Tuesday, 9 June 2015

CBC Radio: Q the Decline?

CBC is like a crazy, old aunt, unwilling to accept the reality of her circumstances. In CBC's case it is the reality that its radio audience is comprised mostly of older Canadians. CBC senior managers have recently boasted about the record high audiences of CBC Radio. They gush over CBC Radio's audience share in speeches and public appearances, such as last month's appearance before a Senate Committee, but never acknowledge that loyal, senior citizen listeners are responsible for creating a mathematical illusion. Mark Twain would say there are lies, damn lies.
While CBC Radio is undoubtedly the jewel in CBC's crown and virtually a necessity for a large number of Canadians, managers have been close to deceitful about its audience performance. Why?
As reported elsewhere, CBC managers have scooped over $100 million (about 30 per cent) from the annual budgets of CBC English and French Radio over the past six years. CBC TV has had its budget spared in comparative terms. This has crippled CBC Radio: many programs have disappeared and been replaced with repeats of the remaining programs; radio staff has been cut by 20 per cent. while TV has lost but 3 per cent; local noon hour shows have been reduced to one hour ; local morning shows now constantly repeat sports, weather and traffic information and fill airtime with syndicated segments which were once occupied by local reporters and serious discussion of local issues. Radio staff do their best with much reduced resources.
What better way of deflecting criticism of all these cuts than to tout the audience success of the hollowed out service? But a careful review of the data CBC released to the Senate shows CBC Radio's audience is not at record levels.
CBC Radio 2 has been turned into a service with a split personality. It once was a classical music and arts service but about the time budgets were being gutted, it became a strange mélange of classical and contemporary music. For the first time since the 1970s commercial advertising was introduced. Radio listeners on average only tune to a handful of stations in any given week, as few as three, and they expect the programming 'format' to be consistent whenever they tune to a particular station. This is Radio 101. The split format of Radio 2 goes against established programming strategy and likely satisfies neither old nor new listeners. Apparently it hasn't satisfied advertisers either, since ad revenue has been disappointing, pulling in a fraction of what was anticipated.
CBC Radio 1, which is primarily news and information, has suffered most of the massive budget cuts. It just announced that one of its flagship morning shows, Q, will be hosted by Shad, a rapper, and the program will feature more music and try to attract younger listeners. All music has a place but in an important time slot on Radio 1? Does it signify another break with reality and blindness as to who really listens to CBC? I have no explanation for these counter-intuitive programming decisions but I once heard the president of CBC, Hubert Lacroix, declare at a luncheon speech that his mother liked the music on Radio 2 rather than citing audience research. 
CBC Radio is not for everyone. But about one in three Canadians listen to CBC Radio for at least an hour per month, according to our surveys. That is a very substantial plurality, as many as vote for the winning party in federal elections. Those who listen regularly are intensely loyal and spend many hours a month with the service but is the audience growing, as claimed by CBC?
Radio listening overall has been declining since 2000, according to ratings data CBC provided to the Senate. Within some age groups weekly average hours spent with radio have declined by as much as 40 per cent (see graph below), as people, especially younger people, are turning to other alternatives to listen to music, including iPods, smartphones, Internet streaming, etc.
However, when CBC claims that its audience is at record levels, it doesn't use average hours spent with CBC Radio. Rather it switches to another metric, audience share. Yes, the CBC share has grown since 2000 but the base for the calculation of share, hours spent listening, is down by as much as 40 per cent. The CBC share has increased because many non-CBC listeners have abandoned radio for other music alternatives, while CBC's mostly older, beleaguered listeners have stayed with CBC despite the diminished service. In effect, CBC has a larger share of a much smaller pie. Again, Twain would say reports of an increase in CBC Radio's audience are greatly exaggerated (and the result of demographic trends, especially an aging population).
Among older adults, who are the heaviest radio listeners, as shown in the graph, CBC Radio registers more than a 33 per cent share, while among younger adults, who are lighter radio listeners, the share is less than 10 per cent . Despite the stunning fact that one third of all seniors' listening is captured by CBC Radio, managers are loath to acknowledge that it is overwhelmingly a service for older persons, a group that will only get larger. 
So the decline in CBC Radio and the real audience story has been covered up, along with the serious negative effects of disproportionate budget cuts. Meanwhile managers continue to ignore how people use radio, going after the younger, hip audience that long ago abandoned radio for other media choices. Poor auntie Bee denies it and withdraws into fantasy.

