10/09/2012 12:35 EDT | Updated 12/09/2012 05:12 EST

How the NHL Lockout Could Devastate the CBC


The CBC is hooked on hockey and the NHL lockout could be just a bitter foretaste of the future for the national public broadcaster. Friends' calculates that the CBC will suffer a devastating financial loss of as much as $200 million annually if it loses the rights to Hockey Night in Canada in 2014 when its agreement with the NHL expires.

According to Friends' analysis, Hockey Night in Canada:

  • Delivers more than 50 per cent of the ad revenue earned by CBC's English TV Network. And because hockey sales are linked to sales elsewhere on the schedule, hockey drives additional ad revenue (as much as $10 million) earned by local stations.
  • Punches well above its weight, occupying 10 per cent of the schedule but delivering 30 per cent of the entire audience watching CBC English TV. Losing hockey would wipe out one third of CBC's audience.
  • Earns a profit for the CBC, albeit a much smaller one in recent years because of a 50 per cent increase in fees the CBC agreed to pay the NHL when it last negotiated a rights deal in 2007.
  • Clears $15 million for the CBC after expenses of approximately $115 million.

Even if the CBC were to avoid the high cost to buy, market and produce hockey it would still face the expense of replacing the 400 hours hockey occupies on its schedule and this is the issue that would play havoc with CBC's finances. Friends' analysis estimates this would cost approximately $500,000 per hour for a total cost of $200 million and would earn the CBC substantially less ad revenue.

All told, the loss of hockey would be much worse than the most recent round of cuts announced in the federal budget last March. It would amount to a game changer for our national public broadcaster.

The CBC is facing deep-pocketed competitors for its hockey rights, thirsty for hockey. Bell and Rogers both own speciality channels dedicated to sports. Together, they control Maple Leafs Sports and Entertainment, the parent company of the Toronto Maple Leafs, and Bell has a recent history of beating the CBC for other broadcasting rights for major sports events such as the Grey Cup and the Brier Curling Championship, and until recently, the Olympic games.

If the CBC were to lose hockey, it would need to replace it with a similar quantity of the very best, most attractive -- and expensive ­Canadian shows. Any other replacement strategy designed to minimize costs, such as American movies or repeats of Canadian shows, would prevent the CBC from meeting its Canadian content requirements and lower its audience share.

We have filed this analysis with the CRTC which on November 19 will begin the first review of the CBC's broadcast licences since 1999. Friends is urging the CRTC to require CBC to explain how it would deliver the Canadian content, regional shows and distinctive programs that the Broadcasting Act requires in the event of the losing the HNIC rights.

Friends is not proposing that CBC television drop hockey, but our national public broadcaster must prepare for this scenario, which could open new and exciting possibilities to operate more like a public broadcaster in sharp distinction from its private sector competitors -- just as its radio services have done for many decades.

FRIENDS of Canadian Broadcasting is an independent watchdog for Canadian programming and is not affiliated with any broadcaster or political party.