Indian Premier League (IPL) is the biggest sports tournament in the cricketing world. The Board of Control for Cricket in India (BCCI) is conducting this tournament. After every few years, BCCI sells the media rights to the broadcasters, who make the bid for a certain period. During the initial years, these rights were sold to Sony Pictures for Rs8,200 Cr for the period 2008-17 (10 years). During these 10 years, IPL became very popular beyond expectations, in the next cycle the media rights were given for 2018-22 (5 years) and the contract was bagged by Star India (Now Star & Disney India) for Rs 16,347.5 Cr, which means that the price of media rights was doubled for half the period of 5 years.
Now BCCI is busy finalizing the tender for the media rights for the period 2023-28, which is expected to be issued shortly. The suction is going to be the biggest cash cow for sports marketing. As per experts the combined value for the rights for this cycle will be close to Rs 50,000 Cr, which will be three times more than the value of the current cycle (2018-22). The auction is expected to take place in April-May 2022. As per media experts, looking into the current economic scenario, any value beyond Rs 30,000-32,000Cr may not be profitable. Even most media people had regarded Star India’s winning bid of Rs 16,347.5 Cr as quite extravagant. It will surely be a case of breaking the bank, whichever broadcaster/firm gets the rights. In the end, the firm loses money over the rights period but then rights are sought after not only for profits. Lot of times it could be for valuation or simply existence. The potential broadcasters who will be fighting for media rights can be Star & Disney India, Sony Pictures Networks (SPN), Reliance Industries-controlled Viacom 18, and Amazon.
It is debatable whether Star & Disney India recovered or made money on the last bid. Last year BCCI president Saurav Ganguly made the statement that BCCI expected the media rights value for 2023-27 to touch Rs 40,000 Cr. The Star & Disney India which is going to be one of the potential bidder, is going to be dependent on the media rights of IPL for their joint venture’s future growth. Not having the IPL, may not immediately hurt Hotstar’s ( streaming live and OTT channel Of Star & Disney)of user base, but growth may slow down. As per media expert “ we have seen how Netflix’s stock was hammered down due to slow subscriber growth guidance.” The same thing might happen to Disney’s stock in the USA if they are not able to show strong subscriber growth, which is why the company will be bidding aggressively. Star & Disney is going to be bullish on all rights renewals. They have over 60% market share in sports broadcasting, which they will like to keep with them.
For Sony Pictures Network (SPN), which is merging with Zee Entertainment Enterprises, scaling the sports business will depend on the IPL, a property it helped create in the initial 10 years. In the last rights cycle, SPN had bid aggressively for the TV rights of the IPL. This time, it is expected to bid for both TV and digital. As per SPN representative’s statement “ We were clear even 5 years back, that either we get the BCCI media rights at the right price or let them go at a price which would be economically unviable.
Another bidder will be Viacom 18. The company recently entered sports broadcasting with the acquisition of rights to a clutch of properties, including FIFA, LA Liga, Serie A, and NBA. Viacom 18 is expected to launch sports channels in the coming quarter, and will need to make substantial investments in the area. Their journey is going to be difficult, therefore any new entrant will always have more to lose while bidding for tactically critical assets than the incumbent.
Most media experts are not sure about Amazon’s strategy. Amazon is like the joker in the pack. They have close to 20 million Prime users in India, less than half of Hotstar. The IPL can give them a quick jump. They have picked up sports right in the past and now the idea of live streaming, and they should not be ignored in the bidding process.
So who will win the bid for IPL media rights ? We will definitely know in a few months.
Waiting for your views on this blog.
Anil Malik
Mumbai, India
21st February 2022.