Hockey Night in Canada: How CBC lost it all

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The victors strode into the CBC's Toronto headquarters at 250 Front St. West on June 1 in an especially humiliating denouement for what was left of the public network's sports department and its version of Hockey Night In Canada.

Not only had Rogers Communications Inc. wrenched the Canadian national broadcast rights to NHL games from the CBC's grasp with a stunning $5.2-billion payout over the next 12 years, but the Visigoths were actually at the gate. Part of the ensuing deal, in which those in charge of the CBC meekly handed over the company's airwaves for free, was that the Rogers people connected to Hockey Night, along with some people hired from rival TSN, would use the CBC's studios and take over the show's office space on the north side of the eighth floor – the plushest in the building thanks to the show's status as the network's biggest money spinner.

The cash-strapped national broadcaster may have lost a Canadian institution it held for 62 years because it could not hope to match the money Rogers threw at the NHL, but no one was actually going anywhere. The show's staff stayed put and the new bosses moved in. Hockey Night will continue to be broadcast on the CBC's stations across the country – the show makes its season debut Saturday night after Rogers officially unwrapped its new toy this week with Wednesday Night Hockey to cover the NHL's opening night – but the money all goes to Rogers now.

The only revenue the CBC will get is from renting its studios, offices and some staff to the conquerors.

Not long after the Rogers people moved into the CBC building, a notice went up: The eighth-floor boardroom was now off-limits to CBC staffers. If they wanted to use it, a request had to be made through Rogers.

"I'd say weird is a great way to put it," one Hockey Night staffer said of the atmosphere in the offices on the eighth floor, adding that another emotion has a greater hold. "I'm angry at the CBC for how they handled this. I think a lot of people are mad. They fired 50 people in sports and those are people with families. This didn't have to happen."

It didn't have to happen, staff at both the CBC and Hockey Night say, because they believe NHL commissioner Gary Bettman and his marketing chief John Collins were willing to offer the CBC a compromise that would have saved a scaled-down version of Hockey Night for the network that still would have been a significant source of revenue. Those staffers also believe the CBC executives missed this chance because of their failure to recognize the changed broadcast landscape and to see the threat posed by Rogers and BCE Inc., which owns the TSN and CTV networks. The CBC negotiators insisted throughout an exclusive negotiating period with the NHL that any new deal would see the network stick to a regional and national schedule by carrying all games played by Canadian-based NHL teams on Saturdays.

The anger of the staff at the CBC and Hockey Night is directed at network president Hubert Lacroix and the two executives in charge of negotiations with the NHL last year: executive director, sports and general manager, Olympics, Jeffrey Orridge, and interim executive vice-president of CBC's English-language services Neil McEneaney.

The game of musical chairs alone has been disconcerting. Producers and other executives who put in more than 30 years at CBC Sports and managed to survive the layoffs of dozens of staffers in the department, due to the loss of the NHL rights, found themselves booted from their offices. The new home for the displaced executives is a corner on the south side of the eighth floor once occupied by George Stromboulopoulos's old CBC show. They were crammed together in desks among the rest of the staff, although it became roomier as the layoffs took effect.

Stromboulopoulos, of course, is now part of the winning side, hired by Scott Moore, Rogers' broadcast president, to be the face of the new Hockey Night In Canada. Moore, too, is an old CBC hand, once running CBC Sports before leaving for Rogers. Now he's back to claim an office as well. Moore said the Rogers crowd moved in because the company's headquarters lacked the space for the kind of studio he and his fellow executives had in mind for the show. Rogers held a splashy unveiling last week of the new 11,000-square-foot studio on the 10th floor of the CBC headquarters.

After their failure to keep the NHL broadcast rights, the fallout was severe: The loss of a total of 657 full-time jobs in April at the CBC, along with a $130-million cut in its budget thanks in part to the loss of an estimated $225-million in annual advertising revenue (half of the company's total). The network was also hit by a funding cut from the federal government and announced as many as 1,500 more jobs will be eliminated in the next six years, along with more programming cuts and the potential sale of the CBC's Front Street headquarters.

Also lost was Hockey Night's satellite radio show. It technically had a contract with Sirius-XM through the coming season, but the CBC always paid the production costs of about $400,000 a year. Despite the show's popularity, neither the CBC nor Sirius-XM had much interest in covering those costs in the last year of the radio deal with the NHL (Rogers takes over the radio rights for the 2015-16 season). The show went into limbo during talks between Rogers, the CBC and the satellite company, and it was officially cancelled last week when a deal could not be reached. Moore said in an e-mail message he hopes to revive the show next season.

This misstep was compounded after Bettman shocked the CBC executives last November when he told them Rogers now owned the rights to every NHL game broadcast in Canada for the next 12 years. Their only way to stay in the game was to negotiate with the winners. Many staffers feel the subsequent deal, which has the CBC carrying Rogers' version of Hockey Night on Saturdays for the next four years with no revenue coming to the public network, exacerbated the fallout of losing the NHL package.

It has also left even those staff members who will survive and even thrive in the shift from CBC to Rogers questioning why Orridge has so far not been included in the slashing of jobs. After all, it was announced last spring the CBC is getting out of the business of chasing professional sports, and Orridge was hired to negotiate those deals, particularly the NHL one.

Orridge is a Harvard University law graduate and veteran negotiator who arrived at the CBC in April, 2011. Since his most important negotiation would be for the NHL rights in 2013, Orridge's long friendship with Bettman, which goes back to the early 1990s when he was head of business and legal affairs for USA Basketball and Bettman was the NBA's general counsel, figured prominently in his hiring.

This was curious logic for the CBC. Bettman is famous in the business world for being a merciless, smart negotiator who never lets friendship get in the way of business.

