How the NHL's Lockout Hurts NBC (Analysis)
The Hollywood Reporter -- This story first appeared in the Dec. 21 issue of The Hollywood Reporter magazine.
It's sudden death for the players and owners of the National Hockey League, whose talks to end a months-long lockout abruptly broke down Dec. 6 (four days later, the league canceled all games through Dec. 30). Among victims of the debilitating labor stalemate is NBC Sports Group, which signed a 10-year, $1.9 billion rights deal with the NHL in 2011, hoping to cash in on hockey's growing popularity in the U.S.
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When the Los Angeles Kings won their first Stanley Cup in June, it looked as if the NHL -- a perennial also-ran to the NFL, Major League Baseball and the NBA -- was on the cusp of becoming an American A-list sport (with such Hollywood fans as Matthew Perry, James Gandolfini and Jerry Bruckheimer). Last season's Stanley Cup Playoffs averaged 1.09 million viewers through three rounds on NBC, NBC Sports Network and CNBC -- the most-watched postseason in 15 years -- and the NHL generated estimated ad revenue of $149 million from NBC Sports Net and NBC in 2011-12, according to Kantar Media. That was a nearly 50 percent increase compared with the previous season's $101 million and almost double what the league generated from ads during the 2009-10 season.
If the 2012-13 season is scrapped, then NBC won't pay a rights fee this year and will add a year to its contract. But the NHL deal is a pillar of its nascent sports network, and a repeat of the canceled 2004-05 season could seriously damage the pro hockey brand. "I wouldn't be surprised if NBC has stuck their head into [lockout] negotiations," says Patrick Rishe, director of sports market research firm Sportsimpacts. The longer the sides remain at loggerheads over how to share revenue, the more damage to NBC.
"If the lockout goes for a week or a month, fans stay interested. But if it's longer, and watching the NHL stops being a habit, then the NHL is in trouble," says Kenneth Wong, a marketing professor at Queen's University in Ontario.
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NBC Sports Net has filled schedule holes with college hockey, boxing, soccer and college basketball. In Canada, the CBC network stands to lose an estimated $180 million in ad revenue if the NHL season is axed.
Still, while damage to the NHL brand could be hard to fix, other leagues -- like the NBA last season -- have returned from labor strife to strong ratings. "Hockey fans are die-hards," says Rishe. "As long as the NHL comes back, the damage will be minimal."
Related article on THR.com:
NHL Cancels Another 104 Hockey Games Through December 30
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Find more online: THR.com
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