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Mon, 02 Dec 2013 20:15:00 GMT | By Deirdre McMurdy, MSN Money

The NHL content ownership faceoff

Rogers has gained a strategic edge over Bell Canada — at least for now.


Deirdre McMurdy

Canada is a nation notoriously fragmented by distinct regional economies and agendas, held together by ceaseless — and often grudging — negotiation, consultation and compromise.

If there is one thing that binds the country together, however, it is hockey. Generations of Canadians share a passion for what we like to characterize as “our game.” Over 2.3 million Canadians watched the opening game of the season in October. And newcomers to this country are often among its most ardent fans, even embracing the tradition through broadcasts in Mandarin and Punjabi.

That’s one of the reasons why there was such an uproar when Rogers Communications spent $5.2 billion to score the exclusive rights to broadcast National Hockey League games on all platforms and in all languages for the next 12 years.

In hockey, as in other sports, familiarity is a huge part of the equation. Fans become attached — for better or worse — to the cast of characters who play, manage, coach, call and comment on the game. And disrupting that dynamic usually causes quite a stir.

But while the hockey crowd chewed over the consequences of what it would all mean to their rituals, the significance of Rogers’ coup was rocking a parallel universe: in the corporate scrimmage for content, Bell Canada had just been driven into the boards.

In the aggressive competition for market share, it’s hard to overstate the strategic value of content like the NHL broadcasts.

At a recent telecom conference in Ottawa, Bell Media president Kevin Crull was the luncheon speaker. Bu while the assembled crowd dutifully chewed through a meal of wilted salad and convention-centre chicken, it was clear there was something else on the menu. At least for Bell Media.

Crull began his remarks by providing a detailed analysis of how important — and how expensive — content is for cable and wireless service providers. He then explained that because costs are rising, because hits have to pay for misses, and because of Canadian content requirements, it is most cost-effective for customers to subscribe to a package of different channels and content.

The decision to deliver this message on the front porch of the federal government was no coincidence. In the most recent Speech from the Throne, the Conservative government specifically committed to making broadcasters like Bell, Rogers and Shaw “unbundle” the channels they offer, optimizing consumers’ choice of content.

Content has become such a hot commodity because whichever service provider controls the best and most of it has a big competitive edge when it comes to selling on mobile devices. And as the traditional cable market matures, mobile content offers the best — and most lucrative — prospects for growth.

The singular drive to control content, after all, was behind Bell’s controversial $3.4 billion purchase of Astral Media earlier this year, a deal that gave Bell control over almost 36 per cent of the English television market and 23 per cent of the French language market.

That’s not to say there aren’t consequences on the cable television front. Rogers now has control of the NHL Centre Ice package, and diehard fans who want access to that may well have to switch from Bell to Rogers.

Although there’s been considerable chirping about the deal since its announcement, it shouldn’t have come as a total surprise. Keith Pelley, the executive in charge of Rogers’ media division has a long history in sports broadcasting at CTV and TSN. At CTV he oversaw Olympic Games coverage and previously was an executive in the Toronto Argonaut football organization.

Furthermore, Rogers has reinforced its sports platform in recent years The company has been aggressively building its Sportsnet brand with a massive publicity push, a new magazine, an expanded digital presence, the acquisition of competitor theScore and an investment, in partnership with BCE Inc., in Maple Leaf Sports and Entertainment.

Because the deal came together relatively quickly, there remain a number of unanswered questions about who will be impacted in what way.

But one thing is certainly clear: the transfer of hockey broadcast rights is — literally — a game changer.

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