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SBJ/August 22 - 28, 2005/Media
NHL rights put OLN in big leagues
Published August 22, 2005
Comcast officials are downplaying the idea that Outdoor Life Network will compete directly with ESPN now that it has the NHL under contract, but all signs point to OLN transforming itself into a broadly positioned sports network that also will go after the NFL and possibly Major League Baseball.
New deal will give OLN rights to broadcast all playoff games not carried by NBC.
There’s also a penalty clause if OLN does not make a sizable jump in its distribution, currently in 64 million out of 90 million U.S. cable homes.
Comcast Corp. chief operating officer Steve Burke said he thinks adding the NHL will have a major impact on distribution within just the next few months.
“We happen to have a lot of deals that are up at the end of the year,” Burke said. “There’s no question we believe we’re going to be expanding the number of homes we’re going to be in, and there’s no question that when you add something like the NHL, you expect the licensing fees are going to go up.”
Asked if he believes OLN can equal ratings that ESPN and ESPN2 posted for hockey, NHL Commissioner Gary Bettman said: “Ultimately, yes. Not necessarily this year because we don’t have a schedule that was matched for what we were attempting to do, but I believe our ratings will be stronger over time.”
OLN President Gavin Harvey predicted OLN’s hockey ratings eventually will be “comparable” to ESPN’s, a 0.47 during the last NHL season.
Inside the NHL-OLN deal
|58 to 78 regular-season games per year on OLN; all playoff games not on NBC will be shown on OLN, using spillover channels when necessary.|
|A three-year deal, with a Comcast option for three additional years.|
|Either party can end the deal after two years.|
|Rights fees are $65 million, $70 million and $72.5 million, respectively, over the first three years.|
|Comcast guarantees $20 million worth of promotion per year.|
|All OLN games are exclusive to the network.|
|The Monday night OLN game will be the only NHL game of the night.|
|Two games per night will be streamed on Comcast broadband.|
|Comcast will have non-exclusive NHL VOD highlight rights and will carry the league-owned NHL Network on its cable systems.|
|Comcast regional sports networks will air NHL games from other cities, with permission of the club and its rights holder.|
|Comcast will pay the NHL $15 million if OLN lands an additional major sports property or if it fails to meet distribution targets.|
OLN will show NHL games mostly on Monday and Tuesday nights, as well as every playoff game not aired on NBC. Spillover channels will be used when multiple playoff games are played at the same time.
In the second year of the deal, OLN will have a fully exclusive night on Mondays, with no other NHL games played other than one on OLN at 7 p.m. ET. It also will have games on Tuesdays and sometimes doubleheaders.
All of the OLN games, up to 78 during the regular season, will be exclusive to the network and not blacked out in the local markets. That’s nearly twice the 40 exclusive games that ESPN2 would have had if ESPN had exercised an option to continue its NHL contract. In the last NHL season, ESPN had only 20 exclusive games.
The greater number of exclusives take a chunk out of what regional sports networks can televise on a leaguewide basis, and the local rights fees that clubs can generate. The limit on how many games can be taken from any individual club increases only from six to eight, and no club can lose eight in two successive years, but more clubs will see the maximum number of games taken because of the larger overall number in the package.
The league and OLN both have options to pull out after the second year, and OLN has the option to extend for another three years once the first three are completed.
Other elements include Comcast launching the NHL Network, which has been on Canadian television for the last three years, on its cable systems, primarily through its optional sports tiers. Comcast’s regional sports networks also can pick up NHL games from other regionals, with the participating clubs and rights holders’ permission. Comcast will produce NHL video-on-demand products and can show up to two games per night via its broadband Internet platform.
The Professional Bull Riders saw its ratings tumble, but OLN offered additional telecasts.
OLN does not plan on changing its name to reflect the new programming mix, said Harvey, the network president. He described the NHL acquisition as just another example of adding more high-profile programming, following deals to bring “Survivor” reruns and the America’s Cup to the network.
But there is widespread belief in the sports television industry that the NHL deal marks a first step toward OLN becoming a broad sports network and a serious competitor for all major sports rights.
The network already has bid on the NFL Thursday-Saturday package and is considered the favorite to get those rights, according to multiple industry insiders. An MLB package is also up for grabs.
The ESPN business model is difficult to compete with. The network commands an industry-high licensing fee of about $3 per month per subscriber and generates major profits from “SportsCenter,” a show that is difficult to replicate. (Fox Sports Net learned that the hard way with its failed “National Sports Report.”)
The current sports rights fee market is largely structured around ESPN’s economics, so competing with the network on any level will be an expensive proposition.
ESPN President George Bodenheimer said ESPN won’t change its rights acquisition strategy just to keep OLN out.
“Certainly OLN is making moves to build their sports portfolio, and that certainly does make them a competitor,” he said. “I relish that, and our people will thrive on competition with them. It’s going to make us better. Game on.”