TORONTO – Canada’s two biggest telecom companies are pledging that die-hard fans of Toronto teams “won’t miss a single second” of every game, now that they own a big chunk of the NHL’s Maple Leafs, the NBA’s Raptors and the Toronto FC soccer club.
Rogers and Bell Canada teamed up Friday on a $1.07-billion bid for a majority stake in the country’s biggest sports franchise company, Maple Leaf Sports&Entertainment. The move is calculated to help slake consumers’ growing thirst for sports content to broadcast on everything from smartphones to tablets to televisions.
The two companies, fierce rivals in the delivery of cellphone and Internet services, said Friday they will each pay current owner the Ontario Teachers’ Pension Plan about $533 million for a 37.5 per cent chunk of MLSE. Through his company Kilmer Sports, minority owner Larry Tanenbaum will boost his current stake in MLSE by five per cent to 25 per cent.
“People want to watch live sports and the power of the technology… ensures not a single person has to miss a single second,” said Rogers chief executive Nadir Mohamed.
“With the new technology, it’s not just going to be broadcasting, it’s—if you think of behind-the-scene camera angles, taking a different shot of a goal that’s being scored—those are the things that get added on with the technology on a real-time basis.”
Despite their less-than-stellar record in recent years—the Leafs have not won an NHL championship for 44 years, the Raptors have made the playoffs five times in 16 seasons and Toronto FC have never finished higher than 11th place in their first five years—together they are a hugely valuable sports property.
Mohamed said the new owners are focused on winning, but will take a hands-off approach and allow Tanenbaum to oversee the day-to-day operations.
“Championship teams drive our network business so there is no greater commitment that you’ll see from the two of us to make sure that Larry and the team are doing everything they can to build championship teams,” Mohamed said.
The Leafs, the NHL’s most valuable team, are a lucrative money maker in what has long been one of the best hockey markets in the world. It alone makes up an estimated $520 million of MLSE’s $2 billion value.
Fans said Friday they hoped a change in ownership leads to a turn of fortune for their hometown teams.
Jaspreet Brar said he didn’t know if new owners would help his beloved Leafs.
“I hope it does, because I’ve been a diehard Leafs fan as long as I can remember. I support them until the end,” he said outside the Air Canada Centre.
Manvir Poonia expressed hope that Rogers and Bell might bring out the best in one another after the purchase for MLSE goes through next summer.
“When you’re working together like that, you don’t want to be in conflict with one another,” he said. “They have more power combined. If they do it right, they can do big things rather than what they can do alone.”
The ownership change could actually lead to an improvement in the teams themselves because it makes good business sense, said Kenneth Wong, a business professor at Queen’s university.
The two media mogul owners recognize that there are numerous synergies and profitable opportunities to stream affiliated content from broadcasting games to fans across the globe to reality shows featuring the Leafs, he added.
“You’re getting cheap content because you’re not going to be paying any licensing fees to anybody for access to the Leafs, the Leafs in turn are getting free promotion… it’s like the greatest PR coup in the world,” Wong said.
“I think it becomes one more possible inducement for why a good player might want to come to a Toronto-based team because they know they’re going to get the media coverage, the national exposure that ultimately helps raise their market value in the endorsement and advertising market.”
Rogers and Bell have put their differences aside before, when it comes to sports, teaming up to form a media consortium that brought viewers the 2010 Vancouver Olympics on Rogers Sportsnet channels and Bell-owned CTV and TSN.
But make no mistake, they will continue to compete for every customer, George Cope, president and CEO of Bell Canada parent BCE Inc. (TSX:BCE), said at a news conference.
“We will be racing each other to get this content on our devices faster than the other guy,” he said.
“The Canadian telecom industry, wireless industry, leads the world in technology. Making that available to everyone in every market, we think, will be one of the huge benefits to the fans and quite frankly to the NHL, and the other sports organizations.”
The heads of both Rogers and Bell declared the deal a victory for sports fans and one that will keep the company in Canadian hands.
“This is a perfect fit for Bell from a strategic perspective” as it dovetails nicely with the company’s acquisition last year of the CTV television network and its TSN sports channel, Cope added.
Rogers already owns the Toronto Blue Jays baseball team and their stadium, the Rogers Centre, as well as the broadcaster Sportsnet.
More and more Canadians want to watch live sports on wireless devices when they’re on the go, and MLSE offers some of the richest, most sought-after content in North America, said Mohamed.
“There’s no great mystery it’s the best way to leverage distribution to get the most number of people accessing the teams.”
The surprise deal, worth about $1.32 billion, including equity and debt, came a few weeks after Teachers’ announced it had given up trying to sell the stake in the sports company, which it bought for $180 million, beginning in 1994.
Shortly after the announcement, Bell and Rogers (TSX:RCI.B) stepped forward with a bid that met all of its original terms and conditions, Teachers’ said.
“We are very proud to help the company get to this level, but now is the right time for the sale,” Jane Rowe, senior vice-president of Teachers’ Private Capital.
“We will continue to cheer for the teams and look forward to celebrating their success, but after the summer, from the sidelines,” she added.
Tanenbaum will remain as chairman of MLSE and as a governor of the NHL, the NBA and Major League Soccer.
“I am proud this is a made-in-Canada deal that will bring resources and expertise to help us win on and off the ice, court and pitch,” Tanenbaum said.
Cope said Bell plans to hold on to its minority ownership stake in the Montreal Canadiens, while Mohamed said Rogers’ Toronto Blue Jays will remain a separate, but complementary business.