In a blockbuster deal few saw coming, Rogers Communications Inc. signed a landmark 12-year $5.2-billion broadcast and multimedia agreement with the NHL. Even though it has been two decades since a Canadian team last won the NHL’s most coveted prize, the Stanley Club, hockey is thriving like never before in our great nation.
This monumental deal gives Rogers an important stranglehold on NHL content, securing all rights to broadcast NHL games across the country, and leaving fellow broadcasters like TSN and CBC out in the cold. This is a significant step towards halting the increasingly worrisome trend of consumers unplugging their cable cords, choosing to view content online or on their mobile device.
Like it or not, the traditional TV model of bundling channels in packages is dying a slow and painful death. The CTRC may have put the final nail in the coffin of this outdated model, when it proposed mandating cable companies to offer pick-and-pay alternatives to subscribers. What’s at the heart of this change in viewing habits? Content.
Although our appetite for content hasn’t changed, the platform we view it on certainly has. The facts don’t paint a pretty picture – Rogers lost a net 83,000 subscribers in 2012, while its annual subscriber growth has slowed to a paltry 1%. Who’s picking up all the slack? Internet and smartphones continue to be growth areas, as they let us watch what we want, when we want.
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While we can’t seem to get enough of cable alternatives like Netflix and Apple TV, there’s one area where cable still has the upper hand – live sports. There’s nothing like sudden-death overtime in Game Seven of the Stanley Cup playoffs – it just isn’t the same watching it the next day when you already know the results. Going out to see your favourite team play live is unaffordable these days, so enjoying it from the comfort of home on the big screen is the next best thing. The Rogers NHL deal will give the communications giant full control of hockey in Canada, and they will have the advantage of choosing the medium – TV, online, or mobile – we enjoy Canada’s game on.
Despite its hefty price tag, Rogers investors are generally thrilled with the deal. Not only will it keeps subscribers happy, but the deal will also practically pay for itself – advertisers will pay a premium to broadcast commercials during hockey games.
The agreement offers a host of benefits to Rogers’ other lines of business, including fewer lost customers and the ability to maximize revenue for customer devices. This offers some good news after an especially tough year for Rogers shareholders. Not only has its stock price languished – up only 4.9% compared to double-digit gains for rivals Bell and Telus – Rogers continues to give up market share to competitors.
The agreement should give Canada’s second-biggest telecommunications firm a new weapon in its arsenal to clobber the competition with. Rogers has long been known as a blue-chip stock, but that may be slowly changing – investors see great opportunities for growth at the lowest rate of risk among the big three. Stock analysts have gone as far as saying its stock is trading at a discount, which is good news for existing shareholders if the stock price skyrockets.