Fresh off the biggest deal for U.S. television rights in its history, the National Hockey League has passed the puck on its digital advertising sales to its TV broadcast partner, NBC Universal.
The five-year deal announced on Monday means that the NBC Sports sales team will now sell ads for a channel it does not own - the NHL Network - as well as digital properties including the NHL.com website and NHL mobile sites and apps.
The announcement comes after a historic deal in April, in which NBC owner Comcast Corp. paid roughly $2-billion (U.S.) to secure the TV broadcast rights to NHL games for the next 10 years.
As the broadcast partner, NBC already had rights to sell advertising on its own network and the cable sports channel, Versus, which became part of NBC Universal following its acquisition by Comcast last January. The 14-member NHL media sales department will move to the Comcast bench as well, working as part of the NBC Sports Group's Sales Department.
"It's unusual not only for NBC Universal, but for any media company. I don't think it's ever been done, where there's been total unification of all media assets," said Seth Winter, senior vice-president of NBC Sports Group, adding that he thinks this should be "a model" for other deals.
The financial terms of Monday's deal were not disclosed, but it includes a revenue-sharing component, meaning that NBC Sports will take a cut of advertising sales on NHL digital properties beyond the on-air games.
The agreement is an example of a trend among TV broadcasters, who are facing rising costs to buy television rights for sports events, and are no longer content to invest in traditional TV rights alone. TV advertising is still where the money is, but broadcasters have woken up to the growing value of online viewing and mobile apps.
Digital rights are "integral for the broadcasters. It is part of NBC's willingness to pay what it pays," said Matthew Harrigan, a media analyst with Memphis-based Wunderlich Securities.
It also gives advertisers a one-stop shop for NHL properties. "Joining forces with NBC enables us to go to the marketplace with unprecedented strength," NHL chief operating officer John Collins said in a statement Monday.
The NHL will keep its hands on the lucrative sales of official league sponsorships. But the digital deal is valuable for NBC, especially as it builds its brand to compete against other sports broadcasters such as ESPN.
There is little incentive, at least at the moment, for the NHL to keep the comparably thin digital revenues to itself, especially because the league has a renewed stake in keeping its broadcast partner happy: The NHL's total annual TV revenue at the end of the 2010-11 season was $217.5-million, a figure set to rise significantly with the Comcast deal.
"I definitely think it's groundbreaking for league-broadcaster relationships," said AJ Maestas, president of Chicago-based research firm Navigate Marketing, which counts ESPN among its clients. "Not only is [digital partnership]required to avoid that risk of cannibalizing their existing business … I don't think you'll see major media deals done without this."
With files from reporter David Shoalts