Industry reacts to Rogers, Bell sports partnership
Canada’s professional sports landscape has undergone a seismic shift with a massive “made-in-Canada” deal that gives Rogers Communications and Bell Canada Enterprises a majority stake in one of the country’s iconic sports franchises.
The Ontario Teachers’ Pension Plan (OTPP) announced Friday that it is selling its 79.5% stake in Maple Leaf Sports & Entertainment (MLSE) – owner of the Toronto Maple Leafs, Toronto Raptors, Major League Soccer’s Toronto FC and the American Hockey League’s Toronto Marlies, as well as the Air Canada Centre, two specialty sports channels (Leafs TV and NBA TV Canada) and the Maple Leaf Square condominium development – for a rumoured $1.32 billion.
The deal came just weeks after OTPP said it was no longer looking to sell MLSE, which it acquired 17 years ago for $180 million.
Rogers (which also owns Marketing magazine) and Bell each acquire a 37.5% interest in MLSE as part of the deal, while Larry Tanenbaum’s firm, Kilmer Sports Inc., increases its ownership stake in MLSE to 25% from 20.5%. Tanenbaum will remain as chairman of MLSE.
The deal is expected to close in mid-2012, pending regulatory and league approvals.
The deal once again brings together two bitter foes that are fighting numerous content battles as they attempt to position themselves as leaders in areas like sports, news and prime-time television and feed multiple delivery platforms like smartphones, tablets and computers.
Bruce Neve, CEO of Starcom MediaVest Group Canada, says it will be interesting “to see how they structure this to allow them to collaborate on this side, while still cutting each other’s throats on the media sales front.”
“A voracious need for content certainly makes strange bedfellows,” said Bob Stellick, president of Toronto-based Stellick Marketing Communications and a former director of business operations for the Toronto Maple Leafs in the 1980s and ‘90s.
According to Stellick, OTPP chose to unload MLSE because it regarded the entity as a mature cash cow that was no longer a growth company. “You need a media company to really see more runway there, but no one company could afford it,” he said.
While he believes Rogers and Bell may have slightly overpaid for the MLSE assets, Stellick said it’s easy for the companies to justify the deal since the Leafs alone are a “cash cow” that will continue to produce revenue indefinitely.
The question, he said, is which company gets to make management changes when the Raptors or Leafs get off to a lousy start. “Rogers can’t put [Rogers Media] president Keith Pelley in there to run the show because there’s no way BCE would allow it,” he said.
“The wedding day is bringing the Hatfields and the McCoys together. Their guns and knives are away, but it will be interesting to see how it all flushes out, particularly if things don’t go as they want,” said Stellick.
Speaking with Marketing on Friday, Pelley said the deal gives his company access to “world-class premium content.” Live sports, he said, is “critical” in a media environment in which people are consuming content over multiple platforms.
“[The deal] makes us that much stronger, with prolific content – 162 Blue Jays games, the Ottawa Senators, the Leafs and the Raptors,” said Pelley. “It’s a very comfortable position that we’re in. It positions us to continue with our aspirations of becoming Canada’s number one sports media brand.”
As the media and marketing industry reacted to the announcement, few seemed surprised that such large rivals had come together.
“It’s not an unlikely pairing when you really think about it,” said Anne Myers, president of MediaVest Canada. “They are the only Canadian companies that have deep enough pockets, and it supports each of their content and distribution strategies. They partnered successfully for the Vancouver Olympics… which must have told them that they could do it again.”
Fred Forster, president and CEO of PHD Canada, said sports is a strong media play in a content-hungry marketplace.
“There’s so much content there, no one entity can use it all,” Forster said. “So the fact that they’re co-owners of [MLSE] makes a lot of sense. The content is so appealing to companies like Rogers and Bell based on where the world is heading in terms of mobile devices and the need for fresh content on a regular basis. Sports provides that.”
Brian Cooper, president and CEO of S&E Sponsorship Group, which specializes in sports marketing sponsorships, joked that the seemingly friendly collaboration was an “only in Canada” situation. “When was the last time you saw Coke and Pepsi do something like this?”
Cooper sees both companies benefiting equally from the deal, but agreed that it’s now a race to see who can market the MLSE properties best. Both have sports media brands–Bell owns TSN and Rogers has Sportsnet. Cooper said TSN “has a national footprint, greater equity in the marketplace and more subscribers,” but Rogers has stronger radio and print platforms.
“It’s too early to tell who can do it better,” said Cooper.
While acknowledging that it’s still early days for determining how Rogers will integrate all of the MLSE assets into its existing portfolio, Pelley said that the company’s integration of the Toronto Blue Jays across all of its media assets will provide a template for how Rogers plans to integrate the MLSE assets.
Bell didn’t respond to interview requests, but said in a release that the deal “accelerates” its strategy to deliver premium content across all screens and strengthens its all-sports networks TSN and RDS, and new services like Bell Mobile TV.
“The Bell team looks forward to bringing the Leafs, the Raptors, the Marlies and Toronto FC to fans in new and innovative ways,” said president and CEO George Cope in a release.
