Published on October 25th, 2012 | by James Conley0
Will NBC Step Into the NHL Lockout?
NBC didn’t enter into a ten-year, $180 million television agreement with Gary Bettman without anticipating the possibility (or, probability) of another NHL lockout.
According to a spokesperson with NBC, the lockout “didn’t take us by surprise.”
Thursday marks the league’s imposed 82-game scheduling D-Day, the last date for reaching a CBA agreement that would ensure a full regular season schedule.
Overtures from Donald Fehr and the NHLPA about holding a meeting Wednesday were shut down by Bettman, who is uninterested in working on a deal that does not stem from the league’s last offer. The NHL’s last proposal included a first-year dive to 50-50 revenue sharing and a paid-by-players “make whole” clause, items the NHLPA has been reluctant to agree to.
“We said to them that we are prepared to meet if you want to discuss our offer or you want to make a new offer,” Bettman said Wednesday. “They have no inclination in doing either and so there really was no point in meeting at this point.”
Pending announcements set to come from the league Thursday or Friday, games through November 2 are history.
The NHL lockout has more vested interests than one can count, and NBC is among the biggest keeping watch. The network signed the longest and richest national television deal in NHL history with its 10-year, $180 million agreement in 2011.
Having lost two weeks of NHL programming already, its NBC Sports Network subsidiary is reeling.
The prospect of losing NHL games due to the lockout further complicates the channel’s fall schedule.
“Live events are what draws viewers to sports networks,” Adgate said. “If the NHL doesn’t play, NBC Sports Network won’t have a lot of compelling live events.”
The network’s ratings have been down drastically since the end of the Olympics, and the lull hasn’t been helped by an absence of NHL games.
According to Sam Carchidi, NBC won’t release numbers on how the lockout has affected its advertising revenue. However, it can’t be happy with the work stoppage after rebranding the Versus network last January with the NHL as its flagship league and hockey games its centerpiece live sporting events.
So, will NBC step into the NHL lockout fray?
The network stands to lose at least some revenue and plenty of momentum from last Spring by losing hockey. While games broadcast on NBCSN are its most marketable live events, they aren’t big engines of revenue.
Not that the NHL delivers big national TV ratings to Comcast’s NBC outlets. NBC’s dozen regular-season NHL games last year averaged 1% of U.S. households — about as low as regular-season broadcast ratings get — while NBCSN’s 90 games drew 0.2% of cable TV homes.
All this goes without mentioning the effect on Canadian television, where the NHL draws comparable audiences to American football crowds.
NBC could put pressure on the league soon, especially if the lucrative Winter Classic event is axed. Bettman has said due to intense planning obligations, the Classic would be cancelled in November despite taking place January 1.
The Classic is a key event for both the league and NBC. According to a report from The Windsor Star, the two Classics held in Boston and Philadelphia generated $30 million and $36 million, respectively, and the pending Detroit-Toronto Classic in Michigan Stadium “could more than double those numbers.”
How much NBC generates from advertising during those games is unknown, but it can’t be insignificant.
NBC’s problem, though, is that television revenues are still insignificant to the NHL’s bottom line.
To start, national TV revenues for the NHL are low compared with what the other leagues get from their TV contracts. Although the numbers have not yet been officially announced, a new, 10-year contract with NBC and Versus will boost the league’s U.S. national TV revenues to $200 million annually in the 2011–12 season—up from $75 million last season. In Canada, the CBC pays the NHL about $100 million in broadcast fees annually, and TSN reportedly pays about $40 million a year in broadcast fees.
With about $350 million of the league’s $3 billion-plus revenues coming from national television contracts, the NHL is clearly still a gate-driven league. As long as the league feels its losses at the gate are acceptable (and interest at the box office remains inelastic), NBC’s influence could be minimal.
Besides that, NBC may even be interested in getting a year of free rights in 2022, when a year of those rights might be worth well more than the $180 million annual sum they’re paying now.
NBC can start to put pressure on Bettman to get a deal done, but given their relatively small effect on the league’s bottom line, it’s most likely they will only have a minimal effect on ending the lockout.
Image clydeorama @ flickr