Do You Know The Business of Hockey, Part II?

Question

You are the president of a network which has been invited to submit a bid for an NHL TV contract. You have 30 years of viewership statistics available to you (numbers are actual numbers provided to the NHL by various media sources)

1975 1.18MM viewers per telecast

1980 1.21MM viewers per telecast

1985 1.30MM viewers per telecast

1990 1.41MM viewers per telecast

1995 1.46MM viewers per telecast

2000 1.49MM viewers per telecast

2005 1.54MM viewers per telecast

2007 1.81MM viewers per telecast

The asking rate is $50MM per year.

You are able to get commercial time worth $26MM per year

As a division of a publicly traded company, you cannot legally buy the rights at a loss.

How do you convince potential sponsors to buy time to reach $50MM a year?

Answer 1

I think just the fact that the increase in viewers have gone like this through the last 20 years:

90-95 = + 3.5%

96-2000 = + 2.1%

01-05 = + 3.3%

06-07 = + 17.5%

This is a promising trend, obviously there is tremendous upside with marketing their product, and with any business venture, you want to get in early before the price gets too high.  Let the numbers do the talking.

Answer 2

I'll bite:

-Hockey is an Olympic sport; sell on reaching an olympic audience (which is a huge ratings machine).  If I'm a free to air network that may or may not have a tie-in with the IOC, that could be huge.  If not, I'd certainly try to do everything possible to ride the Olympic wave.

-Online revenues on my "brand/chain" website; since hockey's audience is heavily european, I'm trying to sell targeted ads by IP (customizing for European visitors), including travel to North America.  

Inserting foot into mouth carefully...

Answer 3

I will try to sell the point that numbers are improving - up 21% over the year 2000.

Also My network will do a better job of hiring the right comentaters and analysts and present a better product than the old network.  This will further increase our ratings increasing our ability to generate comercial time.

I would hire staff away from the successful networks in Canada.

Hey if it was a license to print money they would want more than 50M for the rights.

Answer 4

Since you must double your commercial input you double your airtime. Thus airing two hockey games instead of the one. This will double your commercial time but keep your costs equal. Therefore TSN has two games a week instead of one.

Answer 5

The games are just the start of it. Remember Hockey is what is going to get the bulk of your viewers to that station. Next is a highlight show, maybe a Movie night. Verses used UFC, Bull riding, Bicycling and other things to get other groups to view. This ultimately brings more viewers, more time slots, more add revenue and most importantly more $$$. So as important as it is to have that NHL contract there is a whole day of programing that will draw more people to the station and with the right advertising during the day hopefully turn more viewers to the games equaling new viewers and more money.