Why Viacom18 paid the big bucks for IPL’S digital rights

The strategy included ramping up the price for TV rights to gain the advantage in push for digital rights

Sanjjeev K Samyal

MUMBAI: The sports world watched in amazement as the outcome of the Indian Premier League (IPL) media rights auctions defied expectations in the most unexpected way. The digital rights were expected to fetch more than last time, but not expected to trump the coveted TV rights. The base price of the TV rights was much higher than digital — ₹49 crore to ₹33 crore per match. The numbers also reflected the BCCI’S expectations.

But Viacom18, the new digital broadcast partners of the IPL, blew those expectations out of the water and ended up paying a greater sum (₹23,758 crore) than Disney Star (₹23,575 crore) paid for the TV rights as the board raised a record ₹48,390 crore for the 2023-27 period.

After the numbers were made public, several experts were still trying to figure out the strategy behind Reliance Viacom18bodhi Tree (Uday Shankar)-lupa Systems (James Murdoch) going all out for the digital rights. Media honcho Shankar, on familiar turf, is seen as having played a key role. He was the head of Star India when it swept the media rights in 2018 with a ₹16,347.5 crore bid for the global media rights. He also helped Star get the BCCI rights with a ₹6,138.1 crore bid. He left Star in 2020 after Walt Disney Company acquired it from Rupert Murdoch’s 21st Century Fox.

With Viacom18 having launched a sports channel recently, many had expected it to go all out for TV. Besides, it was felt that holding the digital rights alone won’t provide exclusivity if the package for select matches (C) and global rights (D-rest of the World) went to rival bidders. In the end, the Viacom 18 group only conceded a couple of territories in the ROW category.

Viacom18’s strategy was clear. People aware of the details said that, for them, digital is a global phenomenon; and while the discussion is about digital coverage in America, it’s growth has been even more dramatic in India.

So, the people explained, when the bidding for package A came up on the first day, it was about bidding aggressively to escalate the price and deplete the war chest of their main rival when the digital rights (Package B) were taken up. The key was exiting the bidding process at the right moment as there was always a risk of being stuck at the high price.

“The plan was for the future. If we were buying something for five years, why would I invest in the business of the past,” said a senior member of the Viacom18 team who asked not to be named. “Digital technology since the last auction has grown by leaps and bounds, the mobile consumer has become savvier. We will use it to create a much more superior experience.”

The other challenge was devising a strategy for package C, where the winner of digital rights had to bid again for 18 non-exclusive matches. Though winning C would assure exclusive digital rights, Viacom18 decided to pull out if the numbers got very high.

The participants at the auction were not happy with the idea of having to bid again for the property they had already paid for. For them, as one of the people put it, it was like buying a car and then watching someone take out the tyres as the vehicle is about to be driven out of the showroom.

The Viacom18 consortium paid ₹23,758 crore, and several experts believe that recovering costs will be a big challenge. However, strategists at Viacom18 are not looking at the sum in its aggregate form. For them, it’s about calculating and seeing how big the monetisation pool in digital can become in five years.

“Five years ago when the economy was much smaller, the advertising market was smaller. The IPL rights still went for ₹17,000 crore. Five years later we are paying ₹23,000 crore when the digital market is much bigger. Google and Facebook in ad revenue terms today are already bigger than any media company. In five years, digital advertising will double,” said one of the people involved in the process.

It is the first time that the rights have gone to different bidders. In 2017, Star India had both digital and TV rights, which gave them flexibility. But given that three big players (Star, Sony and Viacom18) were in the fray, shared rights was an outcome they were all prepared for.

Viacom18’s think tank doesn’t see it as a challenge: “Digital can do everything that TV can do; TV can’t do everything digital can.”