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ESPN: The Puck Stops Here

ESPN has declined to pick up its $60 million option on the NHL for the 2005-06 NHL season.

The decision was expected in the wake of hockey's declining ratings and after negotiations with the players’ association led to a lockout that canceled the 2004-5 season.

ESPN “would like to continue its long-term relationship with the NHL,” the company said in a statement. “We remain interested in a multimedia agreement that provides us with appropriate value and continue to talk with the NHL about future potential models.” The option deadline is tomorrow (6/1).

The league has a two-year contract with NBC to air games when they resume.

ESPN said it tried everything possible to salvage its long-standing relationship with the NHL, extending the option deadline date from April 15 until June 1, trying to negotiating a lower rights fee taht would allow it to continue coverage and offering a revenue-sharing deal similar to that which the NHL has with NBC, but ultimately the league would not budge from the $60 million it wanted, said ESPN’s executive VP of programming and production, Mark Shapiro.

 “We’re not playing games here," he said, without apparent irony. "We wanted to get a deal done and do something long-term, but given the damage that’s been done with the prolonged labor strike and the uncertainty moving forward, we really have no choice if held to a firm deadline but to pass on our option,” he said.

Shapiro said the NHL was worth “a modest rights fee, well below half of $60 million dollars,” noting that once the strike was resolved, he believed someone would pay a rights fee for the NHL, just not ESPN.

“It’s a sad state of affairs when ESPN and the NHL break up like this,” he said. “I don’t think there are too many rounds of dating here. They’ve got to figure out what lies ahead before they determine who they want to be with. They know where we stand and we’re not going to depart from our strategy.”

ESPN will now pursue options with other leagues and permanently fill its hockey-less schedule with college sports and original programming from its ESPN Original Entertainment department, the same fare with which it filled holes left by hockey programming last season.
That replacement programming commanded the same ratings as the NHL’s regular season and playoffs, and enabled ESPN to keep all its ad dollars previously committed to the NHL, Shapiro said. It also made it easier to drop hockey.

“We’re not going to be held hostage as we were last season hoping the two sides would get it together and the NHL would be back,” he said, noting that the network did not lose any advertising dollars by filling holes from hockey last season with college basketball and originals.

In a prepared statement, NHL VP of media relations Frank Brown said the league factored the potential for a long-term work stoppage into its $60 million option price tag and that the league wasn’t interested in “further devaluing” its product by taking a rights-revenue cut.

"We have enjoyed a long history with ESPN, and we appreciate the network's continued interest in our product,” he said.