Ten Sports was acquired by Sony Pictures Network in last week of August 2016 to combat Star superior bouquet of broadcasting rights in India. With close to 10 participants in the bidding for cricket broadcasting rights from BCCI in 2006 (eventually won by Harish Thawani controlled-Nimbus Communications).Taj Network (a subsidiary of ZEEL Network, which owned a bouquet of 5 channels under the Ten brands) exited the business by writing off its business to Sony Pictures network for Rs.2600 crore (385 million USD) , leaving the market fragmented to only two major broadcasters in the broadcasting space in Asia namely Rupert Murdoch controlled Star India and leading Japan electronics vendor Sony co-owned Sony Pictures network. This post discusses about the deal and the future prospects of the live sports broadcasting industry in India and other Asian countries.
Brief about how Ten Sports evolved before reaching the hands of Sony Pictures Network.
The strength of any analysis lies in its roots. The better we understand them, the better off we are. Ten Sports was launched on 1st April, 2002 under the parent Taj Television with the brainchild of CEO Mark Denton promoted by a UAE based businessman Abdul Rehman Bukhatir. By acquiring broadcasting rights for major sporting properties like 2002 FIFA World Cup, long-term association with WWE (World Wrestling Entertainment), UEFA, Formula 1, etc… it developed a leading premium sporting channel (Ten Sports) making it the most watched channel in the Indian Sub-Continent. Ten Sports evolved as a highly credible sporting broadcaster with few years of its launch.
In 2006, ZEEL bought a major stake in Taj Television and went on to completely purchase the network in 2010 from the UAE based promoter. Despite its own sports channel (ZEE Sports), it retained the brand of Ten Sports and was continuously investing in purchasing broadcasting rights to stay relevant and turn profitable in the coming years. It launched a dedicated 24-hour Golf Channel as Ten Golf making it a premium destination for all Golf lovers in India.
ZEEL renamed all its Ten channels namely Ten Sports, Ten Cricket, Ten Action and Ten Sports HD to Ten 1, Ten 2, Ten 3 and Ten HD few months back except Ten Golf.
Sony Pictures Network announced to purchase Taj Television for 385 million USD making it one of the most valuable acquisitions in recent times in the broadcasting industry. Reliance Industries Limited took over Network18 business (Stakes in CNBC-TV18, Colors, Forbes India, Firstpost, etc…) for Rs.4000 crore in 2014 making it the most priciest acquisition till date in the Indian broadcasting Industry.
How Sony evolved to become a major broadcaster in India
Sony Entertainment Television achieved the number one position in the Hindi GEC rankings in early 2000 but couldn’t sustain the momentum as Star Plus came with KBC and Balaji Telefilms soaps making it the market leader within no time.
Come 2002, Sony wanted to revive fortunes of its flagship (SET India) and Set Max was doing well, it went on to acquire ICC events broadcasting rights between 2002-2007 including ICC World Cup 2003 and 2007, ICC Champions Trophy 2002, 2004 and 2006 for Rs.1200 crore. It went on to telecast the matches on its movie entertainment channel Set Max making it a hub for movies, music and cricket. With shows like Extraa Innings it was able to justify its investment in the cricketing rights making it a diversified broadcaster in India.
With India reaching the World Cup finals in 2003, Sony was able to take its network to the next level, instilling its confidence in the sport as India is a cricket-crazy nation. More than 80% of the ads on sports in India goes for cricket as an equal number of people watches the sport in India.
After the completion of the contract came up the broadcasting rights of the lucrative today but untested in 2008 IPL rights which Sony grabbed for Rs.8200 crore for the next 10 years of the 60-day cricket extravaganza.
Industry experts expected it to launch a sport channel in 2003 (with ICC rights) but Sony Pictures Network went on to launch their first sports channel Sony Six in 2012.
After launching its first sports channel in 2012, the network turned aggressive by acquiring many sporting properties like National Basketball Association rights, TNA Wrestling, FIFA World Cup, Ultimate Fighting Championship, etc… along with the cash-rich IPL. It wanted to launch the sports channel by acquiring BCCI TV rights for 2012-18 which was eventually won by Star India.
Sony came into a strategic partnership with Walt Disney’s ESPN to launch a co-branded channel Sony ESPN on Jan 2016. On a lighter note ESPN ended its 18-year partnership with Star India in 2012 and came back with a bang in 2016 after the end of the clause put-forth in the agreement between Star and ESPN in 2012. Its presence was felt with its online portal ESPNcricinfo serving the young cricket-crazy population in India.
With the acquisition of Ten Sports, Sony became the only challenger to the 20-year old Star Sports Network in India who would be fighting for the IPL rights due for renewal in 2017.
IPL rights for renewal in 2017; if you have missed it, we strongly recommend you to read our detailed analysis of IPL broadcasting rights battle between the two giants by clicking here.
The Big Picture: – ZEE’s Ten Sports and Sony’s acquisition
ZEE has been the pioneer of satellite television in India since its inception in 1992 as India’s first domestic broadcaster. The most profitable broadcasting network by far, ZEEL has always believed to give better returns to its share-holders.
Despite the profits of the network as a whole, its sports entity was incurring cumulative losses in its operations since 2010. With acquiring broadcasting rights for various sports becoming more costly year after year, it made business sense for ZEEL group to curb the losses by writing off its business.
