Score Media Inc. has been sold to Rogers Communications for $167-million, in a deal that will see the communications giant take control of the scrappy network's television properties but give it only a small stake of The Score's growing mobile apps business.
The Toronto-based sports network's stock was halted halfway through the trading day Friday "pending news," after increasing by 46 per cent on rumours that a deal was imminent. The company has been on the block for almost a year, as it struggled to outbid its larger rivals for increasingly expensive top-tier live events.
The two companies worked late into Friday night to hammer out the final details of the deal: Rogers will pay $1.62 a share, or $138-million for the television network. It will also assume about $13-million in debt and invest $12-million in The Score's standalone digital media business.
While the television network has been the Score's main money maker, its digital products have seen the greatest growth. They are among the most popular on the planet, ranking amongst products developed by giants such as ESPN for the most downloads on both iPhones and BlackBerrys.
Rogers won't own the digital division, but said its 10 per cent stake would allow it full access to the platforms for use with its own brands.
While Rogers Media president Keith Pelley praised the station's unique programming – it focuses largely on offbeat commentary and second tier sporting events such as wrestling and college sports –he said it would be rebranded as a Sportsnet property.
Sportsnet is the No. 2 sports network in Canada behind Bell Media's TSN, and operates as four regional stations that share content but break out live broadcasts of events of interest to viewers in specific areas of the country – there is Sportsnet East, Ontario, West and Pacific. Rogers also has a Sportsnet-branded radio station and a magazine.
"The Score is a tremendous sports service that offers a distinct flavour of premium, niche programming that fits squarely within our strategy of delivering highly sought-after content to Canadians," he said in a statement.
The television channel generates about $45-million of subscription revenue and $15-million in annual profit before interest, taxes, depreciation and amortization. Rogers will also take over the company's closed-captioning service Voice to Visual Inc. and ownership of mixed martial arts promotion The Score Fighting Series.
When The Score was founded in 1994, it provided text-only sports scores on its television station. It now earns most of its revenue from a television station that specializes in offbeat commentary and relies largely on second-tier sports such as college basketball and professional wrestling for its live events.
While it carved out a niche by providing a slew of bloggers a home for their cheeky commentary and hiring scrappy on-air talent, it found itself increasingly marginalized as the country's biggest broadcasters such as Rogers Media and Bell Media continued to expand and bid up the cost of live events.
News of the deal comes the same week as Rogers and Bell closed the deal that will see them become joint owners of Maple Leaf Sports and Entertainment, which means the three largest English sports broadcasters in the country – Bell's TSN , Rogers' Sportsnet and The Score – would be held by the two companies.
But while its television station and its stable of outspoken hosts may be the Score's most visible assets, the company has aggressively pursued the online data market via mobile apps built specifically for sports fans. The apps draw more than 3 million unique visitors a month, and consistently rank among the world's most popular for both BlackBerry and iPhone.
Score chief executive officer and founder John Levy will lead the new digital company that will continue to build on that market, which has grown rapidly but without much profit. It spent $2.9-million developing apps and honing its technological offerings in the last quarter, but the products it has developed only brought in $1.1-million in revenue.
It just signed a deal that would help further monetize its digital offerings, announcing a partnership with a U.K.-based betting house that would allow anyone using the ScoreMobile FC to place bets on live football matches with the push of a button.
The deal comes at an interesting time – BCE Inc. is in the midst of a highly scrutinized $3-billion takeover of Astral, which has thrust the issue of media concentration into the spotlight.
That deal with be scrutinized by the country's broadcast regulator next month, as rivals line up to protest that the Canadian broadcast industry has grown too concentrated as Rogers and Bell buy up all of the independent producers of content.
Rogers, which has filed an intervention opposing the Astral deal, said media consolidation is good for the Canadian broadcast industry because "significant benefits accrue to Canadian consumers as a result of having larger and financially broadcasting companies operating."