Monday, September 12, 2005

NHL Radio Deal

Today it was announced that the NHL signed a national (in both USA and Canada) radio deal. TSN's story is here. They signed a ten year $100 million deal that begins in 2007 with XM Satellite Radio. This will be broadcast in Canada with Canadian Satellite Radio (which is XM's Canadian partner). This will be the only national radio broadcast for the NHL (I assume teams will still be allowed local deals - although the article does not address this point. This brings up one question. The NHL website offers local radio broadcasts of NHL games (or at least has in the past). Will this be gone? Will these radio broadcasts only be available to satellite radio subscribers? Doesn't that make NHL hockey less accessible to fans?

NOTE: XM Satellite's deal starts this year. It becomes "exclusive" in 2007. I think it is very reasonable to mistrust exactly what the word exculsive means. It would not be suprising if this is not merely a seemless extra method for fans to hear games, but instead limits their options a bit to push them into subscribing.

Actually, Sirius will still be broadcasting games for the next two seasons. So both major US satellite radio companies will be carrying NHL games (after that, XM has the games exclusively).

Local coverage won't be affected at all. Think of the satellite radio deal as a Center Ice-type package. They're just picking up the local feeds and re-broadcasting them nationally.

There should be no change for the webcasts either.

The NHL was on satellite radio before, it was just a non-exclusive deal, so the NHL went and signed a larger deal with XM that included eight years of satellite radio exclusivity.
$100 million is a lot of money. I still do not trust the NHL. What did they promise when XM Satellite Radio becomes "exclusive"?

I think my lack of trust is well grounded given the recent past of the NHL.
The only thing the "exclusive" agreement means is that starting with the 2007-08 season, NHL games will only be on XM satellite radio (basically, not Sirius anymore) through the length of the agreement. If another satellite radio company started, they wouldn't be on that either.

$100 million for 10 years isn't that much. If you want a comparison, XM paid MLB $650 million for 11 years last October.
MLB charges to listen to their webcasts (gameday audio). I would not be at all suprised if the NHL has something similar lined up with this XM Satellite deal. Wouldn't ypu?
The satellite deal and radio webcasts are unrelated. Remember, the NHL has already been on satellite radio. This isn't a first, it's just a newer deal.

I doubt the NHL will start to charge for radio broadcasts. For one thing, baseball is a much better radio product. Second, MLB has almost double the amount of games during its regular season. Also, the NHL is looking to rebuild its relationship with fans. Starting to charge now for something that was free would be a bad move (not that the NHL doesn't make bad moves, but I don't think they're going to here). One more thing to remember is that the NHL's deal with Comcast should provide us with some video webcasts this season. I would be surprised if the NHL didn't charge for that though.
You might be right. But I still have doubts.

I think that if I was buying exclusive satellite radio rights, I wouldn't be too happy to see the NHL giving away an almost equivalent package in their webcasts. But they could offer my broadcasts on the web if they charge for it and I get some of the money.

Now my deal doesn't go exclusive until 2007, by then trying to win back fans is no longer an issue. Either the fans have been won back or they are not coming. The job now is to get every last cent out of them.
There's nothing to really doubt, it's just the terms of the deal.

XM's not really interested in webcasts and whatnot. They're not XM's broadcasts either, they're local broadcasts who will all get a chunk of money to be re-broadcast on XM. XM is interested in one thing and one thing only: market share against Sirius. They signed a deal with the NHL that becomes exclusive to hopefully attract NHL fans to purchase XM over Sirius when buying satellite radio. That's about it. It's why XM threw money at the MLB and NASCAR. It's why Sirius threw money at Howard Stern and the NFL. They're just trying to get a larger future market share against the other.
Once again, don't they get a bigger market share if their broadcasts are not given away for free on the web? It would not suprise me if part of spending $100 million for exclusive satellite radio rights includes the right to prevent something like that. It forces more people into subscribing so they can hear their broadcasts.
No, it's not their broadcasts that are being given away. It's like saying a cable company will be mad that the NHL will offer video webcasts, if it's cheaper than buying Center Ice. It's not comparable because it's a different medium.

Satellite radio, in general, is still thought of more of a car option; the web, a home option. There's no competition there, and there's no competition for quality either.

It's not that they think they're going to get people to subscribe to satellite radio to hear game broadcasts, it's that they want people who are going to subscribe to satellite radio to choose their service because they offer the NHL games. Webcasts simply don't affect their market. If the NHL starts charging for them, it's simply because they think it will bring in significant money to the league.
Let's try a hypothetical situation. Imagine that the NHL had a long standing policy of broadcasting on the web the TV feed for their games (and imagine that the technology existed that we cold easily watch it on our computer with no significant degredation from what we would se on TV).

Now imagine that some TV channel bought exclusive rights to show this on TV for significantly more money then had ever been spent on this product in the past. Don't you think they would ask that the NHL stop giving away their product for free on the net?

The NHL has a couple years to slowly transition into a pay for webcast system to comply.

Obviously, this is not a necessary conclusion for this deal. Still, I think it is a very likely one and I think that if I am correct it will in its own small way hurt the accessibility to hockey.

It already stands right now that games shown on pay per view are not available to the Center Ice package (and I think the audio webcast).
It's not likely to impact sales, so it's not likely to be a consideration.

ESPN has exclusive rights to baseball games on TV, but those games are still shown online on MLB.TV. It's a different medium, and a different set of rules.
MLB TV is not a free service. If it was free then it would be a much better analogy.

ESPN and MLB likely have something in their agreement about MLB using ESPN feeds on the net that make up (some of) the reason that it cannot be free.

It would not suprise me to see the NHL start charging for webcasts of the "exclusive" XM Satellite radio feeds - however I hope that I am wrong and you are right.
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