Rogers Purchase of Bell's MLSE shares

[jdheid]

Just curious what any of you who are much more business savvy than I am think about the possible ramifications of this for CPL? Do you see this as a door opening to CPL on TSN or is is being slammed shut even more so than before?

 

Kevin Blue, being as astute as he is, has to be running all sorts of ideas through his head to find a way in in light of this morning's announcement.

[Mihairokov]

I don't think this has much implication for the CPL in the short-term.

My very basic understanding of the situation is that Bell is offloading assets for quick liquidity to pay off and cover current debt - it has something to do with ensuring that investors are able to be satisfied by current dividend levels, but that's above my pay-grade.. They don't seem think MLSE operates as a good future revenue growth operation, or at least viewed its current valuation as good enough to sell at this moment. 

For Rogers? It sees them get majority control of MLSE. What this means for the broadcast landscape is anyone's idea, but my understanding is that the Raptors and Leafs have long-term contracts with TSN/Bell and will remain there for now. 

For Bell? It sees them offload direct ownership of the Leafs, Raptors, TFC, and the Argos. This doesn't have big implications for the first three (unless you think TFC are at some risk) but it likely has big implications for the Argonauts, who were purchased by Bell in order to satisfy the CFL's TV rights deal with TSN. Now that Bell is no longer involved it remains to be seen what their future holds in terms of ownership, or what Bell's interest is in continuing their TSN deal with CFL. The Argos, as i'm sure we're all aware, are a big net-drain on expenditure for whomever owns them. Keep in mind that Bell brought back CFL on CTV earlier this summer for this fall.

So...for the CPL? It depends on what TSN's future is. If Bell doesn't have a direct stake in Toronto sports teams, namely the Leafs, Raptors, TFC, and Argos, it begs to wonder if they're still fully committed to TSN as an outlet. There's no reason to believe they aren't at this moment, but we'll have to see how things play out in the coming months. If we assume that Bell's part-ownership of TFC/MLS was a hurdle to CPL-on-TSN, then that hurdle has now been removed. If we assume that the CFL taking up many hours of broadcasting through the summer is now at risk and needs replacing, it's possible there's room for the CPL to fill in.

I'm not expecting CPL to slide onto TSN any time soon, but I am expecting some movement on the Argos in the coming 6-12 months. I can't imagine Rogers are keen on plugging holes in the hull long-term. They're the one outlier amongst all of the teams in MLSE.

Edited yesterday at 07:24 PM by Mihairokov

[Kingston]

12 minutes ago, Mihairokov said:

The Argos, as i'm sure we're all aware, are a big net-drain on expenditure for whomever owns them. 

I'm not arguing they aren't a drain, but:

MLSE manages the stadium.  I assume the extra dates benefit them somehow.

Also, in the scope of MLSE the entire Argo's budget is a rounding error.  It probably helps offset taxes or something.

[SpursFlu]

I read that Rogers as part of the deal will go 50/50 on Leafs Raptors broadcast. No mention of MLS. I know MLS has mostly gone to Apple but TSN still has an MLS game of the week. It's always fun when the Whitecaps are playing and I can't watch them but the LA Galaxy San Jose Earthquake game is on. It will be interesting to see if they continue that (in my opinion, pointless game of the week) that could go to a much more relevant CPL game of the week. Also as part of that game of the week, MLS occupies news and notes along the TSN scroll. If TSN has no arrangement with MLS, does that need to continue? Probably not. That space could be occupied by CPL. I've always thought another interesting property is the Voyageurs Cup. Nice and cheap and a way for TSN to fill a potential soccer gap by no longer working with the MLS. Just some thoughts 

[Mihairokov]

27 minutes ago, Kingston said:

I'm not arguing they aren't a drain, but:

MLSE manages the stadium.  I assume the extra dates benefit them somehow.

Also, in the scope of MLSE the entire Argo's budget is a rounding error.  It probably helps offset taxes or something.

I think the question we should be asking is not if the extra dates benefit MLSE but if another tenant would benefit them more. I don't have any insider information but I hear there's a women's soccer team currently exiled out to York Lions for next season...

[narduch]

The ironic thing is that MLSE only bought the Argos to appease Bell. Now they might be stuck with the Argos?

I wonder if they plan to spin off TFC and the Argos. I'm guessing they don't care about those 2 teams.

[Kingston]

16 minutes ago, narduch said:

I wonder if they plan to spin off TFC and the Argos. I'm guessing they don't care about those 2 teams.

They may not care much about the Argos but TFC worth something like $700 million.  That's not exactly small change, even for them.

[SpursFlu]

I honestly still believe TSN if they changed their business model could really thrive. If they stopped overpaying for properties that they felt they have to overpaying for and start looking for undervalued properties and building them up.. it seems like a way better business model. Give all these streaming services enough rope and they'll hang themselves. For instance Tennis. What's up with all the Tennis? How much do they pay to prop that up in the consciousness of Canadians?

Edited yesterday at 08:38 PM by SpursFlu

[shermanator]

This has zero relevance to the CPL, and NSL has already signed their agreement with TSN.

[red card]

1 hour ago, SpursFlu said:

I honestly still believe TSN if they changed their business model could really thrive. If they stopped overpaying for properties that they felt they have to overpaying for and start looking for undervalued properties and building them up.. it seems like a way better business model. Give all these streaming services enough rope and they'll hang themselves. For instance Tennis. What's up with all the Tennis? How much do they pay to prop that up in the consciousness of Canadians?

First, TSN has to commit to streaming. There is no spending on undervalued properties to grow the audience since there is no audience to grow on linear tv. TSN has lost about 6% of their subscriber base every year for the past decade.

But the decision is in Bell's hands as they'll want to milk the cash flow from cable bundling and/or need to see streaming revenues pick up/losses stemmed. Last year, TSN made 6x more in cable carriage revenues than via TSN+ subscription fees. So, most of the cord cutters haven't bothered to move over and when they do for the Euros/World Cup/NFL, most churn out when it ends.

TSN has started to bulk up their streaming inventory and they will be starting to show tier 1 games exclusively on TSN+. They have platformed Canadian leagues such as PWHL, CEBL and soon NSL but there are no dollars for rights or production.

[red card]

From Ken Fang on Awful Announcing:

It’s worth wondering here if there’s a larger shift away from sports and sports broadcasting by BCE, too. Yes, the 20-year Leafs and Raptors rights deal gives TSN some security (again, though, that depends on the particular conditions). And it suggests there’s no particularly-pending move to sell or shut down the channel. 

And “cash” to transform “from telco to techco” doesn’t seem like a trade that will help the sports side of BCE and Bell Media. That’s especially true considering that TSN already made a full jump to offering an over-the-top feed way back in 2018, which was itself two years behind Rogers, which was almost a full decade ahead of ESPN’s long-debated plan to launch their own version of this. A lot of the talk about sports broadcasting companies adopting tech and needing money to do so has been about raising funds to launch direct-to-consumer offerings, but that’s not the case here, and there hasn’t been a lot of positive reinforcement from BCE lately on how TSN fits into their long-term plans. And selling off the MLSE stake certainly seems ominous.

TFC: It’s possible that sublicensing shifts to Sportsnet, but that’s a much more marginal move than most of what’s at issue here; TFC does very well at the gate, but MLS TV ratings in Canada have traditionally not been good (not that they’ve been great in the U.S., either), so neither TSN keeping that sublicensed package nor it moving to Sportsnet seems like a massive impact.