HabsCast Hockey Blog

With some recent programming decisions, the topic of the CBC has been brought up again recently. The arguements usually just go around in the same circles, but, one point that often gets brought up, that I’m starting to question is, whether the CBC is actually making money on HNIC programming like they claim, particularly with their most recent six year contract, which will cost over $90M a year to keep the franchise going.

Taking a look at the 2006-07 financials (click here), the CBC has $328M in revenues from advertising and programming sales. This includes all of their primary business, including english and french television and radio channels, as well as their website. Separate specialty channels are listed under a separate line item, which includes CBC Newsworld. The rest of their funding comes from about $1 Billion in goverment subsdization.

The question becomes, how much of the revenue pie does HNIC consist of, and, how much is it really costing them to broadcast. They do not detail this on their public statements at all, so no one can really validate or refute their claims. We don’t even know how much each of their lines of business contributes to that revenue. You have to assume that English television is the biggest piece of the pie, but, I would think that it’s unlikely that even though it is the biggest chunk, that it can’t gratly exceed more than 60% of total revenues.

If we assume that it is 60%, you’re then left to figure out how much of that roughly $200M in revenue is attributably to the HNIC franchise. Again, there is nothing to give us a detailed breakdown. If you look at the roughly 30 weeks of regular season broadcasts during the season, plus playoffs, including the game times, pre-shows, post-shows, and game re-broadcasts, I calculate around roughly 5% of the CBC’s english language broadcasts is made up of HNIC.

While it is one of the few high profile programs they have, it’s not alone on the CBC’s schedule. Their news programming has long been considered one of their biggest revenue generators. They 2006-07 programming year that includes CBC’s CFL contract, and Grey Cup, which was the highest rated program during their year. According to their site, This Hour Has 22 Minutes and The Rick Mercer Report was winning it’s time slot in Canada, so, they’re generating revenue from there. I’m assuming that any other programming, from day time talk shows, to afternoon syndication of the Simpsons, to movies they show in prime time are still generating some revenues as well.

To meet just their licenscing fee, HNIC, as 5% of their broadcasting, would have to consist of about 50% just to meet their new licensing fee rates.

On top of that is the cost issue. The CBC, being a heavily unionized environment, is reputed to be a broadcaster that operates at a higher cost than their private sector competitors. Each week, having broadcast teams, usually in at least 3 or 4 locations requires a certain amount of costs.

On their website, there is $1.4 Billion in television and radio service costs. No further breakdown is provided.

On top of that, there is a great deal of costs that are likely shared or common costs across all lines of business, like amortization of property and equipment, transmission, distribution and collection and corporate management. This comes in at roughly $200M, and, generally from my experience in the costing industry, that organizations that are trying to show that certain product lines are profitable, general don’t allocate these costs to their products when they say whether they are profitable or not.

We can never really know how much the CBC is making off of HNIC, but, I think with the information that is available, that it just can’t be assumed that they must be making off of it, because they state that it is the case.

[Article via HFBoards.com]

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