NBC Sports Chief Says Network Will Make Money on $2 Billion NHL Deal

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NEW YORK -- If anyone needed more proof that live sports is the holy grail in an increasingly time-shifted and fragmented TV environment, NBC Sports' $2 billion, 10-year deal for exclusive rights to the National Hockey League is it.

At more than $200 million annually, the new deal more than doubles the yearly rights fees NBC and Versus are paying for the NHL under the current deal, which expires at the end of the season. Not bad for a sport that when it was on ESPN was jockeying for position with poker.
 
The deal is the first major sports rights contract since the Comcast-NBC Universal merger put Comcast's Versus in NBC Sports Group chairman Dick Ebersol's portfolio. And it will be the cornerstone in the rebranding of Versus, which Ebersol said will get a new name in three months.
 
"Our wonderful run of not paying anything [for the NHL] for a number of years is over with this deal," Ebersol joked during a meeting with reporters Tuesday.
 
But NHL commissioner Gary Bettman said he had "no regrets" over the league's previous six-year deal with NBC and Versus, valued at a relatively modest $75 million annually. He added that NBC Sports has been a "tremendous partner" that should get some credit for "positioning" the NHL as the hotly pursued sports property it has become. Suitors this time around included Fox Sports, Turner and last-to-fold ESPN.
 
"When we looked at the entire field," Bettman said, "it was clear we were going to go with the incumbent."
 
Added Ebersol: "But isn't it nice to know others think you're pretty?"
 
Put another way, "It's a nice psychological boost" for the NHL, said Wunderlich Securities analyst Matthew Harrigan. "NHL ratings have certainly accelerated considerably, but no one will confuse it with the NFL or NBA. [It's] a nice reversal from at one point seeming to slip from relevance."
 
According to the new deal, which runs through the 2020-21 season, NBC Sports obtains digital rights across all platforms and devices for the games it televises. NBC will continue to broadcast a regular season "game of the week" along with the NHL Winter Classic and Hockey Day in America. This year's Winter Classic was the most-viewed regular season game in 36 years, averaging 4.5 million viewers in primetime. Versus also will get an exclusive "game of the week" as well as NHL Premiere Games, NHL Faceoff, the NHL All-Star Game and any future NHL Heritage Classic outdoor games in Canada. When "scheduling anomalies" arise during the regular season, said Ebersol, games will air on another national NBC Universal cable network -- in other words, not on a regional sports network.
 
NBC and Versus will again divvy up the Stanley Cup Final similar to the current arrangement, which has the first two games on NBC with Versus getting Games 3 and 4 and NBC getting the remaining games as necessary. NBC will also build a new studio for the NHL Network at its existing facility in Stamford, Conn.
 
The length of the deal will help to amortize the cost. But with deep-pocket ESPN at the negotiating table and live sports' status as singular DVR busters, rights fees have hit the stratosphere. Ebersol bid $2 billion for the 2010 and 2012 Olympics. The network lost $220 million on the 2010 Vancouver Games and is sure to also lose money on the 2012 Summer Games in London, which account for $1.2 billion of the total rights package. But Ebersol contends that in his two decades of dealing, that's the only time he's taken a bath.
 
"Those were the only times that we ever lost money," Ebersol told The Hollywood Reporter after the press conference. "To some degree I overbid in 2003, and the marketplace was not quite reset post the economic crisis of late [2008 and 2009]."
 
And NBC Universal CEO Steve Burke has signaled a new era of fiscal responsibility. ("We are here to make money," he told Wall Street analysts last month when asked if NBCUni would bid on the 2014 and 2016 Olympics in Russia and Brazil.) But the Games have also been an integral part of NBC Sports portfolio for decades.
 
As far as rights deals in general, Ebersol joked during the NHL press conference that he doesn't believe that he'll be "let out of the building unless I'm going to make money."
 
Turning a profit on multibillion-dollar rights packages, he told THR, "is a mandate that I've lived with for a long time."

Georg Szalai contributed to this report.

Email: Marisa.Guthrie@THR.com
Twitter: @MarisaGuthrie

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