(This post originally appeared in Huffington Post)

Saturday, 30 May 2015

In Memoriam: Friend and Researcher

We buried Mark Cannon this week.  He was 66, roughly the same age as most of his friends because we all met in the 1960's either in high school at St. Pius X or St. Pat's College in Ottawa. Both schools offered a good education and even better lessons in life. Many young people were also at the wake, not just nieces and nephews, but also youth that Mark mentored in his role at CBC in the audience research department.  The young CBCers would visit regularly when he was hospitalized for the lung cancer that spread to his brain.

Mark was a childhood friend so remarkable that I can easily remember the faces and mannerisms of his long-departed parents and whose siblings (Elaine, Terry and Martha) I recognized immediately even after many decades.

Years after school our paths intersected at CBC.  I urged him to share his exceptional intelligence with CBC and he agreed, a bit reluctantly because of an innate distrust of bureaucracy.  Mark didn't draw attention to himself and was always under-the-radar but he possessed a rare genius, fed by voracious reading, beneath that exterior. Within months of joining the CBC research department he had mastered the art and science of studying audience behaviour, needs and interests.

Mark was the anti-Gomeshi at CBC. He succeeded in the star-obsessed, over-managed CBC (and in life) because he lacked all hubris, despite being the smartest person in every room he entered.  He could handle even the most opinionated manager, deliver the bad news about ratings and somehow make the manager feel better about it.    They so respected him, some, such as Chris Boyce, who seems to have inexplicably taken the fall for the Gomeshi scandal, took time to visit him in his last days at Kensington Hospice. He was so loved by his old school buddies, many regularly made the trek from Ottawa to Toronto to spend a few hours with him, including one good friend who frequently drove to Toronto and back the same day for a visit.

Many of Mark's school buddies went on to become successful politicians, senior civil servants, lawyers and judges but he never asked for a favour and was happy for their success. Coupled with his intelligence was a wry sense of humour.  He could use it to perfectly frame a situation, often to reign in a misguided CBC programmer or friend who was out of line.

Mark met the love of his life at CBC, Christine Wilson, and though they later separated, they had two beautiful children, Sam and Rachel.  If they have half of Mark's intelligence, they will be successful. Christine was so caring for Mark in his last months, she was declared ex-wife of the year in our St. Pius/St. Pat's circle.  Despite our Catholic beginnings, there are a number of potential nominees.
Mark Cannon leaves an indelible memory on all who knew him. He was one of those rare individuals who gave himself to others and asked for nothing in return.  He will be remembered.

Friday, 19 December 2014

Doyle’s List 2014

John Doyle, the Globe and Mail’s acerbic TV critic, likes to publish an annual list of the ten most irritating people associated with Canadian TV.  John revels in the belief that everyone in the TV biz has him number 1 on their most irritating list. This ‘got me started’ on a list of the 10 biggest errors and contradictions in John’s column the last year or so:

1.     CBC now receives “much less” than $1 billion from the government. (nope, John, it’s still over $1 billion and projected to stay there for the foreseeable future)
2.     The #1 news show in Canada is CTV local news in Toronto. (John, you'll be accused of being Toronto-centric)
3.     CBC’s total budget is about $1 billion. (Sorry again, don’t forget ad and subscriber revenue, which brings it to $1.5 billion)
4.     Adaptations of novels don’t work on TV.  (Come again? Most of John's recs this year were based on books)
5.     CBC needs to be “cool,” no, I mean “different,” sorry, make that “smart,” hmm, no, “get off its high horse.”
6.     “CBC is ever more relevant,” no, make that “adrift, directionless.”
7.     “There is no adult in charge at CBC.” But, “CBC is not in terrible shape.”
8.     “What makes a hit?...Gotham’s debut of 22.2 million (viewers),” yet, “CBC’s Strange Empire which brings in about 300,000 viewers” is John’s pick of the year.
9.     “Our web site has 4.2 million unique visits a month.  Ezra Levant is talking to 5,000 people.” (Note: arrange briefing for John on difference between monthly reach and average minute audience.)
10. “CBC is our national neurosis--and that’s a good thing.” Hmm, sorry didn't I just say, “I don’t want to be one of those CBC bores.”

