CBC braces for lower TV revenues under extended NHL lockout

The delay or potential cancellation of the NHL hockey season would “negatively impact” CBC/Radio-Canada’s advertising revenues as the public broadcaster plans for replacement programming and cost containment, Suzanne Morris, vice-president and chief financial officer at CBC, said at the corporation’s annual meeting in St. John’s, N.L. The NHL player lockout, which reached its tenth day Tuesday resulting from a dispute over player salaries and revenue sharing, has so far led to the cancellation of all NHL exhibition games in September. Chuck Thompson, a spokesman for CBC, said he could not further comment on the broadcaster’s plans to deal with a continued NHL lockout. He said in a phone interview that CBC is waiting to see whether the lockout will affect regular season NHL games before announcing any plans. Thompson said CBC can continue to make use the prime-time Hockey Night in Canada time slot. “If the lockout continues, it doesn’t necessarily mean we’ll take a revenue hit, so long as our costs don’t outstrip the revenue we generate from that time slot,” he said. Thompson couldn't say how much advertising revenue CBC could lose if the NHL season is cancelled. Bloomberg reported Sept. 21 that Rogers Communications Inc. and BCE Inc. would lose ticket, merchandise and TV advertising revenues as a result of the lockout. Graydon Ebert, a corporate and commercial law expert at Barriston Law LLP in Barrie, Ont., told Bloomberg the lockout could cost each of those companies $25 million US to $50 million US per quarter. Tom Mayenknecht, sports business commentator and host of The Sport Market on TSN 1050 in Toronto and TEAM 1040 in Vancouver, said in a phone interview that, without the flagship property Hockey Night in Canada, CBC doesn’t have much programming around which to build sales tactics. "Among the Canadian NHL broadcast rights holders, the CBC stands to lose the most from a protracted lockout, both tangibly and intangibly," Mayenknecht said, adding that Bell and Rogers have more diversified sports content rights. Mayenknecht said CBC pays about $100 million per year for NHL rights, “so you’d think their revenue forecast as a public broadcaster allows for at least that in revenue during the regular season." He added: “That’s where the CBC would make most of its money, so if the lockout is resolved this fall or by mid-season, most of the crunch would have been avoided.” Mayenknecht noted that the lockout coincides with the 60th anniversary season of Hockey Night in Canada. Brian Schecter, a media analyst and president of consulting firm Puddle Duck Productions, said in an interview that CBC would have to “work a deal or get creative with advertisers” under a continued lockout. Schecter said advertisers buy packages early in the hockey season to ensure spots during NHL playoff games. “What they would end up doing—assuming the lockout ends in a reasonable time frame—they will just bonus those companies with extra advertising down the road,” he said. He said CBC could also offer advertisers the option of shifting their ad purchases to other CBC sports properties. Schecter said this is not as good an option for advertisers as the CBC does not cover many other sports. “ TSN can shift their advertising from hockey to other like-minded sports like football or something like that, but the CBC doesn’t have that flexibility because they don’t do a lot of other sports,” he said. Schecter said no NHL games would mean there's no money coming in and “that doesn’t bode well for any of the parties.” In a speech at the CBC annual meeting, Morris said the broadcaster’s revenues grew in the first quarter of 2012-2013 despite lower hockey playoff revenues. Morris said the broadcaster’s revenues rose by $26.6 million, or four per cent, from the same period a year earlier. She said overall revenues for the first quarter of 2012-2013 rose $2.6 million from the same quarter a year earlier. Morris said higher digital revenue, facility rentals and growth in subscription revenue contributed to rise. “These were partially offset by lower hockey playoff revenues,” she said. Ebert said in a phone interview with The Wire Report that the impact of the NHL lockout on Hockey Night in Canada will not be positive because it is CBC’s most valuable advertising vehicle. He said CBC won’t have the cost of putting NHL telecasts together, “so that’s going to balance it out a little bit.” Ebert said CBC can offer single games to advertisers for more flexibility if the lockout ends. Thompson confirmed in a follow-up email that single NHL games are available to advertisers. “They’ll be more flexible in making sure they fill their inventory if they’re selling it on a per games basis rather than big blocks,” Ebert said. “But I’m sure they’d prefer the cost certainty of having advertisers buy big blocks of games.” He alluded to CBC's budget cuts, and said that given its Hockey Night in Canada NHL TV rights are up in 2014, “there’s question that CBC will even have hockey again.” CBC said in April it was laying off 650 people to deal with cuts announced in the Conservative government's budget that will reduce its annual budget by $115 million by 2014-2015. CBC shut down 607 analog transmitters in July to find annual savings of $10 million. At the annual meeting, Hubert T. Lacroix, CBC’s president and CEO, said the broadcaster is focused on being “more distinctly Canadian, more regional and more digital,” as it follows its 2015: Everyone, Every Way strategic plan. The strategy aims to extend the broadcaster's regional reach largely through radio and the Internet. “Canada needs a strong public broadcaster and with our licence renewal hearings set to begin on November 19, Canadians have an opportunity to remind the CRTC of the importance of the Canadian programming we bring to them,” Lacroix said in a statement. “While Strategy 2015 sets out our vision for the future of Canada’s national public broadcaster, we need a more streamlined regulatory framework and the ability to generate new revenue to enable our progress and allow us to maintain our presence no matter what degree of industry consolidation may happen or how fast technology and demographics might evolve.” He said CBC can’t be a public broadcaster without being “deeply rooted” in regions and reflecting what Canada looks like in 2012. dgrenier@thewirereport.ca --- CORRECTION: An earlier version of this story said all NHL pre-season games were cancelled. Only September's games were cancelled with the official season scheduled to start Oct. 11.

CBC braces for lower TV revenues under extended NHL lockout

News | September 25, 2012

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CBC braces for lower TV revenues under extended NHL lockout

News | September 25, 2012

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