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World Cup exit brings bad news for India Inc

India Inc is reeling from the World Cup debacle and the hardest hit are the broadcasters, reports Saurabh Turakhia.
None | By Saurabh Turakhia (With inputs from Lalatendu Mishra & Venkatesh Ganesh)
UPDATED ON MAR 27, 2007 03:46 AM IST

India Inc is reeling from the World Cup debacle. And the hardest hit will be the broadcasters. Advertisers, who had committed to a Rs 600 crore spend during the tournament, now want to renegotiate rates.

While Rs 150 crore have been spent already, advertisers are expecting a 50 per cent fall in viewership and want lower rates to ensure that they get enough bang for their buck.

“There was a lot of enthusiasm earlier, but India not making it to the Super 8 is a concern,” said Punitha Arumugam, group CEO of Madison Media, voicing her clients’ displeasure.

“We expect a 35 to 50 per cent drop in viewership. It is in the interest of broadcasters and clients to reconsider the deals,” said Manish Porwal, MD (west and south) of Starcom India.

Experts say matches featuring India deliver television viewership ratings (TVRs) of 5 to 6.5. For other matches, TVRs fall to 2.7 to 3.5, said M.K. Machaiah, senior business director at Mindshare.

Consumer goods major Videocon, which was hoping a good performance by Team India would help it sell 10 lakh TV sets, has now decided to suspend ads featuring Rahul Dravid and Mahendra Singh Dhoni. Videocon CMD Venugopal Dhoot indicated that the two cricketers would not feature in their ads till they started doing better.

Other advertisers like Hero Honda and Pepsi have already withdrawn their World Cup and India-centric communications. Showing ads cheering India on don’t make sense any more, they feel.

Experts estimate Sony Entertainment, which is broadcasting the World Cup, would lose Rs 100 to Rs 150 crore as it would have kept aside some inventory for India’s matches in the next round.

It may be forced to sell this airtime at lower rates now. TV makers, who had produced more sets to meet the anticipated spike in demand, are now saddled with huge stocks. “India’s exit has affected sentiment; it’s a big opportunity loss,” said Onida’s vice-president Vivek Sharma.

Tour operators, who were hoping to sell 3,000-odd packages (inclusive of air tickets, hotels, cruises), have lost an opportunity to do business worth Rs 120 crore, not to mention losses due to cancellations. “We had targeted 200 packages, but half of them have cancelled,” said Heena Ja, chief operating officer of Travelport.

Meanwhile, in a joint statement, the Indian Broadcasting Foundation and Advertising Agencies Association of India have called on their members to honour the deals at the original rates.

“Cricket packages are not necessarily linked to the fortunes of Team India alone. All parties, therefore, cannot renegotiate deals on the basis of the performance of a particular team,” said the joint statement.

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