And one thing unrelated to TV:

1.     Germany really wants to win the World Cup, but won’t”.  (Hold that prediction for 2018)

John’s columns are often very witty, although he admits he may have written some of them more than once.  He gets into trouble when he tries to be serious and with numbers (and soccer predictions).  But many of his columns are funnier than the people and sitcoms he writes about and are a welcome relief in an industry that takes itself too seriously. So, apologies, John, you may be on everyone’s irritating people’s list but not number 1. 

Wednesday, 26 November 2014

Has the CBC Violated the Broadcasting Act?

It appears CBC is violating Canadian law. CBC must obey the Broadcasting Act, a law established by Parliament but the Corporation has failed to fulfill a key requirement of the Act. In particular, CBC has made major, inequitable reductions in the staff and budgets of CBC Radio but failed to reveal the plan for these self-imposed cuts. Over $100 million in funds have been surreptitiously transferred from CBC Radio to CBC TV, both English and French, and the effect on radio programming is palpable.
CBC is no stranger to sidestepping rules and regulations. For example, Rex Murphy's weekly commentary on The National is supposed to be clearly identified as Mr. Murphy's opinion. When asked last year how viewers were supposed to know it was Mr. Murphy's opinion, not that of CBC, managers at first claimed a graphic, "Rex Murphy Point of View," appeared during the segment and then sheepishly had to admit that somehow it had been removed years ago. The omission was quickly corrected.
The distinction between facts and opinion has gradually been blurred by CBC news, even by Peter Mansbridge, as he not only moderates opinion panels but participates in them. As CBC budgets have gotten tighter, program executives have discovered that facts are expensive to gather, while opinions are free.
CBC has stringent journalistic policies dealing with fairness, balance, etc. One of those policies deals with the on-air presentation of surveys or polls.
The policy on polling appears to have been jettisoned by both CBC radio and TV. Programs like The HouseThe NationalDay SixPower and Politics and regular newscasts present poll results with little and sometimes no reference to methodology, contrary to policy.
Online surveys are another case in point. They are being used virtually every day by CBC programs-- ignoring the CBC policy that "If programs refer to online questions, the results are reported in a way that clearly indicates it has no scientific validity..." Such surveys are specifically prohibited by the policy from "giv(ing) the results as a percentage, as we normally do with bona fide polls." Yet they all do, in direct contradiction to the policy.
When this was brought to the attention of CBC, the CBC Ombudsman decreed that policy was being breached and suggested that managers take corrective measures. That was almost a year ago and little or nothing appears to have been done.
CBC is not alone in using on-line polls. The Globe and Mail does so but its ombudsman recently acknowledged their limitations. Yet, the Globe can fall short on accuracy and correction. The Globe's TV critic, in a column belittling media criticism in Canada no less, claimed erroneously that the most watched TV newscast in Canada was the CTV local news in Toronto. A promised correction has yet to appear; management can be loath to challenge star performers.
That seems to have been the case with Jian Ghomeshi. CBC has long-established policies dealing with the workplace environment but implementing such policies is difficult. This is especially true if corporate culture subtly coerces employees to refrain from lodging complaints. What are employees to think when the CBC President, reacting to criticism from Sun Media, proudly announces at a Parliamentary Committee in 2013 that not a single case of harassment across the entire CBC was being investigated the day he spoke. The CBC President, of course, was the subject of another embarrassing case of dodging CBC rules when he was caught this year claiming for $30,000 of illegitimate travel expenses.
A more serious situation is the gutting of CBC Radio budgets. According to CRTC data, CBC French TV has managed to keep a budget of about $500 million annually since 2009; CBC English TV has maintained a budget of about $700 million annually in the same 5-year period. That is, there has been basically no reduction in CBC TV budgets. 

