More on the Economics of the CCA-CBC Deal
An exercise in marginal/incremental studies:
The 2004 -5 curling season is now over, with Canada having soundly defeated Scotland in the finals of the World Championship on Sunday with a record-breaking two five-enders.
I would like to take some time, now, to explore more about the outrage so many curling fans felt about the television deal made between the Canadian Curling Association and the CBC.
At most championships, there are three draws (games) each day for the round-robin portions of the tournaments. In the past few years, the Canadian sports network, TSN, had televised all three of the daily draws during the week, leaving the semi-finals and the finals to CBC on the weekend.
This season, when fans began trying to watch the early games of the round-robin tournament for the The Scott Tournament of Hearts, we were stunned to learn that the Canadian Curling Association had signed a contract with CBC allowing CBC to telecast only two games per day; further, CBC decided to broadcast some of the evening games on a digital channel that not many people subscribed to. Fans were livid. At the time, I wrote:
I couldn't believe it! I was so distressed, I fired off the following letter to the Curling Canada Association:
Okay, folks. Whose wise idea was it to show curling on CBC's extremely lame "Country Canada"???? We don't get it where we live, and we will now miss a LOT of curling. I sure hope CBC paid somebody a lot of the taxpayers money to make sure that fewer Canadians now have less access to watching curling on television.------
I was wrong; we can get Country Canada here if we sign up for digital cable. And so this morning, we committed ourselves to spend a lot extra over the next few years to get digital cable boxes so we can watch curling. As I said, I was furious.
I have since learned that when TSN made a bid to for the broadcast rights to all the championship series, their bid was also for only two games per day, rather than all the round-robin games. The reason both TSN and CBC made such an offer to the Canadian Curling Association was, I suspect, a strictly marginal one:
The expected marginal revenue of carrying the third game each day (ordinarily, but not always, a game not involving Canada's team, since each team usually had only two games per day) was likely to be quite low, especially if the third game to be carried would have been the morning draw. Meanwhile, the expected marginal costs of carrying a third game each day were considerably higher (on a per-game basis) than the those of carrying the second game each day. Carrying a third game would involve dramatic overtime expenses for the broadcasters and crew or necessitate having a complete second team in place to telecast the third game each day. Either way the marginal costs of carrying the third game skyrocketed in comparison with the first two games.The above is not the explanation offered, but it seems plausible. Neither network wanted to carry all three games each day.
But the Canadian Curling Association [the CCA] is still displeased with the deal they negotiated with the CBC. See here for details and additional links.
My take: It looks as if the CCA should consider suing its lawyers for lack of due diligence if, in fact, the CBC made decisions that the CCA would have opposed but were not covered in the terms of the contract. That, or it should be asking serious questions of its own negotiators.
[a similar piece is posted on the Sports Economist]