Why The NHL Is Suddenly Cool

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The National Hockey League is suddenly
looking like a contender.

With ratings rocketing, better viewing on HDTVs and
a power-play marketing push from national carriers NBC
and Comcast-owned Versus, the league has become a belle
at the ball for potential TV partners.

The current TV contracts for Versus and NBC, which conclude
with the end of the 2010-11 season, have put the future
ratings growth of the back-from-the-brink league up for grabs.
The proposed union of Comcast and NBC Universal, expected
by year-end, would make the networks corporate linemates of
sorts with the NHL. ESPN — which iced its U.S. rights relationship
back in 2005, following the work stoppage that claimed
the 2004-05 season — holds European and digital rights that
end with the U.S. TV deals. The sports-programming giant is
now interested in getting back on the ice stateside.

Some consider the upcoming negotiations the first of what
could become more rights face-off s between media titans.

TV POWER PLAY

“If management really intends to improve the network and
compete more aggressively on a national level, this is going
to be the first case of NBC-Versus against ESPN-ABC,” said
Lee Berke, CEO of LHB Sports, Entertainment & Media. “It
certainly will be interesting to see how they step up.”

The NHL’s overall fan interest and rights payments lag
those for pro football, basketball and baseball in the U.S.
But the sport enjoys growing appeal among tech-savvy
young adults and has stepped up its game from the perspectives
of business and buzz.

Since launching in Canada in 2001 and arriving in the
U.S. in 2007, the NHL Network has built a base of some 40
million North American homes and pulled the equivalent
of a ratings-sponsorship-fan base hat trick.

Consider:

• Corporate sponsorship is up 162% over the past three
years, with the league adding Discover as an official partner
just last week;

• The league’s two biggest stars — Sidney Crosby of the
Pittsburgh Penguins and Alex Ovechkin of the Washington
Capitals — have emerged as big draws, likened by some
to back-in-the-day National Basketball Association rivals
Earvin “Magic” Johnson and Larry Bird;

• Subscribership to the out-of-market online video package
“GameCenter Live” was up 25% through the first 24
days of the 2009-10 season;

• The league has established its Winter Classic on New
Year’s Day as a tent-pole event on NBC’s schedule.

That’s a far cry from where the league stood in the summer
of 2005. After a labor dispute iced the entire 2004-05 season,
the NHL and its players finally reached a new agreement in-
August 2005. ESPN indicated it wouldn’t pay more than $30
million in rights per season. Comcast’s Versus (formerly OLN)
promptly stepped in and inked a three-year pact worth some
$207.5 million, a modest upgrade over what ESPN had been
paying. Versus subsequently
exercised a threeyear
renewal option for
some $217 million.

NBC, which has been
ringing up modest growth
with the puck sport, tallied
the most-watched
NHL game since 1974,
when its Game 6 coverage
of the 2010 Stanley Cup Finals
averaged a 4.7 national
rating and 8.29 million
watchers. It has been operating
under a revenuesharing
arrangement.

“Things have really
changed over the past six or
seven years that there now
appears to be more interest
in national TV packages in
the U.S.,” Berke said.
Indeed, some are predicting a fee increase as high as 50% for this round, because
of interest from ESPN and Versus’ desire to maintain
NHL cable exclusivity atop its roster, which also includes
mixed martial arts, college football, Indy Car racing and
the Tour de France. The NHL has helped Versus build its
subscriber base from 60 million to 75 million homes.

Versus, through its strategy to super-serve the sports fan,
has quieted many naysayers about its ability to carry hockey,
improving its average viewership entering the current
season by 130% since it acquired the rights in 2005-06, and
lifting the NHL to a number of Nielsen heights.

Versus’ coverage of the first two rounds of the 2010 playoff
s, encompassing 54 games, averaged 775,000 viewers,
the most on cable since the 1993-94 season, the medium’s
first postseason campaign measured by Nielsen. Its presentation
of Game 3 of the Finals on June 2 drew a network
record 3.6 million viewers. All told, Versus’ average viewership
for 62 playoff games grew 10% over the 2009 postseason,
covering 59 games.

Momentum has continued this season, as the Oct. 7
opening night contest between Pittsburgh and the Philadelphia
Flyers drew 730,000 watchers, the best start for
a season on cable since 2002 and the most-watched NHL
regular-season telecast since 2004.

