Television is the last thing on John Levy’s mind as he sits in his new brick-and-beam office in a burgeoning Toronto neighbourhood better known for fashion than for sports.
The text-based ticker service he transformed into Canada’s third-largest sports channel – The Score – is just down the road and still dominates the streetscape with its enormous outdoor television screen that shows highlights and scores throughout the day.
But the television channel is in regulatory limbo since he sold it to Rogers Communications Inc.last year for $167-million, and his new digital company is about to go on a venture-capital-financed spending spree to expand its mobile app as quickly as possible.
theScore, Inc. just closed a $16-million round of financing led by Relay Ventures, a fund that operates out of Toronto and California and focuses its investments on mobile technology companies.
The infusion is a vote of confidence in Mr. Levy’s business plan, which is to attract advertising revenue by infusing the company’s hugely popular sports data app with sports commentary written by bloggers who sit clumped in the middle of the company’s new offices amidst dozens of televisions (and ping pong and foosball tables).
“I feel like that guy in the commercial who has shrugged off his suit of armour and is suddenly free and able to do things,” says Mr. Levy. “We loved the television business, and if it weren’t for that we wouldn’t be here today. But we’re doing something different, and now we can tackle this head-on without any distractions.”
In securing financing, Mr. Levy has overcome one of the larger obstacles facing app developers in Canada. Canada’s Information and Communications Technology Council said earlier this year that access to capital is a major problem in this country, and the market is relatively small for those who do manage to create a product, at $675-million a year – $257-million on in-app purchases, $149-million in download fees, $141-million in advertising and $128-million in subscriptions.
But the mobile company – which has retained the television channel’s name, but is sharing it until the deal is finished, when it will become the sole owner – attracts most of its traffic from the United States.
Mr. Levy concedes mobile companies haven’t figured out how to make money yet – the Score posted a $2.6-million loss in its last quarter despite attracting just over 4 million monthly users – but insists that a sizable user base made of fantasy sports fans looking for updates and gamblers looking for an edge should be enough to build a profitable business within five years.
“There’s no debating how people are getting content,” he says. “And ultimately the advertising community has to reach these people – other avenues are evaporating and diminishing. Our goal is to develop that base – it’s really no different than what we did with television. When we bought that, nobody knew what it was or what we could do.”
While Mr. Levy builds his new company, the television channel he sold is being run by a trustee as the sale awaits approval from the Canadian Radio-television and Telecommunications Commission.
There are no indications that the deal is in peril – the commission has a backlog of high-profile hearings that has likely delayed a decision (if it were rejected, the channel would remain in the hands of the trustee and put back on the market as a standalone channel).
Rogers Media has offered few hints about what it will do when it does eventually take over, but it will be constrained by a licence that restricts the channel to one live broadcast a night and insists that broadcasts be regularly interrupted to provide news updates from the sports world.
Neither Rogers nor the channel’s trustee, Peter Viner, would comment about what comes next, but Rogers Media president Keith Pelley said last month that he would like to use space outside the channel’s studio – which is located a short walk from the home of the Toronto Blue Jays – as a live location for pre- and post-game broadcasts for its Sportsnet channel. He wouldn’t elaborate on any other plans.
The station has continued to operate in trusteeship, largely with the same staff as the day the deal was announced. While Rogers doesn’t need to keep the programming or staff, Mr. Levy said he hopes the cable giant sees some value in the largely irreverent station he built from the ground up.
“You hope the reason they bought it isn’t just to have another channel, but because we were doing something right,” he said. “There are a lot of great people there, I hope they migrate over and find some opportunity. The channel won’t be the same – they’ll do what they do and we’ll do what we do. But really, you have to think it will be different at some point.”