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Four-way contest likely to spice up IPL media rights auction
It was a two-way race between Star and Sony in the last IPL media rights cycle: the arrival of an ambitious player in Viacom 18 should boost the valuation.
It won’t be till Monday evening that every new broadcast and streaming destination of cricket’s priciest property—Indian Premier League (IPL)—is known following the e-auction. Estimates of the valuation varies hugely—former IPL commissioner Lalit Modi expects BCCI to net ₹60,000 crore while some conservative estimates put the valuation at ₹40,000 crore. Even if the bidding ends in between, the valuation will top ₹100 crore/match.
Rising inflation, drop in viewership for the last IPL, value correction amongst start-ups—recently IPL’s biggest sponsors—all are expected to influence the rights sale. Still, BCCI pegged the reserve price to double of the current value— ₹16,347 it received five years ago. With no other cricket league close in scale or value and IPL having become the destination for advertisers, BCCI’s gambit, though ambitious, is not misplaced.
CHANGING MEDIA LANDSCAPE
One reason BCCI has not been conservative with pricing is because there are multiple parties in the fray even after Amazon withdrew on Friday. The media landscape has changed radically in five years and this could work in BCCI’s favour. The last media rights race was between Star and Sony with Reliance still testing the waters. This time there are four serious competitors—Disney Star, Reliance Viacom 18, Sony and Zee.
At the last bidding, winners Star were steered by media baron Uday Shankar. In a closed bid getting the numbers right is the key and Star delivered it perfectly, pushing Sony out of prime-time cricket with a bid that was only 3% higher. Since then, Star acquired Disney from Rupert Murdoch’s 21st Century Fox in 2018. Shankar has forged a new alliance with Murdoch and will be in Viacom 18’s corner, having taken a 40 % stake in the company. “It will be interesting because Disney come with a lot more conservative thought process. Uday Shankar was a lot more aggressive,” said N Santosh, Managing Partner, D&P.
K Madhavan, president, The Walt Disney Co. India and Star India, recently hinted in comments to Mint that it would not go overboard. “We will look at the business plan, we will consult. Beyond that, if it exceeds my business plan, my projections, we will see.”
Though public statements when the stakes are very high are not taken at face value, Disney Star are reportedly working on a back-up plan should they lose the IPL rights. Disney’s Hotstar has become India’s leading OTT platform with 50 million subscribers riding on their IPL acquisition.
Amazon dropping out will ease the pressure on all the remaining players, especially Viacom 18. Competitors expect the new entrant (Viacom 18) to bid very aggressively for TV and digital. “They have launched a new sports channel (Sports 18). Shankar has been roped in. All indicators are that these efforts are to win and nurture IPL rights,” said an industry bigwig.
ZEE BACK IN BUSINESS
Not many are talking about Sony and Zee. But competitors won’t rule them out. Both have made public statements. Sony has questioned BCCI’s aggressive reserve price while Zee has spoken of going solo (Sony-Zee merger process is underway). “We can participate in the IPL tender process on our own. We have a very healthy balance sheet,” Zee MD and CEO Punit Goenka said.
Though Sony and Zee will bid separately, they are expected to share the spoils once the merger is complete. Zee would be hungry for a comeback even after the merger, after being blacklisted by BCCI for over a decade. Few will forget that only after Zee launched the rebel Indian Cricket League (ICL) that BCCI fast-tracked IPL’s launch of IPL in 2008.
THE STRATEGIC CALL
The e-auction will be a three-horse race between Disney Star, Viacom 18 and Sony-Zee. While all of them will bid for the TV rights, they will also have a tough call to take whether to go for TV and digital and become India’s one-stop IPL destination or save cash for the ICC rights that would follow.
With India on the cusp of a 5G revolution and millions expected to switch from DTH (direct to home) to internet-based viewing, the biggest uptick is expected to be in the digital category. An industry veteran, who did not wish to be named, said: “The BCCI bosses may talk up the TV rights value but it's not a growing business. TV penetration is going down. Viewership has come down across genres. The digital growth is going to come at the cost of TV. This is perhaps the last cycle where the TV value still holds importance.”
