toward the wireless industry are actually having the opposite effect one would assume is intended on pricing and choice.

Another interesting thing that Nicholas Kyonka picked up on at this conference was the assertion from Lawson Hunter, a regulatory and government relations lawyer with Stikeman Elliott, that telcos should put more money toward think-tanks in the hope they produce research that suits their purposes, given they’ve lost influence with the government as result of political donation laws.  A few good studies might have made the government a little more sympathetic to telcos’ causes in recent years, he figured.

Nicholas summarized the past week’s coverage as follows: “Each of these stories reflects the ever-changing nature of the relationships between consumers, service providers, technology and government regulators in the telecom and broadcasting industries. More often than not, those changing dynamics can have a long-lasting impact that runs against the grain of what was expected.”

dabma@thewirereport.ca

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A lot can happen in a week

Greetings to subscribers of The Wire Report and curious visitors.

It’s been two weeks since I started working for this website and one week since I took over the duties of editor, with former editor Simon Doyle having taken leave with plans to return to the newsroom in another capacity in the near future.

My first week at the helm has been an exciting one, and busy one at that. With the help of a superb news staff of Nicholas Kyonka and Anja Karadeglija, we got through it and provided some valuable content for our readership along the way.

Nicholas went to Toronto to cover the Canadian ISP Summit. He produced stories about consolidation (for subscribers only) among small Internet service providers, plans by the CRTC to measure the performance of Canadians’ Internet connections and how consumers are having more sway with government on regulatory issues than lobbyists.

In his spare time during the trip, he also managed to be the first journalist to report on Mobilicity’s plans through bankruptcy court to get itself sold.

With energy to spare upon his return, Nicholas got Heritage Minister Shelly Glover on the phone to talk about the government’s order to the CRTC to study how a pick-and-pay TV regime might work.

Anja snagged a story about how Trans-Pacific Partnership documents leaked by WikiLeaks showed Canada and the U.S. at odds over copyright issues, and she smoothed the edges around a few of my stories on the future of 5G communications and a possible government take-back of wireless spectrum in the 2300 and 3500 MHz bands.

A lot can happen in a week in the world of telecommunication and media. Stay tuned for the week ahead.




An important PSA for La Liga and Serie A fans

Last weekend, many soccer fans tuned into a high-profile matchup between FC Barcelona and Real Madrid, featuring two of the world’s best footy players, Leo Messi and Christiano Ronaldo.

Except, if you were a soccer fan in Canada, you couldn’t watch it on television.

That’s because an unlaunched specialty sports channel, beIN Sport, has exclusive Canadian broadcast rights to cover the Spanish league, La Liga, as well as Italy’s Serie A.

BeIN Sport is owned by Qatari Sports Investments, which is affiliated with the Qatari-government owned Al Jazeera Media Network. The channel launched in France and the United States in the summer of 2012, but still hasn’t gotten on the air in Canada.

As The Wire Report reported Thursday (link here for subscribers only), competition issues may have something to do with it.

Guillaume Castonguay, a spokesman at the broadcast and telecom regulator, the CRTC, confirmed that it has not received any applications to add beIN Sport to its list of foreign channels eligible for distribution in Canada, a step that’s necessary before it could seek out distribution agreements with cable, satellite, or IPTV television providers.

But experts in broadcasting say they don’t believe finding a sponsor to file the application is so much of an issue, because almost any broadcast entity in Canada could act as a sponsor. The problem may be what happens after the application is filed.

If the CRTC receives an application to approve beIN for distribution in Canada, competing sports channels like BCE Inc.’s TSN or Rogers Communications Inc.’s Sportsnet would most likely file objections, Michel Arpin, a broadcast consultant and former CRTC commissioner, told us in an interview. They would argue the CRTC should not permit the channel’s entry into Canada on the basis that it would compete directly with existing Canadian sports channels.

Another issue is that, according to the CRTC’s broadcast policy, foreign channels broadcasting in Canada must offer competing Canadian channels fair access to license their programming.

In other words, beIN Sport, if it launched in Canada, may have to share any exclusive rights to cover leagues like La Liga and Serie A with Canadian broadcasters of live soccer, such as Sportsnet. Maybe beIN’s not ready to do that.

Brian Schecter, a media consultant and president of Puddle Duck Productions in Vancouver, told us that beIN Sport may be in the process of finding or negotiating with a Canadian partner to share content and ensure carriage.

He pointed out that Setanta Sports, owned by Irish company Gaiety Investments, previously operated the Canadian version of its channel in a partnership with Rogers. In 2011, Rogers bought out the rest of the sports channel and rebranded it as Sportsnet World.

Whatever the reason, the absence of Italian and Spanish soccer on TV in Canada sure isn’t benefiting television consumers. In fact, it’s probably driven some of those more serious fans to pirate streaming websites.

Perhaps in response to that demand, beIN Sport in October made all of its content available through its website for free, just for people in Canada.

Canadian users can sign up to stream all games for free online, an unregulated space in Canada that allows the company to skirt the rules of the traditional broadcast system. The free streaming service is available for a limited time until Jan. 6, beIN says on its website, after which time it will become a paid subscription service.

Maybe they’re working on a bigger deal, such as announcing something else for television?

Who knows. In the meantime, give their free service a try. It’s deservedly sporting.