Keith Pelley may have left the arena before Rogers Media finally hit a home run with its Canadian NHL broadcast rights, but he feels just as proud and happy as his former colleagues.
“Is it gratifying?” the former president of Rogers Media said when asked about the explosion in ratings for this year’s NHL playoffs. “Yes, it sure is. It’s been very gratifying because I certainly listened to some of the naysayers at the beginning. But from what everybody tells me at Rogers, there’s not many naysayers now.”
The numbers were not record-setting, but still impressive – especially compared with 2016, when they were the lowest since Rogers acquired the Canadian rights in 2014: Over the entire run of the 2017 playoffs, the average audience on CBC and Sportsnet was 1.61 million viewers a game – a 94-per-cent increase over last year.
The Stanley Cup final between the Pittsburgh Penguins and the Nashville Predators had an average audience of 2.67 million over six games, an 18-per-cent increase over 2016. And the most-watched game of the playoffs was Game 7 of the NHL Eastern Conference final between Pittsburgh and the Ottawa Senators, when 4.29 million viewers tuned in.
The reason for the turnaround is no secret. In 2016, none of the seven Canadian NHL teams made the playoffs, capping two years of generally bad play after Rogers agreed to pay the NHL $5.2-billion over 12 years for the Canadian broadcast rights on all media platforms. But, led by the Toronto Maple Leafs, who improved faster than expected and gave the first-place Washington Capitals all they could handle in the first round, five Canadian teams made the playoffs this year. The Edmonton Oilers advanced to the second round, and the Senators made the conference final.
Sources in the advertising industry, who did not want to comment publicly because of business relationships with Rogers, said the company had no trouble selling its playoff inventory thanks to the bump in ratings. There was even a lineup of new sponsors for the commercial time.
The only twist is that Rogers won’t really cash in until next season, since it’s the custom for advertisers to buy time based on a rolling two-year average of ratings. Thus, the 2017 playoff numbers will not be counted until next year.
Which is just fine with Sportsnet president Scott Moore, who thinks next year’s advertising rates will jump “40 to 50 per cent,” because the Canadian teams’ success appears to have staying power.
“It looks like a number of the Canadian teams are going to be playoff teams for the next number of years,” Moore said. “There’s momentum. It’s a long-term play. It’s not just about trying to get the most out of an advertiser in one year, it’s about making sure there’s value for the next few years.”
Pelley, who left Rogers Media in April, 2015, to become chief executive officer of golf’s European Tour, is especially proud of the playoff success because he knows what was at stake when Rogers went up against rival BCE Inc. and its TSN network to bid for the NHL rights in the fall of 2013.
At the time, TSN was the runaway ratings leader of Canada’s two sports specialty networks. Its lineup was so strong with the major events of hockey, tennis, golf and football, Pelley said, that the future of Sportsnet was at stake. “If TSN was to acquire this, what happens to Sportsnet? It would be pretty detrimental, pretty dire if that happened.”
Pelley and Moore, who handled the bulk of the negotiations with the NHL, wanted more than just the survival of Sportsnet in order for that kind of money to make sense to their bosses at Rogers.
They wanted to establish Sportsnet as the No. 1 sports network in Canada and they wanted the NHL rights to drive Rogers to profits in a changing media landscape, where younger viewers – yes, those dreaded millennials – watch sports on their smartphones, tablets or computers as much as they do on television.
Despite two years of declining ratings thanks to the struggles of the Leafs and the other Canadian teams – which resulted in job losses at Rogers and high-profile changes to the hockey broadcasts – Sportsnet managed to pass TSN in the monthly ratings war by the end of the first season with a healthy assist from the Toronto Blue Jays. In fact, Sportsnet recently announced it was No. 1 among all Canadian specialty networks for the third consecutive year, with an average per-minute audience of 153,300. It was also tops with female and millennial (ages 18-34) viewers.
