3 Reasons Why We’ll See 3 New TSN Channels

BCE’s move is good news for both sports fans and shareholders.

| More on:
The Motley Fool

Sports fans, it’s time to rejoice. TSN, Canada’s number 1 specialty channel, announced three new channels to be launched this fall. They will appropriately be named TSN3, TSN4, and TSN5.

People less interested in sports must be wondering how five TSN channels could be really necessary — especially since there are already seven Sportsnet channels. But there are reasons why this move makes sense for owner BCE Inc (TSX: BCE)(NYSE: BCE). Below are the top three.

1. A response to Rogers

The move allows BCE to more effectively compete with Rogers (TSX: RCI.B)(NYSE: RCI) after the latter snapped up NHL rights in Canada for the next 12 years in November. In fact BCE had been pondering a TSN expansion for two years, but when Rogers won that contract, it put TSN under a brighter spotlight.

At the time, Rogers was predicting that owning the NHL rights would make it the number one sports network. And in this competitive battleground, that outcome was not acceptable to BCE.

2. Cord cutting

It is no secret that TV’s traditional model is under threat by upstart rivals like Netflix, and many consumers are less willing to pay the sky-high fees that come with TV service subscriptions. This has led to so-called “cord cutting”, which until recently was a major trend in the United States only. But last week, a new report showed that Canadian subscriptions to cable TV dropped for the first time.

Sports is known as one of the last major advantages that traditional TV carriers have over their new rivals. Best of all, sports are almost exclusively viewed live, making the content DVR-proof. This leads to more advertising dollars.

Interestingly, BCE CEO George Cope told shareholders that consumers would not have to pay for the new channels. So it looks like he acknowledges that BCE simply needs to offer more to consumers to prevent them from cutting the cord.

3. Plenty of content

Based on the first two motivations, it seems that BCE is playing defence with this announcement. But while outside pressures may have influenced the timing, and the price point, the move can also be seen as an act of strength.

This is because the TSN stations currently have access to much more sports content that can be shown on two channels. Sports like football, tennis, and curling tend to have numerous matches being played at once, forcing BCE to pick the one that will be most popular. As a result, events that would be popular among viewers often don’t air. Now viewers can look forward to choosing between multiple games from the same league or tournament. And BCE can look forward to more dollars from subscriptions and advertising.

Should shareholders be wary?

The move by Rogers, as well as the growing trend of TV subscription alternatives, should certainly be a real concern to BCE and its shareholders. But with the announcement on Tuesday, it is at least clear that the company is taking the right steps. Shareholders should be just as satisfied with BCE’s management as Canada’s sports fans are.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair holds no positions in any of the stocks mentioned in this article. David Gardner owns shares of Netflix. The Motley Fool owns shares of Netflix.

More on Investing

A bull outlined against a field

After Earnings, I’m Bullish on These 2 TSX Stocks

Given their solid performances and healthy growth prospects, I am bullish on these two TSX stocks.

Read more »

Woman has an idea
Bank Stocks

3 No Brainer Bank Stocks to Buy Now for Less Than $1,000

Canadian bank stocks like Toronto-Dominion Bank (TSX:TD) appear quite cheap today.

Read more »

Dividend Stocks

Where Will Canadian Utilities Stock Be in 5 Years?

Canadian Utilities (TSX:CSU) is a classic example of a stock where the dividend is all you get. Can the company…

Read more »

Man holding magnifying glass over a document
Dividend Stocks

2 Stocks I’m Watching for Big Passive Income

Consider Bank of Nova Scotia (TSX:BNS) and another top passive-income play to power your dividend portfolio!

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These top TSX stocks have increased their dividends annually for decades.

Read more »

question marks written reminders tickets
Dividend Stocks

Better Buy: Loblaw Companies or Metro Stock?

Loblaw Companies (TSX:L) stock is riding on recent momentum. Meanwhile, Metro (TSX:MRU) is executing for future earnings growth.

Read more »

bulb idea thinking
Dividend Stocks

2 Supercharged Dividend Stocks to Buy if There’s a Stock Market Sell-Off

These two top stocks offer attractive yields, have reliable operations and are dividend aristocrats, making them two of the best…

Read more »

Dividend Stocks

Got $1,000? Buy These Hot Growth Stocks Before They Take Off

These growth stocks just reported earnings that should have investors eager for more over the next year and beyond. They're…

Read more »