Rogers Communications Inc. is off to a slow start in the quest to win its $5.2-billion gamble on NHL hockey.

After eight weeks, the ratings results for NHL games on Rogers’ various networks plus the CBC are mixed compared to last year – up slightly for the Eastern games on Saturday nights, down significantly for the Western games on Saturday, up nicely on Wednesdays and disappointing on Sundays.

According to the ratings compiled by Numeris, the primary audience measurement company in Canada, the average audience for Hockey Night In Canada’s Eastern games on Saturday nights through Nov. 22 was 2,184,000 people. That is an increase of 17,000 viewers from the same period in 2013, which is 1 per cent. The average audience for the later Western games on Saturdays was 860,000, down 17 per cent from 1,032,000 last year.

But the big problem is that one-quarter of the way through the NHL’s regular season, Rogers is running around 9 per cent behind the 20-per-cent increase in television viewers it promised advertisers, who were also told there was a commensurate increase in advertising rates. This has the company lagging behind its projections for the revenue needed to make this venture break even at the very least after landing the NHL’s national Canadian broadcast rights for $5.2-billion over 12 years.

Rogers Sports Network Saturday Viewership

“In my estimation, I think Rogers was very aggressive in their estimates for how much hockey Canadians are interested in seeing and how much that’s worth to advertisers,” said Fred Forster, chief executive officer of Omnicom Media Group Canada, a major media buyer. “It’s time to pivot and to do the best they can, in my opinion, to generate as much revenue as they can from the [advertising] inventory they own, not just in broadcast but across all their properties, and work hard to make the hockey investment pay out.”

Just how much advertising revenue Rogers expects to pull in from Hockey Night In Canada on Saturdays plus its Sunday and Wednesday broadcasts is a closely guarded secret, according to industry insiders. Sources close to Rogers say it is at least $250-million for the 2014-15 season, which is an aggressive target indeed considering Barry Kiefl, president of Canadian Media Research Inc., estimates that if Rogers can manage a 10-per-cent increase over the ad revenue generated for NHL hockey last season by the CBC, TSN and Sportsnet combined, the most it can make is $195-million.

However, Forster says the numbers are not “anything to sweat about,” because Rogers is eight weeks into a 12-year deal, so “let’s not get upset about the first few months of hockey.” This is also the message from Scott Moore, president of Sportsnet at Rogers Media, who says he is “extremely happy on the big picture with a couple of small concerns.”

Moore is happy about the ratings for the early Eastern game on HNIC, which he says are up 9 per cent if you compare the 2,184,000 viewers with the average audience of 2,020,000 for the full 2013-14 season. He is also happy with the Wednesday night games, which averaged 974,000 through Nov. 26. That is more than 200,000 higher than TSN averaged last season for its mid-week national NHL games (744,000) although not all of them were shown on Wednesdays. This number was boosted by two Toronto Maple Leafs games, traditionally the highest-rated of the seven Canadian NHL teams, including the season-opener Wednesday, Oct. 8, against the Montreal Canadiens, the first broadcast for Rogers after winning the rights away from the CBC and TSN. That game drew an audience of 2,025,000 on Sportsnet, a record for the network, although it was down 13 per cent from the 2013 opener, which was on the CBC and also featured the Maple Leafs and Canadiens. However, the CBC is available to more viewers than the cable network Sportsnet.

The concerns for Moore and his fellow Rogers executives are the late Saturday game on HNIC and the Sunday night games on City. The Sunday night games are new for Canadians and are seen as a test of their appetite for watching hockey. So far, Rogers Hometown Hockey averaged an anemic 664,000 through Nov. 21, which puts it 18th among the top 20 shows in Canada on Sundays. It was not even the top-rated sports program, as the CFL playoffs on TSN were ninth on Sundays with 1,230,000 viewers, and the NFL on CTV was 16th at 781,000.

Hometown Hockey Sunday Viewership

Moore says the Sunday games are still pulling much better audiences than City managed with the entertainment programs that ran in that spot last year. Also, he said, Sportsnet beat TSN in the monthly ratings race five times from June through October after doing so only twice in the 12 years after the network was founded in 1998. He also says the number of Canadians who have seen at least part of a hockey game, known as reach in ratings jargon, was 23 million in the first seven weeks of this season, an increase of 9 per cent from the same period last year. Then again, the games are now shown on more networks than they were last season – all the Sportsnet networks, City and FX Canada in addition to the CBC on Saturdays – which makes a 1-per-cent increase in the early games and the drop in the late games less than flattering.

Moore said the poor number for the late Saturday games “is the unintended consequence of putting the early games on four or five different channels.” The splintered audience does not naturally switch over to the CBC, the main carrier for the Western games.

On the plus side, ratings are strong for the surprisingly good Vancouver Canucks, and as of this week five of the seven Canadian teams were in playoff position, including the Leafs, which could mean a strong finish in advertising revenue.

“I think this thing will find its proper balance,” said Forster, who echoes other media buyers as well as Moore who say this is the first time a broadcaster has tried to sell hockey from every available media platform, making predictions difficult. “I think they’ve got a lot of untapped opportunity in their other technology and assets and digital capabilities that have not been fully exploited yet.”

