Morning Mashup: MLSE (soon to be) sold for a bit of money
We may be on the verge of one of the most significant business transactions in Canadian history. The rumour broke last night that Ontario Teachers Pension Plan is nearing the sale of its majority, 79.8% stake in the Maple Leafs Sports and Entertainment consortium to a tandem of telecommunications giants in Bell Media and Rogers Communications. Andrew R will be stopping by with an in-depth look at the prospective $2 billion sale in the next few days. For now, he gives us a quick reaction below:
“Simply one of the more significant business transactions in Canadian history. The games that have gone here – from fake interested buyers in the US with Gretzky, to “oh, the deal is off and MLSE is not for sale,” etc, etc, etc – this has been a soap opera hidden in a massive and game-changing business transaction. The back room politics here, the level of corruption, the sheer extortion that has gone on, it’s amazing..
This Bell/Rogers co-operative thing has thrown me for a loop. I just can’t see this happening and, if it does, it’s a left field type of thing and I have not yet wrapped my brain around it. Rest assured, though, a $2B transaction for MLSE is based on future value which is based on the value of media and content. No one does this without leverage for content and direct-to-market advertising for the broadcasts. Sales needs to be finalized before this portion can be understood fully.”
The big concern for Leafs fans doesn’t lie with the business details but with what this would mean for the way their team is managed and broadcasted. Ostensibly this impacts little in the short term in terms of the management side of MLSE; Larry Tanenbaum will not give this deal the green light unless he remains the chairman of MLSE. The bigger question remains the same one that existed before the surprising emergence of this deal – the eventual replacement of Richard Peddie for the role of President and CEO. Peddie retires in three weeks time.
There’s bound to be concerns about Burke preserving his level of autonomy under new ownership, but the only thing that should change is the people writing the cheques. Any concerns about the way the Blue Jays are handled under Rogers ownership seems like an apple and oranges comparison in the sense that the MLB has a soft cap, and the Jays are not king in the biggest market in baseball. The fact remains, and always will remain, that there is much to be gained by being successful on the ice (i.e.playoff revenue, high viewer ratings).
The broadcasting implications of this type of vertical integration is a little more discomforting. There’s something that makes me generally uneasy about a media corporation monopolizing Toronto’s professional sports teams. It’d certainly suck if this means Leafs PPV events, or expensive channel packaging in order to see the Buds play on a regular basis.
This should be a fascinating story to follow in the coming days and weeks.
Bell will have to sell off its stake in the Habs to make this deal happen. Don’t blame ‘em.
Joe Warmington at the Sun never really explains his title, but I hope he’s right.
I’d certainly hope not.
From Steve Burtch at PPP.