It has not been an easy ride for Orridge who, to be fair, had to grapple with shrinking budgets at the CBC. Since his arrival, the network lost the rights to carry World Cup soccer after this year and failed to woo the CFL back to the network before losing the biggest prize of all, the NHL. Orridge did manage to get the Olympics back, but that was only after both Rogers and BCE Inc., which owns CTV and TSN (and 15 per cent of the The Globe and Mail), opted out of the bidding.

Separate sources said when Bettman and Collins began meeting with Orridge and McEneaney during their exclusive negotiating period over the summer of 2013, it was made clear to the CBC executives the broadcast landscape had changed. The rise in importance of multiple platforms and the NHL's need to squeeze revenue from every game as its salary cap rose to nearly $70-million (U.S.) a team meant the rights package had to involve more players than the CBC.

Indeed, sources said Collins told the NHL's board of governors he expected to get at least $3.6-billion in the next deal for Canadian broadcast rights. Bettman declined to comment on any aspect of this story, but if that was the estimate given to the governors then the $5.2-billion (Canadian) Rogers will pay over 12 years represents another lopsided win for the commissioner.

While Bettman and Collins told the CBC negotiators the total package would easily exceed their ability to pay for it, they were willing to compromise. Sources said the NHL bosses told Orridge and McEneaney to drop the regional broadcasts of Canadian teams and cut back to two games on Saturday night, at 7 p.m. and 10 p.m. (Eastern time), give up the all-star game as well as the digital rights and cut back on playoff coverage. Then the CBC was offered the top ratings draw, the Toronto Maple Leafs, or the Montreal Canadiens for the early games on Saturday nights and the Stanley Cup final for at least a few years. Do that, it was said, and we'll work out a number. Then we'll sell the other games and other platforms to other bidders.

The number the NHL had in mind for the reduced package was said to be a lot more than the annual $120-million paid in the last deal. But it would be one Bettman and Collins thought the CBC could afford, perhaps something around $200-million.

However, Orridge and McEneaney refused to budge from the basic form of the previous contract. Sources said they actually wanted more regional games, not fewer, and told Bettman and Collins that if a Canadian team is playing on Saturday it will be on the CBC.

By the end of the negotiating period, the CBC made what Orridge called "an aggressive offer," which was turned down. Orridge said the above scenario of the NHL offering a reduced version of Hockey Night In Canada for more money was not "an accurate characterization," but declined to discuss any further details.

Orridge did say the CBC's offer was based on the previous contract, not a radically different model. It is also obvious there was a disconnect with how the CBC saw the negotiations, which continued into the fall when Rogers and BCE entered the bidding, and how the NHL saw them.

At some point during October, 2013, those familiar with the negotiations say BCE's representatives told Bettman they wanted to buy sole possession of the Canadian rights. A few weeks later, Rogers Media president Keith Pelley told Collins his company was also willing to buy a complete package. In early November, Collins told both companies the NHL was ready to go with one partner and it would be either BCE or Rogers. It is not clear if this decision was prompted by the intransigence of the CBC's negotiators.

Once it became a two-horse race, BCE executives began calling the CBC in an effort to form a partnership but their approach was ignored, perhaps because of a belief the CBC was still a contender. There were no conversations between the CBC and Rogers. When Bettman told the CBC a week before the official announcement that Rogers was the sole owner of the broadcast rights, its executives were as shocked as everyone else.

However, CBC staff members say they were reassured by their bosses almost right up to that announcement about Rogers that it looked like the CBC would hang on to Hockey Night. This misplaced confidence on the part of the CBC's senior executives may have been reflected in a story in The Globe and Mail. It appeared on the day of the Rogers announcement, Nov. 27, 2013, citing sources as saying the CBC was about to sign a new contract for $200-million a year.

The mistaken sense of the CBC's chances plus sticking to the previous rights model brought into question whether Orridge and McEneaney were aware of the danger posed by the enormous financial resources of Rogers and BCE. Talk that both companies would throw gobs of money at the NHL as soon as the CBC's exclusive negotiating window closed dominated any discussion of the situation among insiders for years. Some insiders think the CBC considered BCE a problem but never saw Rogers coming. Orridge says he was well aware of the threat but others are not convinced.

"They weren't dealing with reality at all," one staffer said of the reassuring messages from the CBC brass.

When the Rogers deal was announced last Nov. 27, Lacroix and his executives tried to play down the devastating blow. "Outside of hockey, we're not anticipating a significant impact," McEneaney told The Globe.

The anger of the CBC staff grew when Lacroix announced the network would carry Rogers' production of Hockey Night on its full network at no charge for four years. All revenue goes to Rogers. Lacroix lamely said this would allow the CBC to promote its other shows to the largest television audience in Canada.

One angry CBC veteran said it also means an extra hit to the network's revenue. The CBC's advertising sales people, many of whom were laid off in the wake of losing the NHL rights, can no longer strong-arm sponsors into buying time on lower-rated shows as the cost of getting on Hockey Night.

CBC staff felt their negotatiors panicked and rolled over when they should have played hardball with Rogers. The cable company's networks do not reach nearly as many Canadians as the CBC's over-the-air network. Many CBC staffers feel the network should have demanded to be paid significantly for carrying the games.

"I think we extracted the best possible scenario going forward where once again Canadians can still see the high quality, the gold-medal standard in hockey production on CBC on Saturday nights," Orridge said. "So all things being equal, this was the best possible outcome given the totality of the circumstances."

The rank and file bitterly disagreed and the hard feelings spilled over shortly after the Rogers announcement. Lacroix held a town-hall session with CBC employees to explain what happened and had to speak amid shouts for his resignation.