Com­pul­sive Bid

Crick­et­ing rights will soon be a must-have for not just broad­cast­ers but also for over-the-top plat­forms and telcos.

Business Today - - CONTENTS - BY AJITA SHASHIDHAR @Aji­taShashid­har

Crick­et­ing rights to be a must-have for OTT plat­forms and telcos

Star In­dia’s ag­gres­sive bid of `16,347.50 crore for the fiveyear broad­cast and dig­i­tal rights of the In­dian Premier League ( IPL) took the in­dus­try by sur­prise. But, what is clear is that hav­ing sports rights – es­pe­cially cricket rights – is cru­cial for broad­cast­ing net­works.

“Premium sports drive premium sub­scrip­tion. It not just helps pump up the over­all rat­ings of a broad­caster, but also gives bar­gain­ing power to ne­go­ti­ate with multi-ser­vice oper­a­tors,” says Vinit Karnik, Busi­ness Head (En­ter­tain­ment, Sports & Live Events), GroupM. Sports is the key rev­enue earner for broad­cast­ers af­ter dra­mas. Among the top 20 tele­vi­sion events in 2016, 17 were sport­ing events, dom­i­nated by cricket.

“Hav­ing cricket in the port­fo­lio im­mensely helps gen­er­ate higher top lines,” says Har­ish Thawani, Founder, Nim­bus Com­mu­ni­ca­tions ( which owns Neo Sports). The IPL hugely con­trib­uted to the prof­its of Sony ( the pre­vi­ous sea­son of IPL earned Sony rev­enue of ` 1,300 crore), and the me­dia con­glom­er­ate launched a bunch of sports chan­nels on the back of the IPL. It ac­quired Ten Sports from Zee En­ter­tain­ment last year and has also joined hands with ESPN.

With BCCI’S In­dia cricket rights com­ing up, Sony, which lost out to Star for the IPL rights de­spite bid­ding `11,050 crore, will def­i­nitely leave no stone un­turned. “I ex­pect Star to do a de­fen­sive bid, so that they will get Sony to bid ag­gres­sively,” ob­serves Thawani of Nim­bus. Star is known to be los­ing `200 crore year- on- year on In­dia cricket, and Thawani be­lieves that it may be happy to let go of the In­dia cricket rights, since it has IPL in its kitty now. How­ever, even in IPL, the broad­caster has to make 20 per cent prof­its yearon-year for the next five years to stay profitable. That is rev­enues of at least `55 crore per match.

Hitesh Gos­sain, Founder of spon­sor­ship mar­ket­place On­spon, sees ad­ver­tis­ers pre­fer­ring net­works that of­fer sports, es­pe­cially cricket. “It may be over-val­ued, but it’s a safe in­vest­ment as far as the ad­ver­tiser is con­cerned.” When it comes to cricket, ad­ver­tis­ers, Gos­sain says, don’t just want to spend on tele­vi­sion but also on dig­i­tal plat­forms that also of­fer a high level of con­sumer stick­i­ness. A large com­po­nent of the traf­fic to Hot­star is be­cause of cricket and other sports. This ex­plains why Face­book (`3,900 crore) Air­tel (`3,280 crore) and Jio (`3,090 crore) bid so ag­gres­sively for the dig­i­tal rights of IPL. “They will want to con­trol the pipe as well as the con­tent as they can charge con­sumers for data as well as sub­scrip­tion,” says Karnik of Group M.

Yes, the likes of Zee En­ter­tain­ment, Vi­a­com and Sun are do­ing rea­son­ably well with­out sports in their port­fo­lio. But in­dus­try ex­pects them to be con­tenders for crick­et­ing rights five years from now. Re­liance bid `3,090 crore for IPL dig­i­tal rights be­cause their next round of growth could come from cus­tomers they will ac­quire on the back of con­tent. With the com­pany al­ready hav­ing a large enough stake in Vi­a­com, there is no rea­son why they won’t bid for both broad­cast and dig­i­tal rights of IPL in 2022. “Zee, most prob­a­bly, has a three- year non- com­pete con­tract with Sony; there­fore, I am quite sure that five years later, they will be in the race too,” spec­u­lates Thawani of Nim­bus. ~

When it comes to cricket, ad­ver­tis­ers want to also spend on dig­i­tal plat­forms that of­fer a high level of con­sumer stick­i­ness

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