NHL TV Moves to Disney’s World

The National Hockey League’s Board of Governors approved a five-year, $600-million contract with Disney-owned ABC, ESPN and ESPN2 on Thursday for exclusive broadcast and cable-TV rights starting with the 1999-2000 season. That signaled an imminent end to the NHL’s brief and bumpy relationship with the Fox Broadcasting Co.

The NHL’s five-year, $155-million agreement with Fox for broadcast rights has one season left. However, Fox is expected to dump the final year to avoid becoming a lame duck and ABC would seem the likely buyer.

The NHL-Disney deal, which will more than double the league’s TV revenues, will be announced next week by the NHL.

The Board of Governors voted on the matter despite a letter from Fox last week disputing the deadline for it to counter Disney’s offer. Fox had 10 business days to match a rival bid after being informed of one by the NHL. By the league’s calculation, the deadline was Aug. 14.

Fox contends that the deadline should have been later because the NHL initially disclosed the value of only the broadcast portion of Disney’s offer and omitted the cable portion. Without knowing the value of each component, Fox said, it was at a disadvantage in preparing a counterbid.

League and Disney sources say, however, that Fox was never eager to renew hockey, a theory supported by Fox’s earlier decision to pass up its right to extend its contract by two years. Those sources say the letter was merely a legal ploy for Fox to cite later, should it want to contest the contract with Disney.

Disney is believed to be paying $350 million to keep the cable rights on its ESPN networks--where hockey is a cornerstone of its sports programming--and $250 million for the broadcast rights, although some sources suggest the split might be closer to $450 million-$150 million. ESPN’s current deal is $100 million over seven years and expires after the 1998-99 season.

Fox spent millions of dollars to promote hockey and millions more to develop and deploy computer graphics it hoped would lift ratings. Its most controversial innovations, intended to help viewers follow the action, were a “glowing” puck and a cometlike tail attached to the puck. Neither attracted new viewers. Fox’s strategy of televising six or more regional games instead of a nationally televised game also failed.

Fox lost about $1 million a game and sparked concern among its affiliates when ratings slipped from 2.0 in 1994-95--the first year of its contract--to 1.4 this season. Each ratings point represents 980,000 households. Its playoff ratings were undoubtedly hurt by its obligation to split games with ESPN, preventing either network from promoting the playoffs as a huge event.

Fox will maintain a connection to the NHL through its Fox Sports Net regional cable channels, which own local rights in many cases.

Disney’s acquisition of the NHL TV package represents another bold step into professional sports by the Mighty Ducks’ parent corporation.

In January, Disney won the NFL’s TV rights with an eight-year, $9.2-billion contract to televise games on ESPN and ABC.

Some critics say Disney could make an extravagant bid for the entire NHL package because it can pass costs on to cable operators in the form of higher licensing fees. Disney can also use cable to subsidize its broadcast bid.

ESPN said its hockey bid will not result in a surcharge to cable operators, but it can raise rates by 20% a year even without one.

The deal will increase each NHL club’s share of TV revenues to about $4.5 million, a considerable jump from the $1.2 million each received from the Fox deal, but well short of the $15 million to $16 million each NBA club receives from that league’s TV deals.