* Labor talks between hockey league, players have stalled
* Lockout deadline Sept. 15; season starts Oct. 11
* NBC Sports Network ratings at risk in strike, delayed start to season
* Advertisers scrambling to figure out plan
By Liana B. Baker
Sept 5, NBC executives are hoping that the National Hockey League and its players union reach a new labor agreement and avoid a lockout that could leave the network scrambling to find a replacement for one of its sports programming mainstays.
Hockey is a linchpin of NBC Sports programming - the network signed a new $2 billion, 10-year contract with the league last year. A strike or delay in the upcoming NHL season would throw cold water on the momentum it built up from the London Olympics, which nightly averaged 31.3 million viewers for the network.
Labor talks between the NHL and the union representing its players broke down last week over economic issues such as revenue sharing. The league's owners have said they would lock out players if a deal is not reached by a Sept. 15 deadline. As of Wednesday afternoon, talks between the two sides had not yet resumed.
The worst case scenario for Comcast-owned NBC, which holds the exclusive national broadcast rights to NHL games, is for the entire upcoming season to be canceled. That's not without precedent. The NHL and its players union scrapped the entire 2004-05 season after failing to achieve a labor deal.
A better, but not ideal, scenario for NBC would be a delay to the NHL season, similar to what happened to the National Basketball Association last year. The first regular season NHL game is scheduled for Oct. 11, but exhibition games start about two weeks earlier.
The timing could not be worse for Comcast, which is relying on hockey to build up the NBC Sports Network, its fledgling cable sports channel. A lockout would leave the network, previously known as Versus and the Outdoor Life Network, with major holes to fill in its prime-time lineup.
"The NBC Sports Network got some great lift and visibility and awareness with the Olympics and they'd like to keep that momentum by having the NHL," said Jason Maltby, director of national broadcast TV at media buying firm MindShare.
Comcast's plan was to couple the momentum generated by the London Olympics with hockey, whose television ratings have increased in recent years, as a way to brand the NBC Sports Network as a rival destination to Disney's ESPN and the regional sports networks operated by News Corp's Fox unit.
More viewers than ever before sampled the NBC Sports network during the Olympics, which aired live team sports during the games. The women's U.S. soccer final, for instance, garnered more than 4.3 million total viewers, a higher total than last year's highest-rated Stanley Cup playoff game.
NBC Sports spokesman Chris McCloskey said in a statement that NBC is hopeful the labor situation will be resolved without disrupting the cable network's lineup. But if a lockout does occur, he said, the network can offer alternatives.
"In the event of a labor stoppage, we are preparing a selection of replacement programming that includes soccer, boxing, original programming, and college football, basketball and hockey," McCloskey said.
In addition, NBC itself could be without the NHL's signature Winter Classic game. The outdoor game, played on New Year's Day, has turned into a marquee event that generates solid ratings and ad revenue for NBC.
The next match-up, between the Detroit Red Wings and the Toronto Maple Leafs, is set to be played in Ann Arbor, Michigan, in front of 100,000 attendees.
Andre Mika, a TBA Global marketing executive and former producer of three Winter Classic broadcasts for NBC, said that the game is a big piece of NBC's sponsorship pie and other than the Stanley Cup final, it is the highest-profile hockey event of the year.
"They need to make a plan. I am sure it's a concern for NBC because right now they are already preparing for the game," Mika said.
LOW RATINGS, FAST GROWTH
Out of the four major U.S. sports, hockey attracts the smallest number of viewers, according to Nielsen. An average of 3.8 million viewers tuned into NHL games last year, compared with 23.1 million who watched the NFL, 7.5 million who watched the NBA and 6.3 million who watched Major League Baseball.
But hockey viewership increased 52 percent last year from the 2010-11 season, according to Nielsen, which is a much faster growth rate than that of any of the other major sports leagues.
NBC and the NBC Sports Network collected $150 million in advertising from NHL games last year, according Kantar Media. The league's increasing popularity, combined with the network's need to lock up marquee sports programming rights not owned by its rivals, led NBC to sign the new 10-year contract with the NHL last year.
If the season is lost to a strike, NBC will still pay the league $200 million this year, but at the end of its contract it will receive an extra year of broadcast rights, according to a source familiar with the deal.
A representative for the NHL declined to comment on its contract with NBC.
Media buyers are anxious to find out if the season will be delayed or canceled because they may need to redirect advertising money intended for hockey.
Advertising buys are made on behalf of clients based on reaching a minimum number of viewers within a certain demographic, in this case males. If a strike occurs, media buyers would need to move their ads into other programming that reaches a male demographic similar to that of the NHL. Depending on the ad agreement, NBC could re-allocate the money to advertising on its other networks or pay the advertiser back a certain amount, which is known in industry parlance as a "make good."
"We should begin to start worrying now. The sooner we know, the better, because everyone will be chasing the other (ad) inventory," said one media buyer for an official NHL sponsor who was not authorized to speak to the media about the league.
Michael Neuman, managing partner of Scout Sports and Entertainment, said that advertising prices could rise for other sports or male-oriented programming if an NHL lockout occurs. Scout Sports, owned by Horizon Media, negotiated Geico's sponsorship renewal and advertising deal with the NHL last year.
But Neuman said a hockey lockout will not have nearly the same effect on the advertising market as the NFL lockout last summer, for example. Last year, when a lockout threatened the cancellation of the NFL season, advertisers scrambled to line up alternative programming that could deliver comparable ratings, a near-impossible task given the NFL's massive viewership. The full NFL season ended up being played after a new agreement was struck.
"The stress on media buyers right now is far less than what the industry experienced last year with the NFL," Neuman said.