Competition Bureau statement regarding NHL/Rogers broadcasting rights agreement
OTTAWA, October 28, 2015 — This statement summarizes the approach taken by the Competition Bureau (Bureau) in its review of the National Hockey League’s (NHL) Canadian broadcast and multimedia rights agreement with Rogers Communications Inc. (Rogers).
In the course of its review, the Bureau consulted with a broad range of market participants, including advertisers, television service providers and distributors. The Bureau also analyzed a substantial volume of documentary and quantitative evidence from the NHL, Rogers and other sources.
On November 26, 2013, Rogers and the NHL jointly announced they had reached a 12‑year agreement (Agreement) for $5.2 billion that gives Rogers exclusive rights to all national NHL games, including the Stanley Cup Playoffs, on all platforms. This partnership between the NHL and Rogers took effect with the 2014‑15 hockey season and will run through the 2025‑26 season.
In relation to this Agreement, the Canadian Broadcasting Corporation (CBC) was contracted to continue to broadcast Hockey Night in Canada for at least four seasons, but with Rogers producing and retaining the revenue of those broadcasts. All of the French‑language national rights were subsequently contracted to TVA by Rogers.
This Agreement is the largest media rights deal in NHL history. Given the duration, significance and exclusive nature of this deal, as well as the fact that Rogers is a vertically‑integrated company with sizeable programming and distribution operations, the Bureau carefully considered its potential impact on competition.
Rogers’ acquisition of NHL rights coincides with the evolution of the broadcasting landscape as viewers move away from the traditional “linear” model of watching television, towards increasingly watching content where and how it most suits them via various new emerging service options, such as web streaming. In respect to television advertising, the preference of consumers to watch sporting events on a live, as opposed to a recorded, basis and the general popularity of sports to attract audiences has enhanced the value of those rights for broadcasters. The role of sports rights in this evolution is not unique to Canada or to the NHL. The Bureau has observed that similar trends are developing in other countries and in other sports where broadcasters and rights holders are entering into increasingly long term, high‑value arrangements.
The focus of the Bureau’s review in this matter was on determining whether, as a result of the Agreement, Rogers is in a position of enhanced market power with respect to sports programming that would result in a substantial lessening or prevention of competition in one or more relevant markets. In particular, in assessing the competitive effects of the Agreement, the Bureau considered whether Rogers’ long‑term exclusive control of the national NHL rights would likely:
- Give Rogers the ability to profitably increase the wholesale prices that cable companies and other distributors pay for the Sportsnet channels above competitive levels (or otherwise restrict non‑price dimensions of competition);
- Allow Rogers to profitably raise rates for advertising during NHL games above competitive levels; or
- Put Rogers in a position to exclude broadcast competitors by foreclosing access to “must have” content.
Wholesale prices for Sportsnet
Prior to the Agreement, the national NHL rights were split between Bell with its TSN service and CBC, with Rogers and Bell each holding the regional rights to various Canadian teams. Given that the Agreement consolidated the national NHL rights with Rogers, the Bureau assessed the likely impact this would have on the bargaining dynamic between television distributors and Rogers.
Our review found that while television distributors view Rogers’ Sportsnet as a “must have” channel demanded by their subscribers, this was the case both prior to and following the Agreement. Likewise, television distributors continued to view Bell’s TSN as a “must have” channel.
Furthermore, in the absence of a negotiated agreement between Rogers and television distributors for carriage of the Sportsnet channels and the fees paid by their subscribers, the Canadian Radio‑television and Telecommunications Commission’s dispute resolution processes, including a final‑offer arbitration mechanism, can be engaged to reach a resolution. In the course of this review, the Bureau found evidence indicating that these processes can be an effective mechanism to remedy disputes concerning carriage fees for NHL content.
Advertising rates for NHL games
The Bureau also assessed whether the consolidation of the national NHL rights with Rogers would allow for advertising rates during NHL games to be increased above competitive levels. Our review indicates that post‑Agreement, advertisers do not feel captive to Rogers because, while space during NHL games is valuable, there are alternative ways to reach the “hockey audience” through other programming.
The evidence collected indicates that the price for advertising, including during NHL games, is largely determined by the demographic being targeted and the viewership. Advertisers report having negotiating power and indicate that given the alternatives available, they will only pay higher rates if their ads are seen by more viewers. In other words, the rates that advertisers are prepared to pay are a function of ratings, not what the broadcaster paid for the broadcast rights. While the Bureau is aware of suggestions at the beginning of the hockey season that advertising rates for NHL games would increase as a result of the Agreement, advertisers report either being successful in negotiating acceptable rates with Rogers or being able to seek out alternative and equally effective ways to allocate their advertising budgets.
Effect on competitors
The evidence obtained does not substantiate a theory that national NHL hockey rights are “must have” in order to compete in the sports programming space. The Bureau took note that Rogers was able to enter and develop Sportsnet into a significant specialty sports channel prior to having any national NHL rights. Similarly, the Bureau’s review indicates that TSN is an effective competitor in this space.
The information obtained in this matter does not indicate that the acquisition of NHL broadcast rights by Rogers has at this time substantially lessened or prevented competition in any relevant market in Canada. The Commissioner’s enforcement decisions are based on the available evidence. Should new and compelling evidence come to light of harm in the Canadian marketplace arising from this or other sports rights arrangements, the Bureau will not hesitate to take appropriate action.
The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.
This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.
However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.
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