Cricket turns unfair game for investors
After India’s debacle at the World Cup, cricket is not what it used to be for advertisers, and therefore, for broadcasters. Those who pay big money to ride on popular telecasts are seeking rebates and wondering how they will recover huge amounts paid to win broadcast rights. A TV ad that goes with cricket usually costs Rs 4 to 5 lakhs per 10 seconds.
ESPN Star Sports, which pledged a staggering $ 1.1 billion for the ICC World Cup rights between 2007 and 2015, has filed an appeal in the Supreme Court seeking to strike down the Rs 5 Maximum Retail Price (MRP) fixed for all pay channels.
But RC Venkatesh, managing director of ESPN Software India, denies as “media speculation” reports that it is renegotiating the deal.
STAR, which had clinched the distribution rights for five years for all games hosted by the Board of Control for Cricket in India and hosted by Nimbus’ Neo Sports for a huge Rs 1,000 crore minimum guarantee, has acknowledged that it is lobbying hard to shave Rs 400 to 500 crore off that figure.
“The economic underpinning of the price points for cricket rights has been weak. A recalibration based on market reality is very much due,” said Chris McDonald, CEO of the Ten Sports network.
Nimbus and Neo Sports have paid as much as $ 57 million for the telecast rights for Bangladesh cricket. As can be seen the current tour by India, Bangladesh cricket is attracting very little advertising and the returns are unlikely to exceed $ 15 to 20 milllion, sports pundits say.
On a much larger scale, BCCI is considering a proposal by Nimbus to lower the record telecast fee of $ 612 million (Rs 2,600 crore) which was the winning bid for BCCI’s matches in India between 2006 and 2010.
Nimbus is believed to have sought a $ 150 million reduction, while BCCI is not prepared to concede anything more than $ 20 to 25, million, or around Rs 100 crore, industry sources say.
Private broadcasters are severely hit by amendments to the cable regulation law that makes it mandatory for them to share live feeds with Doordarshan, thus puncturing their exclusivity.
In 2000, BCCI awarded the rights for $ 50 million to Doordarshan. In August 2004, Zee pushed up its bid for BCCI’s rights for four years to a record $ 307mn. Few would have thought Nimbus would pledge double that figure of $ 612 million two years later.
After India’s debacle at the World Cup, big advertisers like LG and Hero Honda withheld their advertising and sought rebates from Sony Television.
“The rates for airtime sales for live cricket have sunk to such lows, that it looks as if cricket is football,” said Jawahar Goel, vice-chairman of the Zee Group.
“The valuation of cricket properties, and the returns these sports events are under media scrutiny. Advertisers are not going to return to cricket in a hurry unless there is a consistent winning streak in the Indian team’s performance,” he added.