Mega brands jostle for prominence after MLSE deal

Last week's billion-dollar sale of Maple Leafs Sports & Entertainment Inc. (MLSE) by the Ontario Teachers' Pension Plan (OTPP) to this country's two largest telecommunications providers Rogers Communications Inc. and BCE Inc. raises many questions about the potential impacts on consumers and media companies alike.

The reason for the sale is straightforward enough: Liquidity is the name of the game and for the OTPP the time was right to cash in. But there are many issues yet to be fully determined as a result of the sale including the impact on corporate branding.

Keith McIntyre, CEO and founder of K.Mac & Associates Inc., in Oakville, Ont., says much remains uncertain with respect to how the two telecom giants will market their separate interests and brands within the scope of MLSE.

"I don't see any transition between the teams' logos and how to market them. The bigger branding item is going to be how Rogers and Bell as a combined entity would begin to market the ownership," he says. "Will there be a dual logo presence? This is going to be very interesting and it's all about content. The (OTPP) under the direction of (outgoing MLSE president and CEO) Richard Peddie has altered the economics of sports."

It's clear from the Rogers and BCE joint press conference last week that content is king in the eyes of these two partnering entities and arguably live sports is still the No. 1 driver of content though barely a word was uttered about putting winning teams on the ice, court, or pitch.

"Will Bell have activation on day one and Rogers on day two inside the Air Canada Centre? There's a lot of implications there and it'll be muddy for a while," he adds. "The consumer may end up paying more for access . . . from a content perspective, (Rogers and Bell) do control what the access fees will be.

"Ultimately, I can't see how this business can be run without increasing revenues and driving additional revenues through advertising and consumer access fees."

All that aside, where does this leave Telus? Of Canada's big three telecoms, Telus is unique in that it doesn't own content to deliver over its existing network infrastructure.

McIntyre says Telus is in a veritable sweet spot.

"Telus doesn't have a media division while Bell and Rogers have huge media divisions," he notes. "This could be an opportunity though for Telus to come in and hit a homerun in the digital world while these two companies are focused on managing this C$1.3 billion investment."

From an investment perspective, Jeff Young, senior vice-president and CIO at NexGen Financial Corp. in Toronto, says of the MLSE deal itself that it's small potatoes relative to the overall size of Rogers and Bell.

"This is more of a long-term strategic play than one that will have an immediate financial impact. It secures high-quality sports content for both BCE and Rogers' TV channels as well as their Internet and mobile offerings," he tells Yahoo! Canada. "It helps counter the threat to advertising prices posed by PVRs (personal video recorders) and alternate delivery of content as people generally watch sports live.

"But it remains to be seen if there is value in telecoms owning content as opposed to just focusing on the means of delivery. Time will tell as the industry continues to evolve but historically there has not been much benefit."

Investors, Young adds, will be "generally dismissive or skeptical" about the deal in the near-term.

"However, it is small enough not to have an immediately meaningful impact," he says. "Rogers and BCE are betting on content gaining value while others such as Telus aren't. Overtime we will see who is right."