Putting aside the fact that the funds available to French TV seem disproportionate, how has CBC managed to keep TV budgets virtually intact, when ad revenues have been declining and the federal government has reduced CBC's funding?
One can't find the answer in any CBC financial report, including the annual corporate plan. The Broadcasting Act requires the CBC to prepare a corporate plan and a summary of the plan that "shall encompass all the businesses and activities, including investments, of the Corporation and its wholly-owned subsidiaries, if any, and shall set out the major business decisions taken with respect thereto." The summary of the plan requires that the budgets of the Corporation "shall be prepared in a form that clearly sets out information according to the major businesses or activities..." Evidently, CBC has failed to fulfill the requirements of the Act, i.e., the law.
The CBC corporate plan summary of the past five years contained no "clearly set out information" about the four major CBC business activities, English and French radio and TV.  The summary plan is the only information available publicly and to members of Parliament.  MPs and the public had no idea how much CBC planned on spending on TV versus radio or English versus French. Most importantly no information was provided on whether CBC planned on robbing radio to pay for TV. Who knew?
We only learned post facto that CBC planned on achieving its objectives (for TV) by stripping more than a quarter of the funding from its radio services. How? Fortuitously, another law came into effect in 2008 that required CBC and other broadcasters to provide financial data to the CRTC on their major radio and TV operations.
The CRTC data show that while CBC TV services have maintained their budgets, CBC French radio has seen a funding decline of some 35% since 2009 and CBC English radio a decline of some 29%. Staff levels have followed suit. The radio services have been cut by a combined $100+ million, more or less the amount that the government cut from CBC's budget. Is that what Tony Clement wanted, cut only radio and not TV?
CBC finds itself in a most precarious situation. Cuts to radio are not enough and so CBC TV has chosen the path of privatization by a thousand cuts, outsourcing sports to Rogers, weather to The Weather Network and documentaries to independent producers. Rather than take the high road and fight for new sources of funding, as CBC President Hubert Lacroix promised when he took the job, CBC management seems determined to keep their heads down and coalesce on the level playing field of private broadcasters.
The stress on the CBC staff perhaps explains the skirting of journalistic policies, the failure to implement basic human resource policy and, more importantly, the fudging of financial data. But these are ingredients for disaster. CBC, especially CBC Radio, remains an essential service but years of mismanagement and funding shortfalls are starting to affect programming and Canadians are slowly losing a cultural touchstone. Something drastic needs to be done.

A version of this article was published in Huffington Post.

Monday, 17 November 2014

Here's How We Can Pay For the CBC

The CBC has not brought much attention to the fact that its current financial problem is caused mostly by funding cuts from the Harper government. Instead, CBC recently told the government it is "grateful" for the money its gets.
CBC is reeling from a $115 million annual reduction in funding from the federal government, which fully kicks in this year. CBC seems reluctant to discuss that not only has the government cut the budget, it won't provide any money for staff severance payments or inflation on salaries for those who remain at CBC. This is the first government in history that has not only cut the budget but treated CBC employees so poorly.
CBC has also lost all future advertising revenue from NHL hockey, although the president of CBC, Hubert Lacroix, has admitted that CBC was at best breaking even on the NHL. Yet Mr. Lacroix points to the loss of hockey and a downturn in TV and radio advertising revenues generally as the culprit for CBC's financial problems rather than government cuts. He at least has adopted the idea of a cable tax, or what might better be called a "Canadian programming fee" to fund CBC.
A cable tax seems an easy target for the cable and satellite companies to attack and the media would pile on, since no one likes a new (or old) tax.
The cable companies and the media might hate the idea but what do average Canadians think about paying a little bit more for better quality Canadian TV programming?
In a previous article it was pointed out that the entire Canadian English TV industry generates revenues from advertising, subscription fees and government of about $5 billion annually. The BBC alone has more funding than our entire TV industry. The U.S. TV industry, with which Canada's broadcasters must compete, had annual revenues in 2011 of $165 billion or 33 times that of Canadian broadcasters. Lots of critics bemoan the lack of quality in Canadian TV compared to the U.S. but they offer no real solutions other than to suggest Canadian TV (CBC) needs to be "cool" and make do with less money! These critics have scant knowledge of how TV is financed or produced.
What Canadian TV has always lacked is adequate funding that would allow for experimentation, expensive failures, and the occasional hit program. That is how the industry works in the U.S. and elsewhere. In Canada we have starved both CBC TV and private conventional networks of funds and neither CBC nor the privates can produce high quality TV drama that compares with HBO and other U.S. networks. Canadian TV will never produce a Six Feet UnderThe SopranosThe Wire or Big Love with the budgets given to Canadian writers and producers.
CBC can afford to broadcast (in a good week) only two hours of original prime time drama while Canadian private networks mostly buy U.S. dramas and air them at the same time as the U.S. networks. This allows cable and satellite companies to unplug the U.S. channel and replace it with the Canadian channel. The effect is that Canadian commercials are carried on both the Canadian and U.S. channel.
CMRI tracks public opinion about Canadian TV and for over a decade we have asked Canadians if they would be willing to pay for better quality TV. Surprisingly, on average, about four in 10 have agreed to paying $5 more per month. That would be enough to dramatically improve the drama and other programming of CBC TV and private networks. Readers should visit CMRI's blog for methodological details on the annual survey.
Cable and satellite subscribers are far more willing to pay an extra $5 a month for better quality TV than people who watch TV off-air via an antenna. This makes sense. They have always been used to receiving TV for "free." Interestingly, willingness to pay for better quality TV is highest among those who voted Conservative in the last election, something the folks at Sun Media should take note of.
One of the great ironies in Canadian TV is that a large majority of Canadians think that a high percentage of their monthly cable bill already goes to CBC and other local stations. In our most recent survey only about one in three people thought that none of the money from their monthly bill went to local stations, almost one in two thought it was 10 per cent of the bill and about one in four thought that 25 per cent or more went to local stations. In other words, Canadians already think there is a cable tax!
On average Canadians think that about 20 per cent of their bill goes to CBC and other local stations, when it is actually zero. Specialty channels, the majority of which are owned by cable and satellite companies, such as TSN and Sportsnet, receive a percentage of what you pay to Rogers, Bell, etc. but CBC and private TV networks that have local stations receive nothing. They can only benefit indirectly from a small fund that underwrites some of the cost of independent programming. If CBC, CTV, etc. were to get even 10 per cent of our cable bill, it would amount to almost $1 billion per year and change Canadian TV overnight.
The trend has been remarkably consistent over the past decade and provides a clue as to how such a tax or programming fee could be introduced. Perhaps it should be a direct corporate tax on cable and satellite companies rather than on consumers. If cable companies chose to pass on the tax and bring it to the attention of their subscribers, many might be very surprised to learn that Rogers, Bell and others have not been giving some of the monthly fee to the CBC all along.

