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The NHL takes a better cable gamble

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#1 Rock


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Posted 23 August 2005 - 06:17 AM

Aug. 23, 2005. 01:00 AM

The NHL takes a better cable gamble
OLN to make NHL marquee property


In 1988, in the midst of the Edmonton Oilers' glory years, the NHL faced a vexing choice between money and exposure. That summer, the league's U.S. cable TV contract was up for renewal. The league's incumbent broadcaster, ESPN, wanted hockey back, but a brash upstart called SportsChannel America, was willing to pay a then-record $51 million (all figures U.S.) over three years to acquire the hockey rights.

SportsChannel's offer proved too good to pass up for former NHL commissioner John Ziegler and the NHL severed ties to ESPN, which was available in 46 million U.S. households, in favour of SportsChannel and its 5 million homes.

For SportsChannel, the deal was a disaster. While the cable channel three years later was available in 20 million homes, the broadcaster lost as much as $10 million on the agreement, and soon faded into obscurity.

More than a decade later, Ziegler's successor, Gary Bettman, has made a similar gamble with its TV rights. This one stands a far better chance of paying dividends. Instead of negotiating a new cut-rate contract with ESPN, the juggernaut that's now available in most of the 90 million U.S. homes that have cable TV, the NHL began a search to find a new broadcast partner on the heels of its new collective labour agreement.

The league wound up signing a contract for as many as three years with the Outdoor Life Network that could be worth at least $207.5 million. OLN, which also shows America's Cup sailing and the Tour de France, agreed to pay $65 million for rights this season, and $70 million in 2006-07. The cable broadcaster has a $72.5 million option for 2007-08 season and has also pledged to pay the NHL $15 million more if it signs a similar deal to pick up rights to another major sports property like baseball or football.

"This deal gives OLN credibility it can use to go after (baseball commissioner) Bud Selig and (NFL commissioner) Paul Tagliabue for games," said Jay Rosenstein, a former executive with CBS Sports. "I don't know if I'd call the deal a home run, but it's a solid double up the alley," he said.

For the NHL, the deal is a windfall on several fronts. Not only does the league stand to make more money from its new U.S. cable TV contract
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