Without counting the production costs of the hockey shows, Rogers needs to bring in an average of $433.3-million over the next 12 years just to cover the $5.2-billion it is paying the NHL for the broadcast rights on everything from television to radio to mobile devices. The money has to come from four areas: advertising ($195-million, according to Kiefl), French television ($120-million from Quebecor’s TVA network), digital and mobile services, and cable-television subscribers. It is possible Rogers could convince the Canadian Radio-television and Telecommunications Commission to let it raise subscriber fees for its cable networks, but insiders say this is unlikely.

Assuming the advertising sales hit $195-million, the need for at least $118-million from the digital, mobile and cable services is behind the dust-up with BCE Inc. and other communications companies over Rogers’ GamePlus app. That is an add-on feature to GameCentre Live, the company’s streaming service for NHL games. Rogers made GamePlus available only to its own subscribers in hopes of signing up more customers, which prompted BCE and other cable providers to complain to the CRTC that their customers should also get access to the app. A ruling is expected soon and the importance of the decision was seen in the remark by Rogers chief executive officer Guy Laurence that BCE is “a cry baby.”

Sportsnet Hockey Wednesday Viewership

Advertising is the most important of those four revenue sources, and those close to Rogers say that is where most of the heat from Laurence is being directed. The signs of strain in the Rogers sales department became evident shortly after Laurence took over from former CEO Nadir Mohamed last May.

Jack Tomik, a veteran sales executive with a solid reputation in the industry, was hired away from the CBC by the Mohamed regime in May, 2013, to revamp the company’s sales approach. Rogers moved away from the old model where sales people handled just one form of advertising, such as radio, to one where a client could buy ads on all platforms from one person.

At least four senior executives at the top of the sales department left in 2014 as a result of the restructuring, and Tomik himself departed at the end of November, giving way to Al Dark, another CBC veteran. Turnover is common in the media sales field, but those familiar with the company say Tomik’s departure was curious since he left so early in the first season of the NHL contract and a year ahead of what was thought to be a three-year mandate. Many of the changes Tomik implemented caused friction between him and the executives affected by them.

“Dealing with an overall restructuring of the company, he just wasn’t having as much fun as he’d like to,” Moore said of Tomik’s departure. Tomik declined to comment.

Rogers’ initial sales strategy received poor marks from those who buy advertising. While Rogers guaranteed a 20-per-cent increase in audiences over the 2013-14 season, its sales staff took an aggressive approach in demanding a similar increase in advertising rates, which vary according to the program and negotiating skills of the buyers. This was resisted by some major advertisers traditionally associated with hockey.

Tim Hortons, the quintessentially Canadian company (even if it is swallowed by Burger King) whose commercials have long been a staple on hockey programs, did buy time on Rogers’ games but declined a title sponsorship for any of its hockey shows. Title sponsorships are where the premium advertising dollars lie, and sources close to Rogers say Tim Hortons’ decision to turn to rival network TSN for a title sponsorship on a daily hockey show – Tim Hortons That’s Hockey – was a major blow.

A Tim Hortons spokeswoman declined to say anything about the deal with Rogers other than it includes ads on most of the broadcasts. She said the company’s chief marketing officer, Peter Nowlan, was not available for an interview.

Moore noted Tim Hortons has bought both regional and national ads on Rogers broadcasts and “we feel pretty good about it.” However, he added, “we always like to see individual sponsors spend 100 per cent of their advertising dollar with us, but chances are they don’t.”

The only outside title sponsor for the NHL games is Scotiabank, which has the Wednesday games. But Moore says this was by design, as Rogers wanted to be the title sponsor itself for Sunday games and “we didn’t want to put a title on Hockey Night In Canada.”

Aside from selling what sources say is a sizeable remaining advertising inventory, a big challenge for Moore and his team is getting Canadians to watch NHL teams other than their local favourite. The conventional wisdom in television is that good match-ups mean good ratings, but this has been slow to catch on for teams that are not named Leafs, Canadiens or Canucks.

For example, a game between the Detroit Red Wings and New York Rangers on Wednesday, Nov. 5, on Sportsnet One drew just 54,000 viewers and was badly thumped by a game between the Canadiens and the dreadful Buffalo Sabres on Sportsnet national that had an audience of 456,000.

Moore says Canadians are still getting used to finding hockey on different channels than they are accustomed to, and the wide variety has diluted the individual audiences. “One of the things we said we would look for is how much hockey is too much and we’re probably close to how much is enough,” he said.

If the 9-per-cent lag behind Rogers’ promise of a 20-per-cent increase in viewers continues, the company will have to give advertisers what are known as make-goods – free spots on broadcasts, which Moore says the company has already accounted for in the budget. But, he says, the real revenue jackpot comes in the playoffs. Moore is hopeful the promising signs from most of the Canadian teams, even the Maple Leafs, mean the disappointing finish that hit the CBC last spring, in the last year it controlled the revenue from HNIC, can be avoided.

“You always feel bullish when the Leafs, Habs and Canucks are all looking like they’re going to be in the playoffs,” Moore said. “If that changes, like last year for the poor old CBC when they had one Canadian team in there [Montreal], that affects your number substantially.”

Many millions of dollars are at stake, but if the Leafs dodge the late-season collapse that sunk them as well as their broadcasters last April, and the other Canadian teams hold steady, Moore says “our revenue will not be an issue.”