The shadow over this is the changing habits of those millennial viewers, who are now a prized demographic for advertisers. A study of Nielsen ratings in the United States from 2000 to 2016 by Magna Global for the Sports Business Journal found that conventional television audiences are aging faster than the general population. In the case of the NHL, the median age of its TV viewers went from 42 to 49 from 2006 to 2016.
Kaan Yigit, the president of Solutions Research Group Consultants Inc. of Toronto, which tracks consumer trends, says Rogers’ gains in hockey ratings are impressive considering his studies show the audiences for the top prime-time television shows declined 11 per cent from 2016.
Another of his studies projects a rise in the number of Canadian households without a cable, satellite or other telecommunications company television package. In 2016, 19.7 per cent of Canada’s 14.3 million households did not have such packages. That rose to 22.1 per cent this year, and Yigit says that by 2020 “that number will be five million households.”
However, both he and another Toronto research expert, Charlton Insights president Gord Hendren, say even the millennial numbers are running in Rogers’ favour for the long-term health of the NHL package. Both say the traditional broadcast platform remains No. 1, and Hendren says his studies show that as long as the games are compelling and feature a favourite team, millennials will come to television.
A Charlton Insights study shows that sports fans’ interest and engagement in the NHL grew moderately from last year among 12-to-17-year-olds, declined slightly among millennials and jumped 18 per cent among fans over 35.
Forty-four per cent of millennial survey respondents said the NHL was their favourite league, and 93 per cent indicated at least some interest. “I’d say that’s solid,” Hendren said.
The increase was attributed mostly to the improved performance of the Canadian teams. This is where it gets tantalizing for Rogers. Hendren said the study shows “the Maple Leafs have a lot of upside.”
The number of sports fans who called themselves a “big fan” of the Maple Leafs increased 20 per cent across all age groups this year to 24 per cent of those surveyed. Hendren said that since the Leafs appeal to the largest market in Canada and just 24 per cent of sports fans say they are more than fairweather fans, there is a lot of room for growth.
“We still think there are a lot of fans in the Toronto market waiting for the Leafs to prove themselves,” Hendren said. “It’s a large market with a long history of futility. The Leafs have given young fans a reason to be excited. This year there is optimism for the first time, but let’s prove it.”
Also growing are the number of fans who watch at least some NHL games on their smartphones, tablets or computers. Hendren’s study showed a 23-per-cent jump this year, to 37 per cent, in the number of fans of all ages who watch games on their phones. The surprising increase was among fans over 35, with a 45-per-cent jump to 32 per cent of respondents.
The non-broadcast numbers and declining television viewers are why Yigit is a little less bullish than Hendren on the last nine years of the Rogers deal. He points out that the bulk of Rogers’ revenue still comes from the regular season, and while millennials will switch to television for big games in the playoffs, they still tend to watch highlights on social media or other mobile platforms rather than sit through an entire television broadcast.
“If the game is boring, the kids aren’t staying around for it,” Yigit said. “What’s happening in the regular season is it’s much longer [than the playoffs]. Every year for the past three or four years, we’ve seen softness in the viewing levels – not just hockey but everything.
“I would agree [Rogers] probably will run to the finish line not having a disaster. But I’d say every year they have a challenge.”
However, everyone from Pelley to Moore to advertising executives to Hendren and even Yigit agrees Rogers has one ace up its sleeve: the fact Pelley and Moore – unlike U.S. networks, with leagues such as the NFL – were smart enough to buy the NHL rights on all platforms, from television to digital to mobile to anything that has not been invented yet.
Rogers still has nine years to figure out how to wring the most money from the different platforms. And millennials who cut the broadcast cord or never buy one still have to buy their access to the Internet from either Rogers or BCE.
“That’s the magic,” said former NHL chief operating officer John Collins, who negotiated the Rogers deal from the league’s side of the table with NHL commissioner Gary Bettman. “Rogers has all those rights in Canada.
“If you’re going to stick to a traditional broadcast model, it will never work. But if you’re going to treat it like you are the gatekeeper for the most valuable content in the most hockey-mad, passionate country in the world and you’re going to have it for 12 years on an exclusive basis, that’s a pretty good deal.”Report Typo/Error