(Originally published in Huffington Post)

Don't Believe Everything You Read About CBC Cuts

Much of what is written about the CBC contains erroneous information. The latest cuts to the CBC are a case in point.
The Globe and Mail, the Toronto Star, the Sun and several other news outlets are fixated on the CBC to varying degrees and with equally varying editorial stances.
But they often provide readers with misinformation about CBC. The Globe, for example, reported that the Conservative government had cut CBC's Parliamentary grant to "much less the $1 billion," a figure that has become a rallying cry for those who think CBC is a drain on taxpayers. The truth is that the CBC's corporate plan shows that for years to come the government operating and capital grant (used to buy and maintain equipment and facilities) will remain at more than $1 billion. The journalist, when challenged, tried to defend this claim on Twitter by saying he was referring to CBC English services but the English services have never received $1 billion from government.
Another Globe reporter said that CBC did not breakdown the necessary data so she said that "outsiders" put the cost of the main CBC French TV network at $400 million. A quick check of the CRTC web site would have revealed it was $476 million in 2013. The CRTC publishes the data annually, which are provided by CBC.
The Star ran an editorial saying the budget of CBC after the latest cuts would be reduced to $913 million, which is off by about $800 million. The total budget of the CBC is about $1.7 billion. The Star ignored not only government funding for equipment but also all advertising revenues and the many millions Canadians pay to receive CBC News Network, etc. through their cable bill. The editorial proclaimed that in the past five years CBC had cut 2,100 jobs. Again, a check of CRTC data would have revealed that the correct number was about one-third that.
An opinion piece in the National Post included those same staff numbers, adding that it represented a quarter of the workforce. The Post also ran a commentary saying CBC seemed incapable of reinventing itself, which may be true, and concluded that it didn't matter since TV viewing was in decline and the television industry, that is, networks, cable, etc. wouldn't exist in its present form in "maybe two years." This blissfully ignores the fact that TV viewing and cable/satellite subscriptions have shown no decline, according to CRTC.
The Sun, which has always taken an aggressive stance when it comes to CBC, echoed other outlets, saying government funding would decline to $913 million in 2014-15, also forgetting government funding for equipment, etc.
The Globe and the Post have reported on the losses CBC TV will incur when it no longer has ad revenue from NHL hockey. The Post put the number at $200 million, while the Globe put it at $225 million. Both estimates were based on hockey representing half of CBC ad revenues but used the total of CBC English and CBC French ad revenues to arrive at their estimates. One Globe reporter was closer with an estimate of $175 million but in the same article said Rogers wasn't a likely bidder for Saturday night hockey. The CBC recently revealed NHL ad revenue was $125-$150 million and, contrary to earlier claims, said it wasn't making a profit. The number was probably $100 million in 2013, a year when the NHL locked out players for the start of the season.
So where does this leave readers of these news outlets?
Thing is, the public who read all these stories about CBC and its crisis need to have the correct facts about its funding, staffing and audiences. After all, the public will eventually shape the future of the CBC. The CBC should be totally transparent about its operations so that journalists of all stripes can report on the CBC accurately. Make no mistake, the CBC is facing a crisis and its networks, especially the CBC English TV network, do not have the funding to offer Canadians what they ask for and deserve.
But it is not just a question of more money, it is also necessary to define the role of CBC TV.
CBC TV and private English TV in Canada compete in an environment that is dominated by U.S. television. The U.S. industry in 2011 had revenues of $165 billion dollars compared to total revenues of all English TV of about $5 billion. Canada's TV revenues are lowest among the G7 countries, while the U.S. is bigger than all other G7 countries combined and 33 times larger than the Canadian English TV industry. CBC TV, the main network and the news channel, have revenues of roughly $800 million, from all sources, or less than 0.5 per cent of U.S. TV revenues.
To be a real public broadcasting service CBC should be funded like public broadcasters in the U.K. or France. As a service to the public, it should be commercial free and like HBO, it should make programs for viewers, not advertisers. A small tax on all cable TV, satellite TV, Internet, mobile services, etc, that is, all the services that provide video to consumers should be used to properly fund CBC (and private TV services). Such a tax could generate as much as $3 billion dollars annually.
This would put CBC and private Canadian television on somewhat equal footing with the U.S. and allow for programs of sufficient quality to compete with U.S. television and the rest of the world. Cable executives would be aghast but I believe the public, evidenced by the insatiable appetite for cable TV, Internet, Netflix, smartphones, etc., would not resent paying for quality Canadian programming on CBC and private TV.
Now that is a story that Canadian journalists could be exploring and, after getting the facts straight, writing about for their readers.

