UFC’s contract with Sportsnet, one of two major sports cable networks in Canada, is set to expire at the end of the year. No new deal has been signed. UFC currently airs on Sportsnet 360, which is available in 5.8 million Canadian homes.

UFC has aired on Sportsnet since 2007, and the network signed UFC to its current exclusive, four-year agreement for Canadian broadcasting rights in 2011. From 2011 to 2013, UFC programming continued to air on a mix of other Sportsnet channels in Canada. When Sportsnet 360 was rebranded as such in July 2013, all of Sportsnet’s UFC programming moved to that channel.

UFC negotiations over its broadcasting rights in Canada are significant because in recent years fees for UFC’s international television rights have become an increasingly more important part of the company’s business model. The Sports Business Journal recently noted that a few years ago, 75 percent of UFC’s revenue came from pay-per-view. In 2013, it was down to 30 percent. That number will be even lower for 2014.


“Between the FOX, Globo and Televisa deal, and countless others, television has replaced pay-per-view as the leading revenue stream,” wrote Dave Meltzer at MMAFighting.

Pay-per-view, though, generates more revenue per event when looking at each event on an individual basis. For instance, Meltzer notes in his article that for the April 19 Fox Network special, the UFC was paid about $2.2 million. This would be the equivalent to a pay-per-view that does about 85,000 buys, significantly lower than even the worst pay-per-view buy rates UFC garnishes.

Still, television is a major revenue source for the UFC, and it will become even more important as a revenue source as the company signs new agreements with broadcasters in international markets. That is why UFC’s negotiations with Sportsnet are important, as they are partially reflective of the UFC’s strength in negotiating television deals in international markets. As UFC President Dana White noted in a recent sports media conference, the UFC is “much more than a pay-per-view company.”

There are aspects of the Sportsnet deal that are unique to the Canadian market, though. One of the key issues in renegotiations is Sportsnet’s November 2013 acquisition of NHL broadcasting rights for $5.2 billion over 12 years. The traditional and most popular night for televised hockey in Canada is Saturday, the night when UFC frequently holds events that televise on Fox Sports 1 in the United States and Sportsnet 360 in Canada. The NHL also frequently broadcasts games on Wednesday night, the night for new episodes of The Ultimate Fighter.

Sportsnet History

Sportsnet is owned by Rogers Communications, one of Canada’s largest public corporations. It is available in 8.5 million Canadian homes as of 2013, down from 9.1 million in 2010. Revenues, however, grew 14 percent during the same period. Revenue for 2013 was $253.4 million, making Sportsnet the second-highest grossing specialty services in Canada behind TSN, which earned $400.4 million in 2013. Sportsnet’s decline in available households is part of a general trend of declining subscriptions to cable television in Canada. With the decline in household cable subscriptions, the increase in revenues has come mostly from an increase in subscriber fees.

Sportsnet was founded in 1998 originally as a joint-venture between CTV (a Canadian television network), Rogers, Molson and Fox. CTV was the majority owner with a 40 percent share. Rogers, Molson and Fox all owned a 20 percent share.

In 2000, CTV purchased NetStar, which at the time was the parent company of TSN, Canada’s other major sports cable network. The CRTC (the Canadian equivalent of the FCC) ordered CTV to sell either TSN or its stake in Sportsnet. Sportsnet’s other owners maintained the right of first refusal, and Rogers purchased CTV’s share of the network in 2001. As an example of how cozy big business in Canada is, after the CTV purchase, TSN’s offices moved to suburban Toronto in the same office park as Sportsnet with the offices of both networks separated by only a parking lot. In 2008, Sportsnet moved its offices to downtown Toronto.

Sportsnet’s New NHL Contract

The first NHL telecast under the league’s new agreement with Sportsnet took place Oct. 8, the first night of the 2014-15 NHL schedule. The brand Hockey Night in Canada was also licensed to Rogers to be used on Sportsnet for Saturday night hockey games. Hockey Night in Canada is a Canadian cultural touchstone that dates back to radio broadcasts in 1931. It had aired exclusively on the public broadcasting network CBC until this year’s exclusive NHL deal with Sportsnet. After CBC failed to negotiate a new deal with the NHL and the league signed the exclusive with Sportsnet, CBC opted to license Hockey Night in Canada to Rogers.

