Rogers & Bell To Buy MLSE? WOW

By TSM

Let’s assume for purposes of this post that the story broken by the Toronto Sun is true, that a deal is close to being completed and not only that it gets done.

Wow.

Last week the Toronto Star reported that a combined bid between Rogers and Bell to acquire the Ontario Teacher’s Pension Fund’s shares in MLSE had failed and as a result Teachers was taking their shares off the market. Nothing like a threat of “we’re no longer for sale” to get a deal back on track.

Tonight, the Toronto Sun is reporting that a deal is very close to being completed.

“Bell and Rogers represent TSN and Sportsnet, the No. 1 and 2 sports broadcasting powers in Canada, but they will call a truce and split the shares with so many lucrative deals to be spun off their union.

An announcement could come as early as Friday, but there are many moving pieces that could delay the final sale until closer to Christmas. MLSE runs the Toronto Maple Leafs, Toronto Raptors, Toronto FC, the Air Canada Centre and has high profile real estate holdings. They also own LeafsTV, as well as basketball and soccer television holdings. Rogers, meanwhile, owns the Toronto Blue Jays, making the baseball team an obvious addition to the new combined network.”

Stop and think about the ramifications about this news. I mean, radio, TV, web, mobile, publishing (does bell own any mags?). Talk about a deal with serious tentacles. It’s enough to give you a headache thinking about how this could actually work out if it gets done and all necessary governmental agencies and leagues bless a potential deal.

The National Post adds several interesting tidbits to the story:

“Larry Tanenbaum, the Toronto-based construction magnate who owns the remaining 20.47% of MLSE, would remain chairman as a condition of his support for the transaction contemplated by Rogers and Bell. As part of a shareholders’ rights agreement, Mr. Tanenbaum has first right of refusal on any attempted sale, and would have to approve any changes to the partners’ accord, including dividing the much-coveted broadcast and Internet assets.”

“Sources say the Rogers family had given their approval to buy the entire controlling stake from Teachers but chief executive Nadir Mohamed convinced them that a joint bid with a major competitor was the more attractive option.

As a result, the proposed deal by Bell and Rogers would see the 79.53% stake divided equally between the two telecom companies, who would also split the estimated $1.4-billion purchase price.”

What’s $700 million between rivals right???

Another interesting tidbit from the Sun story:

“There is speculation that John Tory, a former president and CEO of Rogers, will play a role in the new operation.”

Would he have to leave his post on CFRB 1010? 🙂

So, let’s think about the potential ramifications:

Rogers now will own a piece of every major team in town save for the Argos, including 100% of the Blue Jays and dome.
Rogers owns Sportsnet and the Sportsnet’s Fan 590
Bell owns TSN and TSN Radio 1050
Each has a “cable”, cellular and internet company.

The companies did cooperate on an Olympic tv deal, however they are fiercely competitive. Radio stations, tv neworks are openly hostile to one another. They compete for on and off air talent. They compete for television and radio rights.

To watch this get explained will be the stuff business school case studies are based on. Experts will say it’s destined to fail. Both companies have HUGE egos and I am not talking about the on air talent.

If MLSE currently makes big money on rights for any of their teams how will they handle that moving forward? Two things are certain, MLSE will continue to be very well funded and we, the fans are going to continue to pay a steep price. Having the Canadian media leaders owning this major asset we are assured, I think, that all distribution avenues are going to be exploited. Leaf, Raptors and TFC fans should be the beneficiary of unprecedented coverage and technological advances. Content will be readily consumable to those who are either Rogers or Bell customers on a wide range of devices. Xbox, iPhones, Ipads, you name it.

To be clear, there is no correlation between these two companies buying and any expected on ice/court success. You will hear how it will be more faceless suits owning the teams. Thats true. You will hear that this means winning will remain as elusive as ever. While this isn’t Bob Mckenzie and Nick Kypreos buying the teams, Rogers and Bell do at least understand the business of sports. That’s different than a teachers fund. There’s a difference between Richard Peddie and teachers leaders and Keith Pelly. Better? I have no idea. I do believe that at the very least these two companies have money invested in sports and understand the business side of it. Yes, I am aware of Rogers track record while owning the Jays.

In the end, it’s about the story right.? THE story on this site for the last while was the ever changing sports radio landscape in town. The story will clearly be on how this deal gets papered and approved should it actually get done.

Lots more to come

TSM

About the Author