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NHL Could Net Over $600 Million for Rights Package, But It Needs NBC

Dave Sandford | National Hockey League | Getty Images
  • The NHL agreed to a seven-year deal with ESPN, and media pundits suggest its rights package could be worth $625 million if NBC renews its own contract.
  • Dan Cohen, senior vice president of Octagon's Global Media Rights Consulting division, said the NHL could solicit more than $600 million annually for its entire package.
  • Cohen added the NHL "would be best served to renew its other rights package with NBC."

Call it a goal scored for the National Hockey League. And if the league can complete two more business transactions, it could be in for a hat trick.

Media pundits believe the rights package of NHL's new seven-year deal with ESPN is worth $400 million per year. That's an increase from the roughly $200 million per year that NBC Sports is paying, and the NHL is poised to lure even more money.

NHL Commissioner Gary Bettman called the ESPN deal "groundbreaking," adding the league would "benefit from the incomparable power, reach and influence of The Walt Disney Company and ABC/ESPN."

"It sets a new standard in delivering our game to the most passionate and tech-savvy fans in sports in the ways they now demand and on the platforms they use," Bettman said in a statement last week.

By returning to Disney, the NHL will get its content back on ESPN for the first time since 2004. But post-breakup, ESPN continued to value NHL content by centering coverage around longtime analyst Barry Melrose.

Dan Cohen, senior vice president of Octagon's Global Media Rights Consulting division, said the NHL could solicit more than $600 million annually for its entire package. He added that the NHL "would be best served to renew its other rights package with NBC, who has invested heavily in marketing the NHL and who can offer a tri-cast distribution model."

"Now they are making decisions about sports less so based on executive preference and more so based on what purpose the content will serve," Cohen said. "Something that has as much volume as hockey, they can go with a tri-cast model across ABC, ESPN, and ESPN+/Hulu."

ESPN will get premium NHL playoff contests, All-Star events and streaming rights. ABC will host four Stanley Cups. Streaming services ESPN+ and Hulu will also receive exclusive games. This is the tri-cast model that Cohen predicts other media companies will use, allowing them to put second-tier sports content behind paywalls to attract the diehard fans to subscribe to streaming services.

And with sports the main attraction upholding the cable model, helping to fuel streaming, the NHL revived its rights fee with the same network that devalued it more than a decade ago. Now the NHL is auctioning off the other half of the package.

Joe Pavelski #16 and the Dallas Stars get a puck past Pekka Rinne #35 and the Nashville Predators during the Bridgestone NHL Winter Classic at Cotton Bowl on January 01, 2020 in Dallas, Texas.
Richard Rodriguez | Getty Images Sport | Getty Images
Joe Pavelski #16 and the Dallas Stars get a puck past Pekka Rinne #35 and the Nashville Predators during the Bridgestone NHL Winter Classic at Cotton Bowl on January 01, 2020 in Dallas, Texas.

NHL and NBC need each other

NBC is the frontrunner to return to NHL. There were whispers that CBS Sports was interested and that Fox Sports was lurking. But during a media call last week CBS Sports chairman Sean McManus downplayed any interest in the NHL, and Fox had the NHL long ago in a failed experiment featuring a glowing puck.

Fans and corporate sponsors are already used to NBC's NHL coverage. NBC is moving sports to the USA Network in an effort to resemble a Turner Sports-like property, which means NHL games will reach more households. NBC can't afford to lose hockey, which would fit well in its new Peacock streaming service.

Cohen suggested NBC could pay $185 million to $225 million per year to retain NHL rights. The package would include games on Peacock, the Winter Classic, postseason games and three Stanley Cups. He called the package "fair market value," since NBC would be paying more while losing the NHL content it owned when Comcast purchased the rights in 2005 for roughly $70 million per season.

"NBC doesn't invest over the last decade into the NHL and let it go especially when they need live sports, and they need weeknight programming," Cohen said. "NHL fans are accustomed to finding NHL content on NBC and it has invested a ton of marketing and promotion. I would be surprised to see them exit as a NHL partner."

Discussions between the two parties are ongoing, according to a person familiar with negotiations who spoke on condition of anonymity.

The network would need to be cautious about overpaying, though, since the rights to soccer's Premier League are also close to renewal. Cohen said that package could be worth $300 million per year, up from approximately $167 million per year; part of a six-year $1 billion extension in 2015.

"And after that, they'll have to decide what they want to do with NASCAR, for which they are paying $440 million a year," Cohen said.

But as the NHL expands its media rights, it could face media contraction, too. Its NHL Network could shutter since there isn't much need for the channel as consumers continue to cut the cord.

"That hasn't been profitable," Cohen said of the NHL Network. "If you remember, Disney ran that network, and it returned to the NHL last year. So now, the NHL has to run their own linear network in a shrinking cable world, and they've just sold away half their rights to ESPN. The NHL will have to get creative to increase the value of NHL Network to its MVPD partners."

Disclosure: Comcast owns NBCUniversal, which is the parent company of CNBC.

Correction: This report was revised to correct in one reference when the ESPN deal was announced. It was last week.

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