Rogers Communications Inc. is taking control of professional sports in Toronto by acquiring rival BCE Inc.’s stake in Maple Leaf Sports & Entertainment. Today, we look at what the $4.7-billion deal means for the telecom giants, the teams and their fans. But first:
In the news
On our radar and reading list
In the air: The Canadian Transportation Agency is proposing that airlines get billed $790 for every customer complaint the industry regulator resolves – whether in the passenger’s favour or not. The deal reached with Air Canada’s pilots, meanwhile, isn’t quite ready for liftoff.
At HQ: National Bank of Canada has spent more than half a billion dollars to build a new 40-storey headquarters in the heart of Montreal’s Quartier de l’innovation. The lender is calling it the largest real-estate investment in the city in the past 30 years.
Somewhere else: A federal tax on vacant homes owned by foreign nationals that also ensnared thousands of Canadian taxpayers has so far failed to raise any meaningful revenue, documents show.
Happening today
- The Bank of England and Bank of Japan both announce interest-rate decisions.
- A day after the U.S. Fed’s rate cut, markets also have initial jobless claims to absorb.
- Earnings include FedEx, CrackerBarrel, and Canadian broadband company Vecima Networks Inc.
In focus
Rogers bets big on broadcasting
"Legends Row" outside Scotiabank Arena in Toronto. The players kinda just freeze like this every now and then on the TV, too.Yader Guzman/The Globe and Mail
Today is a banner day for anyone resting at the intersection of Toronto sports fandom and Rogers streaming services. We definitely heard the Leafs battle it out before exiting early again from the playoffs last year, but it often
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In fairness, Bell’s streaming quality hasn’t been much better in our experience. But at least they don’t have to shoulder the blame much longer for the fate of the Leafs, nor any of the franchises under the MLSE umbrella.
That responsibility will now fall almost entirely to Rogers, which is already in possession of the basement-dwelling Toronto Blue Jays. Under the deal announced yesterday, the company will add control of (and blame for) the Leafs, Raptors, Toronto FC and the Argonauts – all teams that can be charitably described as a group of players who are trying their best.
But for both Rogers and Bell, winning isn’t everything. At least, on the field.
What’s in it for Rogers
A lot of money. Buying BCE’s stake will give Rogers 75-per-cent ownership of MLSE, a sports and real estate company that Rogers chief executive Tony Staffieri said “continues to appreciate significantly.”
- Combined with its existing portfolio of sports and media assets, Staffieri added: “We plan to surface more value for shareholders long-term.” That is a form of winning, one supposes.
- And columnist Cathal Kelly puts it this way: ”You could charge Taylor Swift prices to the Maple Leafs all year long, then have the team stage a mass retirement before the final game of the opening playoff round and the city would erupt in rage. But there would still be a waiting list the next year.”
- Which is why Rogers is likely betting on the ever-increasing value of sports broadcast rights. There has long been a question of whether the bubble will ever burst on those fees, Scott Stinson writes. “And Rogers seems to be saying: Never.”
What’s next: In the long term, analysts told Andrew Willis that Rogers will likely combine MLSE with its stake in the Blue Jays. It would then raise money by spinning out a stake in the platform, through sale to institutional investors or an initial public offering.
Why Bell would sell
BCE Inc. sells its MLSE stake but keeps the rights to broadcast games from the company’s teams for the next 20 years on its media outlets, including television sports network TSN.
But given the state of its balance sheet, it simply couldn’t hold onto the puck any longer as an owner. As Tim Kiladze writes, BCE Inc.’s balance sheet was brought to the brink by an unsustainable debt load and a strained dividend strategy: “Mirko Bibic was boxed in.”
- Two debt rating agencies downgraded the company in the past three weeks.
- Revenue growth has proven challenging.
- And the company’s shares have been trading around 2014 levels:
Broadcast news
The upshot: You’ll probably need as many as four channels to follow the Leafs. Maybe more.
The deal is unfolding against a backdrop of increasing chaos in North American sports broadcasting, Simon Houpt notes.
Bigger leagues in the U.S. are striking richer deals than ever with national carriers, regional carriers are in trouble as more people cut the cord, more streamers are entering the market, and some teams have even begun building their own channels.
Those dynamics are about to come into focus in Canada. Staffieri said Rogers would continue to share rights to the Leafs and Raptors “over the next couple of years.
“And then after that, they’ll have the opportunity to continue to buy those rights at market rates.”
So Rogers would seem to be in a position of power over Bell. But hanging over Rogers: Its national NHL rights deal concludes at the end of the 2025-26 season.
- Sticking with one entry point into Canada might not be in the best interests of the league, which has increasing options as streamers enter the market.
What does it mean for the fans?
Nothing. There’s nothing useful in this for fans, Kelly writes: “Yesterday, MLSE’s teams were a collection of middling content producers existing in a magical media market with inelastic demand. Tomorrow, the year after and – God help you if your investment is emotional – 10 years from now, they will continue to be so.”
And as for my streaming woes, maybe I’ll try switching services to the other guys again. They said they could offer me better value this time.
Morning markets
Global stocks were on the rise, buoyed by the U.S. Federal Reserve’s first interest rate cut in four years. Wall Street futures surged on the Fed’s dovish outlook and TSX futures pointed higher as crude prices climbed.
Overseas, the pan-European STOXX 600 was up 1.41 per cent in morning trading. Britain’s FTSE 100 rose 0.94 per cent, Germany’s DAX gained 1.55 per cent and France’s CAC 40 advanced 2.02 per cent.
In Asia, Japan’s Nikkei closed 2.13 per cent higher, while Hong Kong’s Hang Seng added 2 per cent.
The Canadian dollar traded at 73.77 U.S. cents.