In the words of Punit Goenka, CEO of ZEEL the channel is doing well since last 2-3 years with good returns for the network; it is the right time to sell off its sporting arm when the entity is at its zenith like it bought it in 2006 from the UAE promoter (The USP in 2006 in Ten Sports was it became the most watched sports channel in the Indian Sub-continent making ZEEL to acquire a major stake in Taj Television). It has made losses since its acquisition in 2006 for ZEEL, turning profitable only in 2015.
With litigations with the BCCI over many previous ventures like acquiring broadcasting rights on Indian soil in mid 2000s or the now-defunct ICL (Indian Cricket League), it makes sense for ZEEL to sell-off its sporting network at the best available price. It is also getting around 35-40% of its cash invested in sports back helping ZEEL invest in other profitable verticals of the network. It has signed a non-compete clause with Sony that it won’t enter the market for the next four years in the market, giving it the time to make a stellar come-back in sports broadcasting industry hoping all litigations with the BCCI would be resolved, digitization in all parts of India (with rise in HD viewers) and hope that non-cricketing events would gain better viewership in the next four years.
While ZEEL group benefits from the deal, Sony Pictures Network is also a major benefactor of the deal making it a win-win situation for both the leading network. While ZEEL would concentrate on its entertainment, movies and digital business, Sony Pictures Network would go on to strengthen its sporting bouquet as the Network believes it to be one of the three pillars of its business in India.
While Sony has broadcasting rights for
- Cricket: – Indian Premier League, Caribbean Premier League, Ram Slam, Karnataka Premier League
- Football: – All FIFA events till 2018, UEFA Euro 2016, LaLiga, Copa America, National Football League etc…
- Tennis: – Australian Open, ATP 1000, Champions Tennis League
- Fight Sports: – Total Nonstop Wrestling Action, Ultimate Fighting Championship, Pro Wrestling League
- Others: – National Basketball Association and Premier Futsal
Ten Sports will add
- Cricket: Rights for matches played in Pakistan, South Africa, Sri Lanka, Zimbabwe and West Indies.
- Football: UEFA Champions League, UEFA Europa League, French League, English Football League.
- Golf: India’s major destination for Golf on Ten Golf with rights for Ryder Cup, Asian and European Tour, Professional Golf Tour of India, etc….
- Tennis: – WTA and ATP
- Fight Sports: World Wrestling Entertainment
- Others: – Asian Games, Commonwealth Games, Moto GP, etc…
To sum up, the benefits Sony Pictures Network would get from this deal is
- Reduce dependency on IPL as the only major cricket broadcasting rights in India. Before this deal Sony didn’t have a presence in any cricket events played by the Indian Cricket Team till 2018 when the next rights (BCCI TV rights) were due for renewal. With broadcasting rights for matches played by India in five different nations, SPN has improved its cricket bouquet.
- For people who feel that Sony benefitted only from the cricketing properties of Ten Sports, FYI, after cricket fight sports garner the most viewership in India. Wrestling is the next biggest event in India after Cricket followed by Football and Kabaddi. While Star has got the Indian touch for Football with Indian Super League and Pro Kabaddi League brought Kabaddi to the today’s generation in a newer format.
- Sony has a bouquet of TNA Wrestling and UFC Championships and WWE will boost the fight sports category for Sony. With Pro Wrestling League, TNA, UFC and WWE, Sony has become the one-stop destination for all fight sport lovers. WWE is the most watched sports in India back-to-back when there is no cricketing event in India, making it a cash-cow for Sony due to its presence in various forms (including archives) all-round the year.
- Golf is a premium sporting event with a dedicated channel, SPN can cannibalize the premium audience to its other premium channels on the network (for example Sony Le Plex a premium movie channel, is only available for HD viewers)
- Tennis is getting re-defined on the network with better coverage of famous tennis events.
- Sony SIX is very popular in the Indian Subcontinent thanks to IPL. But it lacks presence in West Asian and African markets. While ESPN gave its expertise in hosting popular shows, Ten Sports being popular in the African and other Asian nations will give it an edge for expanding its markets worldwide. Taj Television has a robust distribution network in various markets like Middle East, Hong-Kong, African nations which can be used to push its channels on the global front.
- It will add to the existing Sony Six, Sony Six HD, Sony ESPN and Sony ESPN HD with the Ten channels, namely Ten 1, Ten 2, Ten 3, Ten 1 HD, Ten Golf HD (Ten Cricket and Ten Sports in some markets not available in India) helping the network not only able to increase the channels count to 9 (Star Sports has 10 channels) in India but also helping to provide multi-language feed to its various properties like IPL helping the channel get more inventory resulting in more advertisement revenue. This strategy was adopted by the network in 2014 for FIFA World Cup.
- It would be interesting to see whether Sony would retain the Ten brand like ZEEL group did in 2006 or rebrand it with a Sony branding. While CEO N P Singh to an interview to Economic Times told the network won’t re-brand Ten Sports as SPN considers it a strong sports brand but in the future it may consider re-aligning it with Sony brand.
Star India has a large bouquet of broadcasting famous events like ICC, Olympics, etc… along with home-grown leagues like Pro Kabaddi League and Indian Super League, etc… creating a broad spectrum of audiences for the network, Sony is not left behind with IPL and fight sports. It would be interesting to see how long these two-player would battle against each other for pricey broadcasting rights as many new players are expected to enter the industry like Discovery’s EuroSport or any other foreign broadcaster to test their fortunes on the Indian Soil.
Sony will have to be innovative like Star to launch exclusive leagues on its network to stay relevant and move towards profitability of its sports vertical and benefitting to turn-around its long-ailing flagship SET India.
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