CBC would take $200M hit annually without HNIC: report

CBC/Radio-Canada's annual revenues would fall by up to $200 million if the public broadcaster does not secure the rights to Hockey Night in Canada in 2014, watchdog group the Friends of Canadian Broadcasting said. In a submission to the CRTC dated Oct. 5, Friends said Hockey Night in Canada accounts for 10 per cent of CBC TV's English-language schedule, one-third of its audience share and more than 50 per cent of its advertising revenues. Friends said losing Hockey Night in Canada would create a “400-hour hole” in CBC’s English TV schedule. “The CBC is hooked on hockey and the lockout could be just a bitter foretaste of the future for the CBC,” Ian Morrison, a spokesman for Friends, said in a release Tuesday. If it loses the Hockey Night in Canada rights to competitors, Friends said, CBC would be forced to create content to replace the 400 hours of hockey occupying its English-language television schedule. “FRIENDS’ analysis estimates this would cost approximately $500,000 per hour for a total cost of $200 million and would earn the CBC substantially less ad revenue,” the group said in a release. Without hockey, it said, CBC would have to run a similar quantity of “expensive” Canadian shows. “The most optimistic estimates suggest that this replacement programming might generate ad revenue of only $15M, thus contributing to a net loss of $185M,” said the group's submission to the CRTC, filed for CBC's upcoming licence renewal hearing. CBC’s broadcast rights with the NHL for English-language games on Saturday nights expire in 2014, as live, sports content rights continue to rise in value. Gordon Hendren, president of Charlton Strategic Research Inc., said in a phone interview that the next round of bidding for NHL rights is going to be “very competitive” as CBC faces bids from Rogers Communications Inc. and Bell Canada Enterprises Inc., which have “huge resources” and appetites for sports content. Hendren said the financial impact of losing the rights would depend on how much CBC pays for them. “There’s no question that Hockey Night in Canada is a profit driver for CBC,” he said. “But it all comes down to what do you have to pay.” In 2007, the Montreal Canadiens and BCE-owned RDS extended their broadcast agreement, giving RDS exclusive rights to 82 regular season games until the end of the 2012-2013 season. RDS is paying nearly $20 million annually for exclusive French-language rights. “People are not PVR-ing Hockey Night in Canada as they are with just about every other type of programming,” Hendren said, adding that live content has value in TV broadcasting as well as across multiple screens. “Its value, in terms of live content and the ability to get people to watch as it’s happening, is high.” Friends said NHL rights fees have increased by 50 per cent since the last negotiated rights deal in 2007. According to CBC’s 2010-2011 annual report, advertising revenues for CBC English services reached $246 million for that year. Friends said in its submission that without the NHL rights, advertising revenue would total $120 million, with $130 million written down in hockey revenue and $10 million in the “packaging” of hockey programming. Packaging “refers to the linking of commercial sales in hockey programming to other ad sales elsewhere on the schedule," Friends said. Friends said its "optimistic estimate" projected the CBC could sell $14 million in ads for the programming it would use to replace NHL hockey. Hendren said in a phone interview that losing the rights to Hockey Night in Canada would leave CBC with a Saturday night programming slot that is difficult to replace. “I don’t think they could completely replace those audiences,” Hendren said. “That’s the premier sports series going in Canada. So could they replace it financially? I’d say no.” Morrison said the loss of the rights would be a “game changer” for Canada’s public broadcaster and would be “much worse” than the cuts resulting from the Conservative government's 2012 federal budget, which reduced spending across government. CBC is cutting 650 positions, has shut down 607 analog transmitters and is moving Radio Canada International (RCI) online as part of its efforts to to deal with a budget cut that reaches $115 million anually by 2014-2015. Friends said in its submission that hockey would bring in revenues of about $130 million for CBC in the 2011-2012 season. According to its analysis, Friends said, $80 million of that revenue comes from regular season coverage and $50 million is generated by the playoffs. The public broadcaster is also bracing for a delayed or potentially cancelled NHL season this year. Suzanne Morris, vice-president and chief financial officer at CBC, said at an annual meeting last month that such a situation would negatively impact the broadcaster’s advertising revenues. The NHL player lockout, which started Sept. 15 resulting from a dispute over player salaries and revenue sharing, has so far led to the cancellation of two weeks of the season schedule. In the release, Friends said 53 per cent of the public broadcaster’s English television revenues come from hockey programming. CBC did not comment on the report's findings. “CBC has every intention of continuing our partnership with the NHL, well beyond 2014. We look forward to bringing HNIC to fans across the country for many years to come,” Chuck Thompson, a spokesman for CBC, said in an emailed statement to The Wire Report. Hubert T. Lacroix, president and CEO of CBC, told The Wire Report in 2011 that the broadcaster will do what is necessary to keep Hockey Night in Canada going. "We invented Hockey Night in Canada, and we’re going to do what is necessary to ensure that it stays within CBC/Radio-Canada," he said. The public broadcaster will appear before the commission when its licence renewal hearings begin on Nov. 19. dgrenier@thewirereport.ca

CBC would take $200M hit annually without HNIC: report

Broadcast | October 10, 2012

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CBC would take $200M hit annually without HNIC: report

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