When news broke Thursday night that Rogers and Bell, Canada’s two biggest telecommunications companies, were looking to jointly buy Maple Leaf Sports Entertainment - owner of the Toronto Maples Leafs NHL team and other properties - the reaction from the public via Twitter was swift and decisive: this is bad.
There were the expected barbs, about how if people think their Leafs’ tickets are expensive now, wait till the cellphone companies get ahold of them, but the issue is actually much deeper. Such a deal would exemplify everything that is wrong with the Canadian telecommunications and media industries.
As many pointed out, just how did this deal between supposed rivals happen? Did the conversation go something like this:
Rogers exec: Man, you guys sure stole a lot of our TV subscribers last quarter.
Bell exec: Yeah, well that makes up for the years you trounced us on wireless.
Rogers exec: True. Want to buy the Leafs with us?
Bell exec: Hell yeah!
Moreover, such a deal puts the spotlight on vertical integration. With the Leafs representing the most valuable sports content in the nation’s most populous province, you can’t help but wonder what the two companies - who both also own broadcast channels - are thinking. It seems obvious a joint deal is a strategic move by both that is designed to prevent either from sole ownership of the Leafs.
It also looks like an attempt to cut any potential third parties, particularly the CBC - a broadcast competitor to both companies that has historically aired Leafs games - out of the country’s most lucrative sports franchise, which brings up two further questions.
Will such an obvious deke move around rivals and potential anti-competitive collusion pass muster with regulators? And given that, doesn’t it make sense for such valuable content to be owned by a neutral third party - as it always has been - in the first place? The deal seems as competitively logical as AT&T’s attempt to buy T-Mobile in the U.S., which has been all but scuttled by authorities.
For those reasons, it would be hugely surprising if Rogers and Bell are allowed to go ahead with the purchase.
That said, why would they even want to buy the team? Leafs fans already pay more to follow their team than anyone else in the NHL, so how much room is there for the business to grow?
As expert after expert has pointed out (even going so far as to use hockey analogies), the foreign ownership restrictions on Canadian telecom companies have not only kept companies from other countries out, they’ve also made domestic firms myopically cozy within our own borders. Wouldn’t Bell and Rogers encounter better growth prospects by investing in fledgling wireless and internet operations in places such as Africa, India or South America? Why are they concentrating on buying up more-than-mature assets in Canada rather than trying to look for new growth opportunities elsewhere in the world?
It’s a clear case of those foreign ownership restrictions literally coming home to roost.
December 9, 2011 at 9:36 am
The problem has always been the teachers. It’s always been about the money. There are no other buyers willing to pay close to what they want for their shares. Reports say they want $1.5B. Getting 90% of that or close to it was always the plan. They could care less about the fan. It’s the reason why when ever the board would meet to set the following years team budget they had their budget guy ride herd over the board and veto anything that sounded like spending money on free agents. Larry never cared much about what they did as long as his return was good so he allowed them to carry on being cheapskates. More gas money for his Bentley.
Is it a bad thing to have the teachers leave? Nope. I’ve always said they were a drag on team success. Go back to buying malls!
The last thing anyone in the NHL front office wants is a public tender. Never sell shares to the public is their mantra. They have gone down that route and it wasn’t a happy experience for them in their view. A duopoly will work for them but will it work for us? Will they spend to win at the expense of your smart phone’s data plan doubling? ‘Someone’ has to pay for the bill (debt) these two firms will acquire. Which consumer will it be; the fan in the seat? The telecommunication consumer? The advertisers product prices rise for those consumers? Or all of the above?
Meanwhile the teachers with the two month vacations and half their pensions funded by the public are laughing all the way to the bank.
December 9, 2011 at 2:08 pm
CBC has hinted for years that they want to unload hockey night in Canada, this will probably speed things up as Rogers and Bell will increase the price of broadcasting rights….. Don Cherry on Sports Net?. This has also cemented the fact that the Maple Leafs will never win the Stanley Cup. But look on the bright side , I’ll be able to watch a bad product for a higher price on my tv,iPhone or iPad….. Lucky me.
December 12, 2011 at 2:05 am
On the business side there is little to complaint since it’s on the open market but what I worry is on the political side. Since the big player behind this is the teachers union they have a huge clout to push hockey to have the center of cozyness by the political class thus limiting access to other sport news. The English side is already so poor compared to the French one, for example about Formula 1.