Broadcast profits from Winnipeg Jets games still a question, analysts say

It’s too soon to tell whether broadcasters will earn profits from airing Winnipeg Jets hockey games, analysts and industry insiders say. High production and rights acquisition costs support programming that serves a relatively small broadcasting market with little opportunities for national coverage, which could lead to weak returns for broadcasters airing the NHL team's 82 regular season games, analysts say. “You never know how much you’re going to sell until you go out and sell it,” Carmi Levy, an independent technology analyst, said. “This doesn’t strike me as any different.” Levy said broadcasters typically do not receive “paid-up commitments” from advertisers until after signing contracts to carry sports events. “Everybody wants a guarantee, nobody’s going to get one,” he noted. BCE Inc. subsidiary Bell Media Inc. has agreed to a 10-year contract to broadcast 60 regular season Jets games per season on its TSN station and its new regional specialty station, TSN Jets. CBC/Radio-Canada's Hockey Night In Canada program is also broadcasting 22 Jets games per year as a part of a contract with the league to cover Saturday night games and special matches. That contract runs through 2014, Jeffrey Orridge, the executive director of CBC sports properties, told The Wire Report. Orridge said it is too soon to tell whether the CBC will make money from its coverage of the Jets games but noted that the public broadcaster views all of its Hockey Night in Canada costs and revenues on an aggregated basis. “We have a budget for Hockey Night in Canada, so we are extraordinarily meticulous in terms of staying within that budget and staying fiscally responsible,” he said. “We take a very measured approach to any of the decisions we make regarding our broadcast schedule.” The Winnipeg market is smaller than the other Canadian NHL markets in Montreal, Ottawa, Toronto, Edmonton, Calgary and Vancouver. In an annual report released Thursday, Forbes magazine ranked the Jets' value at 24th in the 30-team league, reporting that the team is worth $164 million (US). The relocated franchise has experienced a 21 per cent increase in value over last year when it was located in Atlanta, Ga., due mostly to stronger ticket sales in Winnipeg, Forbes reported. Winnipeg's NHL value remains last among Canadian teams, Forbes reported, $40 million behind the Ottawa Senators and $360 million behind the league-leading Toronto Maple Leafs. Gregory Taylor, a broadcasting expert and post-doctoral fellow at Ryerson University, said it may be difficult for the Jets to get national coverage due to limited NHL broadcasting time slots and the popularity of other teams in their respective markets. “The Leafs have a complete, dominant stranglehold on Southern Ontario, and I think the area that Winnipeg is going to draw from is demographically challenged,” he said. Winnipeg, in the Central Time Zone, poses a problem for advertisers and broadcasters targeting large markets in Quebec, Ontario and the West. The CBC’s Hockey Night in Canada typically carries two games on Saturday nights, one at 7 p.m. (Eastern time) and a Western Canada game three hours later. “Part of it is the time zone is stuck in, where it’s not going to be the early or the late game,” Taylor said. “So in that sense it’s got another challenge.” Analysts note the profitability of sports broadcasts is related as much to production costs as advertising revenues. Orridge said it is cheaper for the CBC to produce games in Winnipeg and other Canadian cities than it is in U.S. cities. Games featuring two Canadian teams tend to draw higher advertising revenues, he said, as well as games featuring stars or high-profile rivalries. Orridge declined to provide specific costing details. “We typically don’t disclose those types of stats for competitive reasons,” he said. Taylor suggested that some Canadians might not like the idea of the publicly funded CBC losing money on a product like Jets hockey games. But he added that the coverage of the new Canadian team likely falls under the Crown corporation’s mandate to promote Canadian culture, as stipulated under the Broadcasting Act. “I think the CBC has an obligation to carry those games, even if they are not big money makers,” he said. “When you put it in the larger perspective of the power of Hockey Night in Canada, I think as a public broadcaster, the CBC better keep showing these games.” Orridge agreed. “Part of our mission at CBC Sports is really to provide entertaining, engaging, and nation-building sports experiences that showcase relevant professionals, as well as amateur sports. “It meets the needs of the public. It connects Canadians, and it’s best of class.” This NHL season, Hockey Night in Canada ratings do not appear to be fluctuating based on whether the Jets are playing, Chris Ball, a CBC spokesman, said in an email. “The nights the Jets were broadcast on HNIC are on par with the season to date average overall for HNIC,” he wrote, noting that average audiences on those nights register about 2.1 million viewers. Levy said an early season ratings boost for Jets games probably arose from the excitement of an NHL team returning to the city after more than 15 years since the previous Jets franchise moved to Phoenix. He said this could appeal to advertisers looking to latch onto a dedicated audience. “There’s been enough noise surrounding the franchise’s return to Winnipeg earlier this year that it certainly wouldn’t surprise me if there was a number of advertisers waiting around to kick the tires,” he said. “The real question,” he said, “is whether this will sustain over the next number of years.” Bell declined to comment for this story. nkyonka@thewirereport.ca

Broadcast profits from Winnipeg Jets games still a question, analysts say

Broadcast | December 2, 2011

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