(Originally published in Huffington Post)

Who's Really Paying for the Rogers $5.2 Billion NHL Deal?

Rogers massive $5.2 billion, 12-year NHL deal has shaken the TV industry. The deal is for national TV and digital/internet rights for all regular season and playoff games and was voted Canadian business story of the year.
Why would Rogers pay so much for NHL games? The deal averages about $435 million annually, roughly $300 million more than the combined sum TSN and CBC TV have been paying for national rights. CBC TV is left carrying some Saturday night hockey but all ad revenues flow to Rogers, starting in fall 2014. TSN is scrambling for crumbs, including local TV rights in Ottawa and Montreal (French), giving them a select number of games that can only be aired regionally. TSN's desperation showed when it reportedly paid $400 million for the regional rights to Ottawa Senators games for the next 12 years.
Rogers is counting on increased advertising revenues to pay for the deal. It hopes that by broadcasting over 500 games, including Saturday night games, not just on CBC but also on CITY TV, Sportsnet, Sportsnet One and Sportsnet 360, as well as Sunday night and mid-week games, substantially more ad revenue can be generated.
But Rogers may be disappointed -- Canadians already have access to a large number of televised NHL games. CBC airs just over 100 games per year and TSN/TSN2 and Sportsnet each air almost 200 games per season, although Sportsnet games are only available regionally. In addition, the NHL's own network airs a small number of games, as do NBC affiliates and the superstation WGN. There are also French-language broadcasts of roughly 200 games each season for die hard fans. Many viewers already have access to over 500 NHL games/season on regular TV and cable/satellite and this allows us to project future ad revenues.
The table below trends the total ad revenues of CBC TV, Rogers TV (CITY and Omni), CTV, as well as the specialty channels that carry or will carry NHL games.
Rogers TV stations generated some $278 million in ad revenues in 2012, about the same as CBC TV's $246 million but only roughly one-third the revenue of CTV. Note CTV's $100+ million increase in 2010, corresponding to the Vancouver Olympics; no similar increase resulted from the 2012 London Olympics.
The four sports specialty channels combined accounted for another $240-odd million in 2012. Specialty channels have traditionally sold advertising at heavily discounted rates and even with a large number of NHL games in their schedules, TSN and Sportsnet have relatively small ad revenues. Ad agencies won't pay the premium rates Sportsnet and TSN would like to charge. The two specialty sports channels together actually generate almost the same hockey audience as CBC but that doesn't translate into the same advertising revenue.
CBC says that it was basically breaking even or losing money the last few years on the NHL and we assume in this projection that about one-half its total ad revenue was from NHL hockey. Taking this into consideration, the table below estimates the ad revenue generated by NHL games that past 4 years.
In 2012, CBC, which carried the most highly rated playoff games, generated about $120 million in NHL-related revenue. The revenue may have been even less, perhaps only $100 million. Using audience metrics as a guide, we estimate that TSN and Sportsnet generated roughly $25 million each from their NHL coverage. Thus, using fairly optimistic assumptions, the total ad revenue from the NHL is currently about $170 million.
What will happen next season and beyond? If Rogers airs Saturday night games on CITY TV and its other specialty networks, this will eat into CBC's Hockey Night in Canada audiences and the associated revenue; we estimate a 30 per cent loss in audiences and revenue for games on CBC. Games on CITY will likely feature big market home teams (Toronto and Vancouver) and be very attractive for advertisers. But the net effect of losses on CBC and gains from additional games on Rogers stations, coupled with the fact that there are only so many companies who want to reach the hockey audience at any given time, will mean only a modest increase in ad revenue.
