The sports world is sometimes viewed as a universe (or toybox) of its own, but the implications it can have on the rest of a media outlet’s operations are substantial. A case in point comes from Canada this week, with the Canadian Broadcasting Corporation announcing it plans to cut 657 jobs over the next two years and citing the loss of advertising revenue from Hockey Night In Canada (under the new deal signed last November, some hockey games will still be shown on the CBC, but Rogers will control the editorial product and reap the ad revenue) as a major factor in that. The CBC’s far from alone there, though, as sports broadcasts (and NFL broadcasts in particular) have played major roles in the success or failure of American networks. What’s particularly remarkable and distinct about the CBC announcement is that it includes that the company doesn’t plan to bid for any further professional sports rights in the near future.
At first glance, that might appear silly. If sports revenues are such a big part of the CBC’s bottom line, why would the corporation elect to take its ball and go home? The current state of the Canadian media landscape makes this move more logical, though. There are two massive private sports conglomerates (Bell/TSN and Rogers/Sportsnet) out there, and they both have plenty of channels (TSN has TSN and TSN2, plus a few regional feeds, while Rogers has four main regional Sportsnet channels plus Sportsnet One, Sportsnet 360, Sportsnet World and further sport-specific regional feeds) that need quality programming. That means that just about every professional sports contract becomes a bidding war, and league rights are currently selling for much more than what the broadcasters are likely currently expecting to recoup from them. For example, TSN signed a massive new deal with the CFL last year, while Rogers signed the gargantuan NHL deal mentioned above. The numbers in both don’t necessarily represent what the networks can recoup on that product at the moment; they’re more of an indication of the competitive landscape, and a bet that sports programming will only continue to rise in value relative to other television given its DVR-proof status.
It’s difficult for the CBC to compete for top-tier sports under that paradigm, though, as the corporation’s largely publicly funded and needs to show fiscal responsibility on a short-term basis. (Also, unlike cable channels TSN and Sportsnet, it doesn’t receive a per-subscriber fee.) The public funding component of the CBC budget has taken a substantial hit recently ($115 million across three years in the 2012 budget), and the $130 million in cuts announced this week was to balance the budget. That’s why CBC president Hubert Lacroix announced Wednesday that there would be a substantial change in the network’s sports strategy going forward:
Lacroix said CBC could no longer compete against private broadcasters that have speciality sports channels and multiple media platforms. The result will mean “substantially reducing” the size of the sports department and covering fewer sporting events, including amateur sports. And the CBC will only consider broadcasting events that allow the network to break even, he said.
But the CBC will still compete for sporting events of national significance, like the Olympics.
On some levels, it makes sense for the CBC to get out of the professional sports business. As mentioned above, the corporation doesn’t have the resources to really compete with Rogers and Bell, and its requirements for yearly balanced budgets means it can’t bet on increasing values of sports broadcasts in the same way the private companies can. Moreover, the CBC doesn’t have as much overlap between sports and the rest of its content. TSN and Sportsnet can both show footage from their own events and promote upcoming games on their networks in their daily highlights shows and talk shows, but the vast majority of CBC content doesn’t have anything to do with sports. This has come up in deal negotiations like the CFL contract, and it’s yet another point in the private broadcasters’ favour. If a league has to choose between an all-sports network that will heavily promote its games and show its highlights or a news-and-entertainment network that will occasionally mention them, the all-sports option is quite attractive, and that’s even before you consider that the private broadcaster is probably offering more money.
It’s going to be interesting to see how this plays out over the long run, though. Will the value of professional sports broadcasting contracts in Canada decrease with only two players involved? Will the CBC be a bigger competitor for Olympic contracts with that being their primary focus now, and will they have enough sports content in between Games to attract and retain capable and talented sports staffers? Is this move going to help the CBC’s bottom line, or will the network deteriorate even further without professional sports events bringing in viewers and revenue? It’s a unique situation, and one that should be watched closely in the upcoming months.