Rogers plans to broadcast at least 500 NHL games on Sportsnet during the 2014-15 NHL season. Saturday nights include up to seven possible NHL broadcasts. Wednesday nights feature the popular Scotiabank Wednesday Night Hockey.

UFC currently airs on Sportsnet 360. Under its original ownership, Sportsnet 360 operated under a series of names as a channel that aired sports scores and news updates. The channel originally launched in 1994 as Sportscope, then rebranded as Headline Sports in 1997. In 2000, the channel was licensed by the CRTC to show live sports programming and rebranded again as The Score. In 2012, Rogers purchased The Score and the following year rebranded it as Sportsnet 360. Sportsnet 360 also has exclusive broadcasting rights to WWE content in Canada.

Besides the former UFC Central and UFC live events and pay-per-view prelims, Sportsnet also airs UFC Wired and UFC Unleashed, as well as The Ultimate Fighter. The Ultimate Fighter: Nations took place around a Canada versus Australia theme and aired earlier this year on Sportsnet 360, as well as on Fox Sports 1 in the United States.

UFC’s Current Woes in the Canadian Market

“I would tell [fans who are concerned] they’re going to be watching [UFC] on TV,” Tom Wright, managing director for UFC operations in Canada, Australia and New Zealand, told MMA Junkie. “We’re in the process [of negotiating], and we’ll have something to announce in about four to six weeks.”

UFC Central was canceled without warning at the beginning of October. The show had begun airing on April 20, 2009, originally under the names MMA Connected and UFC Connected before being rebranded as UFC Central in October 2011. The show was the primary UFC news-format program in Canada, akin to UFC Tonight. It was hosted by Joe Ferraro.

On Oct. 8, via his Facebook page, Ferraro wrote, “The removal of ‘UFC Central’ was a business decision made by the network last month, one I fully understand, and one I would have made myself, if I was in a position to make such a call. This is a business, first and foremost, so understanding the logistics and the true bottom line, is what is making things somewhat easier, during this difficult transitional period I am going through.”

The UFC is currently in a rough patch with the Canadian market. Despite the massive increase in international shows, the UFC has only had a fleeting presence for live events in Canada during 2014. UFC 178, which was originally scheduled to take place in Toronto on Sept. 27, was moved from the Air Canada Centre in Toronto to the MGM Grand in Las Vegas, which caused the MGM Grand to reschedule its original act for the day, rock band Kings of Leon.

Carlin Bardsley of the Canadian MMA blog “In the Cage” suggests the relocation of UFC 178 from Toronto to Las Vegas may have had to do with UFC’s hardball negotiation tactics with Sportsnet.

“Sources within Sportsnet have told inthecage.ca that the UFC pulling the plug on the previously announced Toronto show (and the planned Montreal show in December) may be a result of Zuffa’s frustration at the lack of progress in negotiations,” wrote Bardsley.

“[I]t’s an interesting theory but I don’t believe this was the case,” Ferraro told Bardsley.

“We end up getting Gustafsson/Jones done. From the minute that fight was done, I said there’s three spots it’s gonna be,” said Dana White at a fan Q&A session before UFC 175. “It’s either gonna be Toronto, Sweden or Las Vegas. That’s what I said. Las Vegas wanted that fight worse than Toronto or Sweden. Trust me.”

“Let’s just say Vegas made a lot of sense,” White also told the The Canadian Press. “When you have big fights, there are some cities that want big fights worse than other cities do. And I’m not saying that’s the case with Toronto, but Vegas really wanted this fight.”