Th rough the week ended Oct. 31, Versus had recorded
an 18% increase in total households and a 12% increase in
viewership for its exclusive NHL telecasts, its best opening
month with the sport.

“Hockey is doing really well on Versus,” Versus president
Jamie Davis said in a recent interview. “It’s a great
property for us.”

NO LINE CHANGE SEEN

Sports-media analyst John Mansell expects both incumbents
will return. “I would be shocked if NBC isn’t paying
some kind of rights fee this time,” he said. “Versus has
been a great partner in helping the league to grow.”

Mansell said distributors would be unhappy to see Versus
lose the property, considering they’re paying the channel
some 28 cents per month in license fees. “If the sport
continues to gain, there should be an upside to subscriber
growth and viewership,” he said.

Despite Versus’ top-flight positioning, NHL owners and
the NHL Players Association have pointed to the cachet attached
with being carried on ESPN — not to mention its
availability in some 100 million homes.

Marc Ganis, president of consultancy SportsCorp., who
credits NHL commissioner Gary Bettman for the sport’s
expansion and rule changes that have made for a more
compelling product on the ice, said that in order to take the next step, it must return to ESPN and “its 24 hours a day, 365-day
promotion.”

Ganis downplayed
the notion
that the NHL would
get lost amidst myriad
other properties. “Even
ESPN needs content.”

So, what is the league’s
view? Not surprisingly, NHL
chief operating officer John Collins
wasn’t inclined to show his hand.
It had been reported that the exclusive
negotiating window for the incumbents
would take place in late fall, but sources
said the league can extend that period into
the new year.

“The sport is as good as it’s ever been,” Collins
said. “Our focus now is to make the business as great
as the game.”

Citing growth domestically and in Europe, Collins
sidestepped a query about
whether the NHL would unbundle
its digital properties
from TV rights.

He also wouldn’t address
whether the league
was looking to air more or
all games nationally in the
first two rounds of the playoffs. Th ere, regional sports
networks, in particular FSN
Pittsburgh, have thrived
with their coverage, bringing
more rights dollars into
team’s coffers.

Rather, Collins replied:
“Versus and NBC have been
terrific partners of the NHL.
They have established great
benchmarks with a series of
most-watched games.”

Collins noted that the
NHL would soon “sit down
with our current partners
and talk about how to further
grow the game. We’re
interested in hearing their
creative ideas.”

Let the puck drop soon.

NHL’S DIGITAL HAT TRICK

THE NATIONAL HOCKEY LEAGUE IS LOOKING TO TURN A DIGITAL
hat trick for its fans with an aggressive push of
live game and library content within the video-ondemand,
broadband and mobile arenas.

This season, the league has stepped up its
digital efforts to better serve its young, affluent and
tech-savvy audience base, while providing more
opportunities for casual fans to sample the league’s
content, NHL senior vice president of digital media
Perry Cooper said.

To complement its “NHL Center Ice” out-of-market
live game package on traditional digital cable
platforms, the network last week made its online
“GameCenter Live” broadband package — which, like
Center Ice, offers roughly 40 live games per week —
available for streaming on PlayStation 3 video-game
consoles, as well as through Roku Internet set-top
boxes. Major League Baseball is the only other major
team sport to make live games, highlights, game
replays and historic contests available to those
alternative Internet distribution outlets.

The league is taking its most aggressive shots in
the mobile space. Last month, it announced three
GameCenter mobile-phone and tablet apps — which
range from free options to monthly subscription
packages — that allow fans to stream live games,
view in-game highlights and access other NHL content
on smartphones or tablet computers, including the
Google Android, BlackBerry, Apple iPhone/iPod touch
and Nokia handsets, as well as the iPad tablet.

Cooper said technological advances, particularly on
the portable device/mobile phone side, are making it
easier for leagues to allow fans to enjoy their content
whenever and wherever they choose.

“Markets are being naturally open because of
extension related to technology,” he said. “As
smartphone penetration continues to push up against
the wireless universe, it will be a very potent place
for publishers like the NHL to exploit on a global
basis. We’re in the infancy of taking full advantage of
mobile and a lot of digital properties right now.”

— R. Thomas Umstead

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