TSN sells MLSE share to Sportsnet

There’s a long and notable history of media companies owning teams and broadcasting their games.

In Canada, a particularly interesting example of this has come from Maple Leaf Sports and Entertainment, which has essentially been a joint venture between the parent companies of national sports networks TSN and Sportsnet for more than a decade.

But one of those is now exiting, with TSN parent BCE set to sell its stake to Sportsnet parent Rogers Communications.

MLSE is the current parent company of the Toronto Maple Leafs, Raptors, and Argonauts, as well as Toronto FC, the AHL’s Toronto Marlies, the G-League’s Raptors 905, and more. They own the Leafs’ home of Scotiabank Arena and 37.5 percent of Maple Leaf Square (featuring businesses like the MLSE-operated Real Sports Bar & Grill), and have investments in BMO Field and Coca-Cola Coliseum, as well as other ventures .

The company has been through a lot of hands over the years. Its current setup was formed in 2011 when the Ontario Teachers Pension Plan sold its 66 percent controlling stake to BCE and Rogers, giving each 37.5 percent. Existing shareholder Kilmer Sports retained the remaining 25 percent (led by Larry Tanenbaum, MLSE’s chairman and the chairman of the NBA’s board of governors, who has 20 percent himself). But Sportico’s Scott Soshnick and Kurt Badenhausen reported Tuesday that BCE is selling their stake to Rogers.

Here’s more from that piece :

“We are proud of our time as co-owners of these iconic sports teams, and through this agreement have ensured that fans can count on Bell’s continued support of their teams,” Mirko Bibic, BCE’s CEO, said in a statement. “Today’s announcement demonstrates that we are focused on creating the financial flexibility to support our ongoing transformation and core growth drivers.”

BCE intends to use the proceeds to reduce debt and to support its ongoing transformation “from telco to techco.” In addition, Bell Media reached a long-term agreement with Rogers to continue to share broadcast rights for the Maple Leafs and Raptors on TSN for the next 20 years. Bell will also remain the official telecom sponsor of the Raptors, along with sponsorships of the Argonauts and Toronto FC.

It’s interesting to hear that this deal (which is expected to close in 2025 if it receives regulatory approval) came with a 20-year agreement for TSN to continue to have some Leafs and Raptors rights (although there are no details, and it’s unclear how extensive their “share” will be). In the case of the Leafs, that’s local rights only, as Sportsnet has the national NHL rights through 2025-26. But the Raptors’ rights are sold nationally and not locally, and that NBA/Raptors package is split between the two broadcasters. It sounds like TSN will continue to have at least some rights for a couple of decades, but it will be interesting to see if the split between the companies shifts.

It’s certainly beneficial for the Bell Media/TSN division of BCE to get at least some level of security on future Leafs and Raptors rights (although it’s not yet clear just what they have locked up). It’s quite possible to conceive of Rogers trying to move all those teams they now own a controlling interest into their networks, similar to what they did with MLB’s Toronto Blue Jays. And that could prove disastrous for TSN.

With the Jays, Rogers took an 80 percent stake in 2000 and full ownership in 2004.  Sportsnet has had its full broadcast rights since 2010. Meanwhile, TSN, which is 30 percent owned by ESPN and syndicates significant programming from them, picked up Sunday Night Baseball in that 2010 trade for the package of Jays’ games they used to have, and got rights to all ESPN MLB games in 2014.

Thus, TSN currently has some national MLB rights , but not to the degree Sportsnet does. And they don’t have local games from the Jays, or the Seattle Mariners, where Rogers sublicenses some local games from Root Sports Northwest for Sportsnet Pacific. So a repetition of that model could be extremely bad for TSN in the Canadian sports network wars. But the 20-year deal here has at least ensured that TSN will have at least some Leafs and Raptors rights for some time.

The other MLSE-owned teams likely won’t have major broadcasting impacts from this right away. Toronto FC’s matches are largely on AppleTV+ as part of that worldwide deal, although TSN and their sister French-language network RDS do currently sublicense some of those ( 14 matches this season ). It’s possible that sublicensing shifts to Sportsnet, but that’s a much more marginal move than most of what’s at issue here; TFC does very well at the gate, but MLS TV ratings in Canada have traditionally not been good (not that they’ve been great in the U.S., either), so neither TSN keeping that sublicensed package nor it moving to Sportsnet seems like a massive impact.

The Canadian Football League’s Argonauts won’t get an immediate broadcasting effect from this, as TSN and RDS hold national rights to all CFL games through 2026. However, they could be in for a potential ownership change themselves. Rogers has repeatedly indicated only limited interest in the CFL, and the 2016 MLSE move to buy the team was believed to be led by BCE and Tanenbaum. So they may be sold off after this move.

Of course, that 2016 MLSE purchase also features obvious synergies. That was especially true with the Argos’ move to TFC’s home of BMO Field, and it’s possible Rogers might keep the Argos mostly for ease. That’s especially in the short term, as BMO Field is set to host FIFA World Cup matches in 2026; any attempt to alter the current setup before that could run into a lot of problems, including in politics. But Argos’ fans and those who work for that team definitely should be worried that their parent company is now controlled by a national Canadian sports broadcaster that hasn’t shown much CFL interest.

It’s worth wondering here if there’s a larger shift away from sports and sports broadcasting by BCE, too. Yes, the 20-year Leafs and Raptors rights deal gives TSN some security (again, though, that depends on the particular conditions). And it suggests there’s no particularly-pending move to sell or shut down the channel. But BCE’s MLSE stake seemed quite beneficial for TSN, giving them a lot of impact on the broadcasting arrangements for two of the country’s biggest teams nationally.

And “cash” to transform “from telco to techco” doesn’t seem like a trade that will help the sports side of BCE and Bell Media. That’s especially true considering that TSN already made a full jump to offering an over-the-top feed way back in 2018 , which was itself two years behind Rogers , which was almost a full decade ahead of ESPN’s long-debated plan to launch their own version of this. A lot of the talk about sports broadcasting companies adopting tech and needing money to do so has been about raising funds to launch direct-to-consumer offerings, but that’s not the case here, and there hasn’t been a lot of positive reinforcement from BCE lately on how TSN fits into their long-term plans. And selling off the MLSE stake certainly seems ominous.

One further thing of note is that the MLSE setup was quite unusual and that it formed a way for major broadcasting companies to own teams in a way that removed or at least minimized some of the obvious conflict-of-interest issues. (This is a general merit of joint ventures and a reason companies still try them despite some of the other issues they can pose .) With the broadcasting rivals holding equal stakes, and with Tanenbaum’s Kilmer Group having the deciding vote, the company couldn’t be used to benefit one broadcaster or the other (at least not on an obvious or ongoing basis).

That got rid of a lot of the talk of problems with joint team/broadcaster ownership. That includes local media rights valuations (long an issue with the Blue Jays, as Scott Boras and others have noted ). With that barrier removed, it will be interesting to see if those issues arise for the Leafs and Raptors down the road. That may get especially interesting after the end of this 20-year agreement to keep games on TSN.

[ Sportico ]

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