Asked by Ferraro on Sportsnet if the UFC was still okay with the country of Canada, White said, “We’re more than okay with the country of Canada. I love it up there. Any chance I get to go there, I’m in. But this fight, we had the last Gustafsson-Jones fight up there, and when we got this fight done and we got it made, it’s such a big fight, it made sense to get the deal here in Vegas.”

“We’ll continue to come to Toronto, we’ll continue to do events there, and we’ll continue to bring big fights there,” said White. Wright said the UFC would hold an event in Toronto in 2015.

“We introduced the UFC to Toronto in 2011,” Wright said. “That first year we had two fights in Toronto and we had one last year and one the year before. We’ve been there four times in three years and we’ll there another four times, maybe even in three years.”

A planned UFC event this December was also relocated to Las Vegas. Wright said that the UFC reserved dates at the Bell Centre in Montreal for December and March.

When asked by MMA Junkie in October if the relocation of the Toronto and Montreal events ought to be a cause for concern, Wright said, “There’s no concern whatsoever. In 2011, 2012 and 2013, we knew what our broadcast plans were, we announced them, and they didn’t change. In 2014, it did. Sometimes those things happen. That’s one of the reasons why there’s a benefit in being part of an organization that can make adjustments on the fly. Sometimes we have to do that.”

Could UFC Re-sign with Sportsnet?

There are a few possible options for the UFC in Canada at this point. One scenario is that the UFC signs a new agreement with Sportsnet. Sportsnet has four national feeds: Sportsnet, Sportsnet One, Sportsnet World and Sportsnet 360, so there is plenty of space in the Sportsnet network for UFC broadcasts.

The obvious major holdup between a new agreement with UFC and Sportsnet is the NHL contract. Sportsnet has invested a lot of money into its agreement with the NHL, which means it might not have the cash flow to re-sign the UFC. The same month Rogers acquired the NHL contract, the company laid off 94 employees in the Rogers Media division, roughly two percent of Rogers Media’s workforce.

Also, with so much money invested in its NHL deal, Sportsnet is obviously going to want to position the NHL as strongly as possible on all four of its channels. That UFC events air opposite Sportsnet hockey broadcasts on Saturdays and Wednesdays makes this difficult, as the UFC is a significantly less attractive property to Sportsnet than it was when the two signed the current deal four years ago.

On Nov. 8, Sportsnet opted to forgo airing UFC Fight Night 56 from Brazil. Instead, in its place on Sportsnet 360, the network aired reruns of The Ultimate Fighter and UFC Unleashed. Sportsnet also did not air prelims for UFC 179 on Oct. 25, which supposedly resulted in a rush of Canadians ordering UFC Fight Pass subscriptions that night.

Sportsnet 360 currently has the UFC 180 prelims on its broadcast schedule, as well as the Fight Night featuring Cub Swanson and Frankie Edgar on Nov. 22. Subsequent broadcasting schedules for Sportsnet 360 are not yet available at press time. The last show under UFC’s current agreement with Sportsnet would be the Fight Night on Dec. 20 with Lyoto Machida vs. C.B. Dollaway in Brazil. The first UFC broadcast after the agreement expires would be the prelims for UFC 182 on Jan. 3, 2015.

“Sportsnet acquiring the NHL rights feels like a major hindrance to the UFC returning to the network, as the two franchises would be going head-to-head on Saturday nights throughout hockey season and several Wednesday evenings during seasons of The Ultimate Fighter,” wrote E. Spencer Kyte for Canwest News Service on Oct. 9.

Could UFC Move to TSN?

The UFC moving to TSN is considered a possibility by many. A Rouge Point, a Canadian sports media blog, suggests that “[TSN] could certainly use some mid-week programming such as The Ultimate Fighter and possibly a studio show to prevent the endless canned programming that has featured strongly.”

TSN is owned by Bell Media, another of Canada’s largest public corporations and the chief competitor of Rogers in the Canadian telecommunications industry.

According to Colin Bardsley, both TSN and The Fight Network have submitted the rights to make a bid on the UFC contract. TSN currently offers World Series of Fighting fights on tape delay. The Fight Network is primarily dedicated to mixed martial arts live events and replays.

