Will its popularity save the bundle or will its rising costs help kill it? An exclusive Cartt.ca investigation into how the sports fan supports the whole system.
IT’S RATHER UNLIKELY the typical member of Leafs Nation has any idea that his devotion to the blue-and-white leads to the making of the likes of Bomb Girls, Murdoch Mysteries, Orphan Black, Rookie Blue, Destinées, Heartland, Toute la verité and dozens of other Canadian TV series.
However, the money which that fellow and all sports fans (true blue, bandwagoners or casual viewers) pay for the likes of TSN, Sportsnet, their offshoots and other smaller sports TV channels directly funds our system of dramatic TV production in Canada. As most in the industry are well aware, 5% of the video revenues from cable, satellite and telco TV providers (the carriers) are diverted to the creation of Canadian content, paying for the work of writers, directors, actors, carpenters, and the whole host of people who do TV in Canada for Canadians.
While it’s equally likely that foodies, gardeners, country music fans, black and white movie aficionados and those who love the antics of a certain duck call making family have no idea they, too, pay for the making of Canadian television they may never see or hear about, it is sports TV viewing, more specifically the live games that demand to be viewed rightnow, that is thought to buttress our entire system.
“Broadcasters are paying a lot for sports,” Bell Media president Kevin Crull told us in a recent interview. “I think live sports is some of the very best television there is, and not just from the standpoint of it being PVR proof… Is it going to save the bundle and the ecosystem, or is it going to ruin it? I’m not sure that there’s a black and white to that.
“Sports and television are so inseparable. The emotional reaction that you get whenever you are watching a great sporting event, when you’re riveted to a great game, when you are connecting with the intricacies of a sport that you love, and television does that better than any other medium,” he added.
Crull – and others – maintain sports television is a pretty good deal for viewers when you do the math – which we will give much greater space to later in this investigative series.
"Is it going to save the bundle and the ecosystem, or is it going to ruin it? I’m not sure that there’s a black and white to that." – Kevin Crull
However, as we can see from the most recent example, last week’s $5.2 billion Rogers-NHL rights deal announcement, billions upon billions of dollars are being bet on the sports fan’s desire to see his or her favourite teams or sports live, on TV, at an ever-increasing cost. As the thinking goes, as long as nearly all of that viewing requires a TV subscription of some sort, usually bundled with a roster of other channels, the system will remain strong.
Consumers, though, have demanded for years to know why they must purchase large groups of channels altogether, rather than just the ones they want. Of late, spoiled by years of exposure to the infinite choice that is the Internet, those consumer demands that they be able to purchase TV channels in an a-la-carte, or pick-and-pay system have grown so loud it’s now seen as a political opportunity by our federal government to exploit. Choice and cost are issues #1 and 1a in the CRTC’s just-launched TV Policy Review.
The demand for more choice in the past were largely muted because TV, delivered by cable, was relatively cheap and analog technology made a-la-carte impracticable. You’d pay $30-$40 a month or so for a pretty decent number of TV channels and call it easy and affordable – and it made great economic sense for the industry, too as cable subscribers basically shared each other’s content costs. Even now, the average TV bill for Canadians is in the $52/month range, according to the CRTC’s 2013 Communications Monitoring Report.
Part of the trouble now though is that consumers are also paying for wireless and Internet too (and data charges on top of that) so adding the phone, wireless, broadband and TV bills mean the average Canadian is paying about $185/month for their entertainment and communications services, often all to one company.
Consumers are seeing this – as well as regular rate increases – and naturally want to cut back and one of the easiest ways for them to see doing that is to trim the number of TV channels they pay for because they can get a lot of the content they love (except for live sports) free, or nearly free, on the Internet with their broadband connections.
While this is happening, those aforementioned sports rights fees are causing the rates sports TV specialties charge carriers to rise dramatically – by factors of two or three times over the next few years. Consumers see the rights fees stories and know it will inevitably have an impact on their bills – and that will further increase the pressure on broadcasters and distributors to offer more a-la-carte options.
Then, though, if the increasing costs of sports causes Canadians to cut back their video costs as they seek cheaper alternatives online, the funding structure for Canadian drama will come under growing pressure.
With so much riding on sports – and the willingness of consumers to pay for it – the real changes will happen when some of the huge, wealthy Silicon Valley players like Google, Apple, Yahoo and Netflix make a move. Our sources tell us those companies are definitely in talks with leagues to acquire rights to live stream games everywhere – and the hot rumour this past summer was that Google wants the NFL Sunday Ticket package, taking it away from satellite TV subscription service DirecTV. (As an aside, if the NHL in Canada is worth $5.2 billion to Rogers Communications, what sort of increase will the NFL be looking for from the Sunday Ticket rights, which it sold for $4 billion in 2009?)
So, as Canadians feel cost pressures and seek to enjoy more content more cheaply online – and as web-video-only players pull people out of the traditional system and onto new platforms – where no revenues are diverted – or allowed to be diverted to Cancon production – can the Canadian TV system sustain itself?
Is the sports fan that strong?
(Editor’s Note: As with any media business, ours is changing, too. In the past, a series like this would have meant that by the time the full investigative package “hits the shelves” as it were, our interviews were completed and our energies concentrated elsewhere.
No more.
This series is meant to be a living thing and online publishing means we can take new stories in new directions we hadn’t yet thought of. So, while we have done over 20 interviews and compiled research into sports television and its overall impact on the system which will be revealed in the coming days and weeks, we welcome anyone who would like to add their two cents – either in the comments section below, in e-mails to us, or if you think we missed an angle, perhaps you’d like to be interviewed, too. We hope you find this series interesting and useful.)
