Source : Ottawa Citizen

Sports and TV can form profitable relationships, but this union doesn't seem likely

by Chris Cobb

To understand why Bell Canada Enterprises might want to buy the Ottawa Senators, a good place to start is with international media baron Rupert Murdoch.

At the end of last year, The Guardian newspaper in the U.K. listed Murdoch as the world's most powerful sports figure. The president of soccer's international governing body, FIFA, was second and International Olympic Committee president Juan Antonio Samaranch was third.

Murdoch, owner of the FOX Network, also controls the L.A. Dodgers, has interests in several Australian rugby clubs and stakes in half a dozen English premier league soccer clubs. He wanted to buy cash cow Manchester United last year for $1.7 billion U.S., but was blocked by Britain's Monopolies and Mergers Commission. Undaunted, he opted for pieces of several other prominent teams, including United and Chelsea, bought through his British satellite company SkyTV.

The purchases carried with them broadcast rights that give Sky a significant leg up on the broadcasting competition.

Murdoch also has a piece of the British and international cricket scene, and last summer asked the England and Wales Cricket Board to increase the diameter of wickets (those three sticks that cricket bowlers aim the ball at). Sky-TV wanted to insert cameras in the wickets, but the regulation width was too narrow. The cricket authorities agreed. Now that is influence – akin to persuading baseball players to stop the age-old tradition of chewing and spitting to protect the sensibilities of viewers.

Sport is big business and Murdoch was the first to understand the potential profitable relationships to be had between sport and TV. Others have followed, most notably cable guy Ted Rogers, who bought the Toronto Blue Jays and is said to be looking at the Toronto Maple Leafs. Next he wants to control Sportsnet, which he helped found and in which he already has a 29-per- cent share. The country's broadcast regulator doesn't like the idea of cable companies owning specialty channels because it fears they will favour them with prime channel space. But that is a side issue. Simply put, if you own the team, you own the broadcast rights. And if you own a sports network, you have all the pieces necessary to potentially make globs of money without wheeling and dealing with competitors.

New York Yankees owner George Steinbrenner also owns the New York-based cable network that broadcasts most Yankees games. It's an arrangement that allows for lots of cross promotion and generates huge profits that annually keep the Yankees in World Series contention.

BCE owns the CTV network, TSN, Bell ExpressVu satellite TV and the Sympatico Internet portal. It doesn't own any sports franchises, although prior to the latest Senators rumour was said to be interested in battling Rogers for possession of the Leafs and the Air Canada Centre. It may still.

The world of modern media is complex and packed with strange bedfellows. FOX (i.e. Murdoch) has a 20-per-cent stake in Canada's Sportsnet and ESPN has a 20-per-cent stake in Canada's TSN. ESPN is owned by Disney. Sportsnet is currently owned by CTV, which more recently bought TSN. The Canadian broadcast regulator ordered CTV to divest of one or the other, which it must do soon – hence Rogers' heightened interest.

Carleton University's Vincent Mosco, a specialist in North American media mergers, said for a company like BCE to own a major sports franchise, and the stadium or arena that goes with it, makes good business sense because of the profit potential that comes not only from owning broadcast rights, but from the arena or stadium itself.

But like most media specialists presented with a BCE-takeover-of-the-Ottawa Senators scenario yesterday, Mosco was skeptical.

"It doesn't really make sense," he said. "The Senators are a small-market team that makes little, if any, money and the Corel Centre is by no means a guaranteed money maker, either. My first reaction is, 'Why the Senators and not the Montreal Canadiens?' Montreal is a bigger market, the team has more potential and Bell has a relationship with Quebec and Montreal that goes back many years.

"You have to ask yourself what BCE would get if they bought the Senators," added Mosco. "They'd get guaranteed broadcast rights, but the Senators are not a huge attraction. And the Corel Centre is dark most nights of the year."

Senators majority owner Rod Bryden estimated the value of the franchise last year at $125 million U.S. The Corel Centre, open for five years, cost $220 million Cdn to build.

Friends of Canadian Broadcasting spokesman Ian Morrison also doubted that BCE would be interested in the Senators, but said such a deal was not impossible.

"They passed on the Canadiens so why would they buy the Senators?" he said. "The Maple Leafs would make more sense. Still, the cost would be petty cash for BCE, and owners of sports channels have to think about Canadian content requirements. The Senators would mean 80 games at three hours each, which could be something they are thinking about. But I'm not convinced it's the best use of $125 million."

A more cynical theory is that BCE may have a U.S. partner in the wings and would buy the Senators to flip the franchise at a later date. Given that a huge portion of Bell's business relies on consumer goodwill, it's unlikely it would risk such a potentially major public-relations disaster.

But that ties back into the chorus of, "If they wanted a team, why not the Canadiens?" Saving the legendary Montreal team from falling into American hands would have been a major public-relations coup for Bell. That they chose not to make an offer says one of two things: either they aren't interested in owning a hockey franchise or they're holding out for the Leafs.

Toronto would certainly be a better match for the model Rupert Murdoch carved for others to copy.

© Ottawa Citizen