TORONTO – Hockey is so crucial to television revenue streams that Canada’s largest media companies are battling publicly over access to camera angles during games.
The fight revolves around an online feature that Rogers Communications offers customers called GamePlus, which enables users to watch and replay game footage from multiple angles, including a camera mounted on a referee’s helmet. BCE Inc., known as Bell, was first to complain to regulators that its subscribers should have access to those same online options.
It’s not just camera angles that are at stake. In question is whether Rogers’ deal – for $5.2 billion Canadian, or $4.6 billion U.S. – to distribute National Hockey League games in Canada will pay off, as well as what regulators deem to be TV content in the Internet age. The 12-year hockey contract, signed last year, was a bet that Rogers could win new subscribers by offering video on tablets and smartphones. While companies are required to provide universal access to content produced for TV, the same rules don’t currently apply to Internet-only media.
“I think the Bells and the Teluses will win,” said Dvai Ghose, an analyst with Canaccord Genuity Group. “Obviously, that leads to the question, which is: Why did Rogers spend $5.2 billion on the NHL rights, and can they monetize them effectively?”
Rogers CEO Guy Laurence called Bell a “crybaby” with a “puerile attitude” during his company’s third-quarter earnings call, saying his rival was trying to stifle innovation. Telus Corp. and Eastlink, the brand name of Bragg Communications, have since joined BCE’s complaint.
The complaints are forcing the Canadian Radio Telecommunications Commission to decide whether Rogers will be allowed to offer some access to hockey exclusively. GameCentre, the streaming service that GamePlus is part of, costs $199 for a season pass. Rogers customers get free access, including the unique camera angles, until the end of December.
Users streamed 1.9 million minutes of hockey through Rogers’ Internet and mobile services Oct. 8, the NHL’s opening night, the company said in a statement. At one point, there were more fans watching on mobile in Toronto than in the entire United States, Rogers said. More than 700,000 Canadians are registered to play hockey, compared with 500,000 in the United States, a nation with about nine times the population, according to the countries’ hockey associations. Online streaming is becoming increasingly important for media companies. Rogers has lost cable customers for five consecutive quarters as users ditch traditional TV subscriptions for Internet-delivered services. Products like GameCentre Live are part of Laurence’s strategy to retain high-value customers with free or exclusive offerings, he said during the Oct. 23 conference call.
Rogers, based in Toronto, has lagged behind Bell and Telus in adding new wireless subscribers. Revenue at the company’s media unit, which includes subscriptions to the hockey app, was unchanged last quarter at $440 million. Rogers’ total revenue for the third quarter was $3.25 billion.
Rogers’ shares have fallen by 6.5 percent this year. BCE’s have gained 15 percent, and Telus’ have risen by 16 percent.
When Rogers announced its arrangement with the NHL a year ago, it trumpeted the deal as the first time the NHL was granting all Canadian rights to a single broadcaster. Now, an adverse ruling from the regulator may call into question whether the contract to broadcast Canada’s favorite sport is as valuable as originally thought.
The CRTC’s rules say features developed exclusively for Internet customers don’t have to be shared. Bell and Telus argued in submissions to the regulator that the unique camera angles are derived from TV content and therefore shouldn’t be treated as Internet-only. “Canadians should be able to access the content they want from the provider of their choice, and not be forced to pay for multiple wireless or Internet services,” Telus spokesman Shawn Hall said in an email.
Rogers says it designed the app specifically to comply with the regulations.
“If this isn’t Internet content, what is?” said Ken Engelhart, Rogers’s head of regulatory affairs. “We’re pretty confident that what we’ve done here does comply with the CRTC rules.”
Rogers also said it isn’t concerned about recouping its investment in the NHL.
“We fully expect that revenues generated by advertising, sponsorships and subscriptions to our SportsNet properties will more than offset the costs over the duration of the contract,” Rogers spokeswoman Patricia Trott said in an email.