ESPN has declined to match a bid by Comcast's Outdoor Life Network for the cable TV rights to air National Hockey League games under a new contract, meaning OLN, whose offer had already received approval by the NHL board of governors, will win the agreement.
ESPN announced its intention not to exercise its right to match the deal just hours before the midnight deadline. OLN bid a guaranteed $135 million for the first two years, and another $72.5 million for a third option year, according to sources. ESPN in late May had opted out of the final year of its TV rights deal ithat would have required it to pay the NHL $60 million for the right to air games the upcoming season, but retained its right to match any offer from another network.
George Bodenheimer, chairman of ESPN and ABC Sports, said, "We have informed the NHL that we did not accept their final contract offer [i.e., match the terms of the OLN offer]. We worked very hard to build and sustain our relationship with the league and would have liked to continue [televising NHL games]. However, given the prolonged work stoppage and the league's TV ratings history, no financial model even remotely supports the contract terms offered."
ESPN was not only unwilling to pay as much as OLN, but it was also not able to meet some of the provisions that OLN had agreed to with the NHL. Among them, a provision that if agreed to, would require ESPN to carry all NHL games on ESPN, which has greater distribution and ratings, and none on ESPN2. Another part of the Comcast/OLN deal would reportedly insure that if the NHL starts up an NHL Network, that Comcast would distribute that network on a digital tier on all of its systems. ESPN could not match that because it does not own cable systems.
The OLN bid, according to sources, also includes a provision that
Comcast offer NHL shoulder programming and some games On Demand to its 22 million subscribers, and would also include a broadband component, including possible video streaming of NHL games.
For competitive reasons, it was thought that ESPN had no choice but to match the offer, because gaining TV rights for the NHL would give OLN a foot in the door toward becoming a full-fledged sports programming network competitor to ESPN. OLN has also bid on the new National Football League Thursday-Saturday TV rights package. Garnering both the NHL and NFL, along with the Tour de France TV rights which it already owns, would make OLN a legitimate rival to ESPN.
ESPN representative Diane Lamb acknowledged that garnering the NHL TV rights will further OLN's presence in sports television. "[OLN] is certainly setting itself up as a potential competitor, and we welcome that competition." But Lamb added that OLN will not be the first competitor to ESPN.
"[ESPN] already faces daily competition from a number of sources," both print and television, she said.