BCE to CBC Face Lost Revenue as Canada Faces NHL DroughtHugo Miller
The worst showing by Canadian hockey teams in 41 years isn’t just a downer for fans. It means lost revenue for BCE Inc. and other media companies that are spending at least C$6.5 billion ($5.9 billion) on teams and broadcast rights to profit from the country’s national obsession.
Just weeks after Canada claimed hockey gold medals for men and women at the Sochi Winter Olympics, only one of the seven Canadian squads in the 30-team National Hockey League -- the Montreal Canadiens -- is poised to make the playoffs. The last time only one Canadian team made the post-season was in 1973, when there were just three clubs north of the border.
Following a late-season collapse, the Toronto Maple Leafs, home to Canada’s largest hockey market, heads into tonight’s game with only a 1 percent chance of making the cut, according to website sportsclubstats.com. Teams in Vancouver, Winnipeg, Ottawa, Calgary and Edmonton have all but been shut out.
The Canucks today fired general manager Mike Gillis.
“We nearly reached our ultimate goal; but I believe we have reached a point where a change in leadership and new voice is needed,” Francesco Acquilini, chairman of Canucks Sports & Entertainment Corp., said in a statement.
The Canadian Broadcasting Corp., which aired the Winter Olympic Games, stands to lose the most from the playoff drought, with BCE and Rogers Communications Inc. also set to lose millions of dollars in missed ticket sales and advertising revenue.
For the CBC, the country’s public broadcaster, it’s the latest in a string of bad news, said Janice Neil, an associate professor of journalism at Ryerson University in Toronto. CBC is expected to disclose the financial impact of losing its advertising revenue next season from Hockey Night in Canada, estimated at about C$200 million annually, at an employee town hall April 10, she said.
“I know people are absolutely quaking there right now, fearful about what is going to come,” Neil said. “In the context of everything else that’s happening, it’s one more nail to deal with.”
Canadian hockey fans are less likely to tune in if their teams aren’t playing. The deciding game six of the 2013 Stanley Cup Finals between the Boston Bruins and Chicago Blackhawks had an average audience of about 3.4 million people in Canada, or about 10 percent of the population, according to data compiled by BBM Canada, which tracks television ratings in the country.
That was less than half the average 8.76 million viewers who tuned in to watch the Vancouver Canucks lose game seven to the Bruins in 2011, a record for NHL broadcasts on the CBC, according to the broadcaster.
“We’re pleased with how our sales are currently tracking for the playoffs,” the CBC said in an e-mail. “While having Canadian teams in the playoffs is certainly good for audiences, the reality is the playoff scenarios and races each season are often right down to the wire -- and so we do not base our plans against that type of uncertainty.”
Chuck Thompson, another spokesman at CBC, confirmed Hubert Lacroix, the broadcaster’s president, will be meeting with employees on April 10 about the “challenges” facing the company, declining to comment on specifics of the meeting.
CBC revenue fell 6 percent in the year through April 2013, stung by the lack of advertising due to a NHL lockout that killed nearly half the season, according to company filings. Conversely, advertising revenue climbed by 4 percent the year before, after the Vancouver Canucks played in the seven-game Stanley Cup final.
Rogers, Canada’s largest wireless carrier, spent C$5.2 billion in November to acquire the broadcasting and digital rights to NHL games in Canada over 12 years, starting in the autumn.
Rogers, based in Toronto, outbid the CBC and Montreal-based BCE for the rights, marking the end of a four-year sports-programming arms race as both carriers sought content to stream on their smartphones and tablets.
BCE, which also has an 18.4 percent equity stake in the Canadiens, bought sports broadcaster TSN and the CTV network for C$1.3 billion plus debt in 2011. Revenue from BCE’s media unit accounted for 13 percent of its C$20.4 billion revenue last year, with TSN accounting for C$375 million in 2012, the latest year for which the data is available.
Under terms of the current broadcast deal between TSN and CBC, the public broadcaster shares coverage of the first three rounds of the NHL playoffs this year, while maintaining exclusive rights to the Stanley Cup Final.
Rogers slipped 1 percent to C$44.57 at 4 p.m. in Toronto as BCE gained 0.3 percent to C$48.19.
“It’s a short-term negative,” said Gabriel Desjardins, who runs hockey statistics website behindthenet.ca and used to advise NHL teams on athlete valuations. “It’s just one of those things that happens and you have to bear with it.”
BCE and Rogers teamed up in 2012 to buy a controlling stake in Maple Leaf Sports & Entertainment Ltd., whose crown jewel is the Leafs hockey franchise. The team is worth $1.15 billion, according to Forbes.
“The vast majority of TSN’s NHL playoffs schedule over the past few seasons have involved series featuring U.S.-based teams,” Greg McIsaac, a spokesman for TSN and Bell Media, said by e-mail.
“While we won’t know our NHL playoff schedule until the season ends on Sunday, our strategy goes well beyond the games and Canadian teams,” McIsaac said, adding that they will use playoff hockey from across the NHL to drive their hockey coverage.
The Montreal Canadiens have qualified for the postseason eight times in the past decade, and won their 24th championship in 1993, the last time a Canadian team hoisted the trophy. Calgary lost in the finals in 2004, as did Edmonton in 2006, Ottawa in 2007, and Vancouver in 2011.
The lone Canadian team to make it to the postseason in 1973 was Montreal, and they went on to win the Stanley Cup.
Toronto won the last of its 13 Stanley Cups in 1967, the longest active championship drought in the NHL. With a loss tonight and a victory by the Columbus Blue Jackets, they will have qualified just once for the playoffs in the past 10 years.
Last fall, the chances of a Canadian team winning the trophy was about 10 to 1, according to Jay Kornegay, vice president of race and sports operations at the LVH SuperBook. At the beginning of the season, the Vancouver Canucks were 12-1 favorites among the Canadian teams, he said.
Anyone who stands to make a buck off the playoffs should take solace it’s Montreal in the postseason, given their history and countrywide appeal, said hockey analyst Desjardins.
“If you had Winnipeg, Edmonton and Ottawa in the playoffs, it would be probably less valuable than having Montreal there,” he said.