In August, TSN expanded to five national feeds, branded TSN1 through TSN5.

“With five national channels as our new canvas, we now have the flexibility to fully leverage our immense portfolio of premium sports programming—we’ve had the content, but not the capacity, and now we do,” said Stewart Johnston, president of TSN. “With this expansion, we are increasing our lineup of live events and in-house productions, while acquiring even more new content. This evolution of TSN is a win-win for both our viewers and our key partners.”

“The move is a testament to a growing belief in the industry that, with an exploding array of TV options for viewers, large audiences can only dependably be earned by live events such as professional sport,” wrote Simon Houpt in The Globe and Mail. “While TSN executives had been idly mulling an expansion for the past two years, Rogers’ move pushed them to launch TSN3, TSN4, and TSN5 more quickly.”

Could UFC Move to The Fight Network?

The Fight Network is less of a possibility compared to TSN, though. Despite submitting the rights to make a bid on the UFC contract, The Fight Network probably doesn’t have the cash to make the deal, or even the clearance to make it worthwhile.

The Fight Network is owned by Anthem Media Group, a private production company that was founded in 2010 with the purchase of The Fight Network, which originally launched under different ownership in 2005. The Fight Network is also available via online streaming through NeuLion.

Could UFC Air Exclusively in Canada on UFC Fight Pass?

UFC Fight Pass has been suggested as a possibility by some.

“On one hand, moving all its programming to Fight Pass could potentially lead to an increased number of subscriptions from Canadian fans that want to continue enjoying live events,” writes Kyte. “On the other hand, after years of UFC President Dana White telling fans ‘If you don’t like it, don’t buy it,’ this could be the decision that prompts them to take his advice and cut ties with the organization.”

Airing UFC content exclusively on Fight Pass in Canada sounds like a good idea on the surface, but it would be a short-term disaster. Long-term, cable networks may be going extinct and over-the-top networks like Fight Pass may be the future. But the future isn’t here yet.

The problem with airing UFC content exclusively on Fight Pass in Canada is twofold.

First, the amount of additional signups the UFC would need in Canada would have to offset the loss that the UFC would suffer by not getting paid right fees to broadcast its content in Canada. As proven by the troubled launch of the WWE Network, getting enough people for a subscription network to offset revenue losses in another part of the business is difficult.

With the WWE Network, WWE opted to offer its pay-per-views as part of the WWE Network subscription. The company effectively cannibalized its pay-per-view revenue in the hope that enough people would subscribe to the Network to make up for it, but it hasn’t gotten anywhere near enough. Fight Pass, on the other hand, has been successful because it did not have to cannibalize any other part of the UFC’s business. It simply provided an additional revenue stream to the UFC over and above what the promotion was already making.

If UFC decided to make Fight Pass the exclusive home for UFC content in Canada, it would be cannibalizing its Canadian broadcasting rights fees. The WWE Network has proven that sacrificing one part of the business to build a subscription network is challenging, and this isn’t a route the UFC should go down in Canada.

The other problem with housing UFC content exclusively on Fight Pass in Canada is that UFC television broadcasts act as advertisements for the promotion’s pay-per-views. The most likely scenario if the UFC went exclusively to Fight Pass in Canada is that fewer people will be watching UFC TV, which means fewer people buying UFC pay-per-views in Canada. This is the same problem the UFC would have if it were to work out a deal with The Fight Network. Even if The Fight Network came up with enough cash to make the deal, the Network’s clearance is so low that it damages the UFC’s ability to market its pay-per-views to as wide of an audience as possible in Canada.

Conclusions

There are really only two serious options for the UFC’s broadcasting rights in Canada: TSN and Sportsnet. With the UFC and Sportsnet seemingly on the out, this would gave TSN an advantageous negotiating position and possibly drive down rights fees collected by the UFC from Canada. But in the big picture, with the importance of collecting some rights fees and being able to market pay-per-views to a television audience, the UFC doesn’t have much choice beyond Sportsnet and TSN.