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NHL moving to Turner Sports is $1 billion risk-reward for hockey

Boston Bruins Center Charlie Coyle (13) passes the puck while Pittsburgh Penguins Left Wing Zach Aston-Reese (12) defends during the third period in the NHL game between the Pittsburgh Penguins and the Boston Bruins on April 25, 2021, at PPG Paints Arena in Pittsburgh, PA.

Jeanine Leech | Icon Sportswire | Getty Images

The National Hockey League has secured the final part of its media rights increase, and it can thank AT&T‘s WarnerMedia for stepping in.

The NHL and WarnerMedia’s Turner Sports agreed to a deal that will see the network land its second-tier hockey rights for more than $1 billion over seven years. Turner will land three Stanley Cups, one of the NHL conference playoff rounds (ESPN has first rights) and the Winter Classic as part of the package, Turner Sports announced Tuesday.

With the NHL agreeing to return to ESPN for over $400 million per year, and Turner now expected to pay $225 million per year, the NHL increases its rights fees to more than $625 million, up from roughly $300 million in agreements with NBCUniversal and, for streaming, Disney.

The NHL’s 10-year partnership with NBC Sports now ends after this season.

“I think NBC and NHL have done a lot for one another over the last 16 years,” said longtime sports media rights advisor Lee Berke. “The challenge for NBC was ESPN took more than the majority of the Stanley Cups and a huge amount of NHL content. What was left was a smaller package than previously for NBC and something that was going to cost more than their current rights fee.”

And now, the NHL and Turner will enter a partnership that appears odd but could still work if WarnerMedia brings the sport to its HBO Max streaming service.

Did Turner overpay?

In some media circles, the NHL’s move to Turner was a surprise. Few expected the NHL to leave NBC, which formed a $1.9 billion partnership with the NHL in 2011. NBC helped the NHL revive following a lockout that canceled the 2004-05 season and attracted limited interest from other networks.

Behind the scenes, the chatter suggested NBC was only willing to pay just over $100 million per year for the rights. But Turner came in with a money bazooka and offered its deal. On Monday, word leaked that NBC had pulled out, and the deal was formally announced on Tuesday.

Hockey viewership usually trails that of other sports, mainly the National Football League and National Basketball Association, but the NHL has a dedicated fan base. Hence, the new bet is ESPN and WarnerMedia believe they can lure those fans into signing up for their streaming services using NHL content.

The thing is, will Turner attract more than $200 million worth of hockey revenue to help pay for those rights? NBC knows what hockey broadcast attracts annually and wasn’t willing to pay the increase. And the move could be a risk for Commissioner Gary Bettman’s league, too.

The NHL loses a broadcast network and transitions more to cable, which is on the decline. If it had stayed with NBC, the NHL would have had its Stanley Cup content rotated on two broadcast networks, NBC and ABC, and the Winter Classic would have remained in the broadcast network spotlight too.

But by choosing Turner, the NHL gets some cross-promotion with the NBA and college basketball games. And Turner gets another fall-into-summer sports package that can lead to its Major League Baseball coverage.

The network sees innovation around hockey presentations, and again, it knows NHL fans will follow. Turner plans to incorporate Bleacher Report into its coverage, lure sports betting opportunities and have flexibility in the deal to put NHL games on HBO Max when the service is ready to host live sports.

Said Octagon media executive Dan Cohen: “Since Turner missed out on the PGA Tour’s media rights, you knew they had to add a fourth pillar to their sports portfolio (NBA, MLB, March Madness), and now [WarnerMedia News and Sports Chairman] Jeff Zucker has completed that task. HBO Max, which has been late to the game in the sports streaming space now has an immediate set of NHL rights that attract young, diverse digital first audiences.”

Berke called the NHL’s rights increase a “signature moment,” pointing out the league solicited more fees in Canada than in the U.S.

“If I’m the NHL, I’m thrilled,” Berke said. “I’ve more than doubled my rights fee. I’ve got ESPN promoting the sports heavily throughout the year on all platforms. I’ve got a new entrance with Turner, which has done a great job with the NBA and MLB.”

Javier Hernandez #14 of the Los Angeles Galaxy takes a shot on goal during a game between New York Red Bulls and Los Angeles Galaxy at Dignity Health Sports Park on April 25, 2021 in Carson, California.

Michael Janosz | Getty Images

The MLS could be a winner

NBC also could have used the NHL content to continue building its Peacock streaming service, but, again, it would be paying more for less. And the network has to think about upcoming deals with NASCAR and Premier League.

“That’s going to be a very competitive marketplace,” Berke said of the global soccer league. “And NBC has shown that soccer fans tend to trend younger, be tech-savvy, and willing to subscribe to streaming services to obtain that content.”

It’s here that Major League Soccer could benefit from the NHL moving.

The MLS’ media rights shouldn’t cost too much as it is still building and needs to prove more on the TV viewership front. MLS had a small run on NBC from 2012-2014, and now that the network has extra money to play with, MLS could be on its radar.

The league is growing among younger viewers, has a new market in Austin, and with Sacramento on hold, Las Vegas could be next. MLS gets roughly $90 million a year in current agreements with ESPN and Fox Sports. The deals run through the 2022 season.

Disclosure: NBCUniversal is the parent company of CNBC.

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