Rogers in-house and Covington & Burling counsel in NHL Broadcast Rights Blockbuster

REUTERS/Aaron Harris

REUTERS/Aaron Harris

Rogers Communications President and CEO Nadir Mohamed said that his company intends to make Sportsnet the number one sports media brand in Canada. That statement would appear to be a reflection of Tuesday’s gargantuan $5.2-billion deal between Rogers and the NHL, which serves as the most significant media deal in NHL history and the largest-ever sports media rights agreement in Canadian history. But Mohamed made the statement in August 2012, when Rogers announced the closing of what was then considered the biggest sports business deal in Canadian history – the purchase with Bell Media of a 75 per cent stake in MLSE.

Things have changed since, and Mohamed’s statement of yesteryear has suddenly become more of a realization than just an ambition. After Tuesday’s announcement, the Canadian sports broadcasting scene effectively became more consolidated – at least for the next 12 years. The deal’s final hurdle is getting approval from the NHL’s board of governors, and the deal is expected to take effect in the 2014-15 hockey season.

The simple lay of the sports broadcasting land is that Rogers now has national broadcasting rights to NHL games; CBC keeps its Saturday spot on a four-year sub-contract from Rogers, though the public broadcaster forfeits to Rogers ownership of the content and the ad revenue from it; Quebecor’s Groupe TVA becomes the official French-language TV broadcaster of the NHL; and Bell Media’s TSN is left to lick its wounds after being completely shut-out of the deal.

CBC President Hubert Lacroix told media that his organization decided on a “one gatekeeper model.” He said that, due to the increase in the broadcasting costs to the NHL, it wasn’t the best way to spend tax-payer money. The risk versus reward would seem unfavourable to CBC if it decided to retain the rights. Reports stated that the NHL was looking at charging $200 million a year for the rights – double what the CBC was already paying. This would have been difficult in the face of the federal government’s suggestion last year that the CBC cut $115 million within three years as part of its broader spending cuts. Otherwise, hockey contributed about $175 million of the CBC’s $450 million in annual advertising revenue.

Helping make the stars align in what The Globe is reporting to be the “most complicated and expensive rights deal in Canadian history…pieced together in five days” were a Rogers Communications’ in-house team and a team from Covington & Burling LLP.

Rogers Communications was represented by Michael Webber, VP legal and chief legal counsel on the deal, with support provided by Emma Miller, Jason Badal and David Miller (general counsel). Michael Webber, Emma Miller and David Miller all worked on the MLSE deal. Jason Badal was in-house counsel for Score Media when that company was bought by Rogers; Webber and David Miller worked on that deal as in-house counsel for Rogers.

Representing the NHL was deputy commissioner Bill Daly, and an external team from Covington & Burling LLP including Doug Gibson, Pete Zern and Kyle Rabe (corporate) and Jeremy Spector (tax).

According to The Globe, sources said Bell took a stab at the rights package but was edged by Rogers’ offer – averaging out to $433 million per year – which is well beyond what the CBC was expected to pay.

To put the size of the deal into perspective, the previous record for NHL broadcast rights was consummated on April 19, 2011, when the NHL and NBC signed a 10-year deal worth $2 billion, or $200 million for each year of the contract. For further perspective, a previous NHL deal inked with Versus cost that broadcaster $75 million per year. A reminder: $5.2 billion is the current record holder. And, chances are, it won’t be topped in 12 years.

Canada’s broadcasting landscape is quickly moving toward consolidation. Eight days after the announcement that 75 per cent of MLSE – which owns Toronto’s Maple Leafs, Raptors, TFC, and Marlies – was sold to Rogers and Bell, the CRTC approved Rogers Media’s purchase of The Score. In 2011, Bell purchased the rest of the CTV network for $1.3 billion, 10 years after it bought CTV for $2.3 billion. (The CTV-owned TSN and French-language RDS sports channels were part of that package.)  More recently, Bell Media closed its $3-billion acquisition of Astral Media earlier this year. Rogers has “spent the past several years under president Keith Pelley building its Sportsnet brand, securing rights deals and acquiring stations in a bid to boost its national presence and steal the top spot” from TSN, according to The Globe.

The Globe compared this deal with some other sports deals here.

Ahmad Hathout

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