Rogers expects NHL audiences to increase by 20% overall, which is optimistic, given the audience performance of the more than 500 NHL games currently available to viewers. However, Rogers should be able to increase ad rates somewhat, given that they control all national rights. Assuming somewhat higher rates and a 10 per cent increase in audiences, we estimate that the revenues generated by the additional CITY TV, Sportsnet, Sportsnet One and Sportsnet 360 Saturday, Sunday and weeknight NHL games will generate about $25 million in additional ad revenue, bringing the total in 2014 to about $195 million.
Rogers paid a premium for national NHL rights and the additional TV ad revenues will still leave a financial 'hole' of approximately $240 million. The hole must be filled with revenues from three other sources: sub-licencing to French TV, digital/mobile services and subscriber/fee increases for Rogers specialty channels.
The French TV rights for more than 300 games per year are being sub-licenced to TVA/TVA Sports for $120 million annually. The parent company, Videotron, will presumably market the NHL in a similar fashion, especially on mobile devices. Conveniently, Videotron operates primarily in Quebec, with minimal service overlap with Rogers cable and internet. That still leaves a shortfall of about $120 million.
A digital/mobile app for Rogers NHL games on smartphones and tablets could fill some of the gap with ad revenues from viewers on mobile devices. Rogers NHL app would likely be bundled with Rogers cable/internet -- if you are a Rogers cable/internet subscriber, the mobile NHL app would be included in your monthly bill at no additional charge. Bell, Shaw and Telus subscribers will have access to the app but would likely have to pay an additional fee for access on mobile devices. This will bring in more revenue. Digital/mobile revenues are difficult to estimate but let's put the number at $20 million.
The big revenue will come from another, more traditional, source. Rogers will enjoy new subscriptions to its lesser known channels, such as Sportsnet One or Sportsnet 360, which have 2-3 million fewer subscribers than Sportsnet. To see all the games your cable or satellite TV company will have to offer all the Rogers channels. Rogers also plans to air some games on Fx, which you may have noticed from the ads is not yet carried by Bell, and has almost 7 million fewer subscribers than Sportsnet. Leaf fans would suddenly find Fx appealing if the channel carried exclusive Leafs' games. 10 million new subscriptions to Sportsnet One, Sportsnet 360 and Fx would generate $100 million, using current fee schedules.
Rogers could also bundle all its sports specialty channels for one fee, which would simplify matters for the consumer. It will presumably also increase fees for its sports channels, as ESPN did when it secured Monday Night Football. The revenue from new channel subscriptions and fee increases will come not just from Rogers subscribers but Bell, Telus and Shaw subscribers who want access to all the NHL games.
The massive deal has the earmarks of satisfying a lot of Rogers and non-Rogers hockey fans, despite what a faulty Ekos poll recently said. The poll planted the idea that it disadvantaged the CBC and then asked respondents if the deal would hurt the CBC. One survey question included a typo, asking about CBC "ad venue" rather than "ad revenue."
Thus, while advertising revenue will probably not increase much, there are additional revenues to be accrued from mobile customers and new subscriptions to existing specialty channels and fee increases for all Rogers sports channels. Cable and satellite TV subscribers and smartphone users will ultimately pay for the NHL deal, which should break even, if not be profitable.
There is one hidden value for Rogers, which is priceless. The NHL deal, bundled for Rogers mobile subscribers, will keep subscribers from switching to other companies and maybe even attract a few from Bell and Telus.

(Originally published in Huffington P0st)