Sony and Star look forward for the TV IPL rights

The Indian Premier League, which started in 2008 by the Board of Cricket Control in India (BCCI) under the visionary businessman and chief Lalit Modi has in 2016 become worth around $4.3 billion making it the sixth most priced leagues in the world according to the recent statistics. In this post I will discuss about the war between two broadcasting giants (some others expected to join in too) to gain the IPL TV broadcasting rights from 2018 onwards for a specific term as the cash and controversy-rich IPL’s 10 year broadcasting agreement with SPN is coming to an end in 2017.

 

IPL rights bidding to start

SPN was the broadcaster for IPL on Indian Television whereas Hotstar did the job in the digital space.

 

Let’s get back to some basics

 

Before analyzing what course would the broadcasting rights of the IPL take, let’s have a brief introduction on how IPL started in 2008.

 

Subhas Chandra (who’s referred as the Indian Rupert Murdoch) had applied for broadcasting rights for cricket matches played in India in 2004 to the BCCI. In his bid, he had included a clause that if he was awarded the rights, he would also develop the domestic cricket in India. Only after a legal fight with the erstwhile ESPN-Star Sports (ESS), ESS won the rights for telecasting cricket in India making ZEEL (Zee Entertainment Enterprises Limited) having no cricket broadcasting rights in India for the first decade of the 21st Century.

 

IPL rights

Indian Cricket League was the first domestic cricket league which paved way for IPL to come into existence

 

But Subhas Chandra hadn’t given up his idea to develop domestic cricket so he went about with his plans without the BCCI. Subhas Chandra’s intentions were very beneficial being a businessman. India was ranked very low in 2007 making it comparable to the ranks of Associate Members according to data published by the ICC in 2007.  He desired to develop domestic cricket to entertain the masses, improve the bench strength for the Indian Cricket team by finding some professional trainers for the players of the respective franchises and spice the game with foreign teams participating in the Indian Cricket League (ICL).

 

Like the Nagasaki bombing in 1945 was due to miscommunication between the major powers, same here happened here as well. While ICL was created as a parallel gaming body to the BCCI in India, the BCCI took its personnel and launched its own cricketing league with international players participating in it termed as the Indian Premier League in 2008. ICL winded up due to lack of support from the BCCI and state cricket boards to use the official stadiums, fear of a ban from the BCCI, etc.… in 2009. If ICL would have been a success then the current discussion on who will assume broadcasting rights for the IPL would not have come into the picture at all as broadcasting rights of the league would be in the hands of the broadcaster-owner of the ICL i.e., ZEEL group.

 

Forget that, in January 2008, the Singapore-based World Sports Group (WSG) backed the 10 year broadcasting rights for the Indian Premier League for a huge sum of $1 Billion, which is resold to MSM for Indian broadcasting for $300 million for the first five years of the League.

 

Broadcast of IPL being done on major channels on the SPN

Sony Pictures Network telecast-ed IPL on its network for the first 10 years

 

But in 2009, the three parties (MSM, WSG and BCCI) reworked the deal for $1.6 Billion for the next nine years of broadcasting with MSM paying the 80% of the agreed sum. It amounted to Rs. 8200 crores in 2009.

 

Nine years are coming to an end in 2017

 

It seems that IPL has just taken up recently but it completed its ninth edition in 2016. The BCCI has called for new bids for the broadcasting rights for the Indian Premier League from 2018 in India and overseas.

 

The cash cow of the BCCI has earned good revenues and response from all sectors, whether it is the advertisers, viewers, team owners and the players not to forget the broadcasters. All have milked out revenues out of the cricket extravaganza being its news and sports channels, with innovative shows on IPL (Star Sports hosted Star Power during the IPL; news channels regularly giving analysis on each IPL match) to sports magazines, cricket portal, etc.…

 

All sections of the broadcasting industry have tried to grab an exclusive right on the IPL being an analysis of each IPL match, exclusive photos, digital streaming and cricket scores or the king being TV broadcasting; have invested and expecting good returns from the cricket league in the near future.

 

IPL TV broadcasting rights are an asset to any network in the fray to grab it. Since we all know that all daily soaps and reality shows witness a viewership decline during the IPL season indicating that IPL is a game which is watched by all and digital viewing will not eclipse the viewership on TV.

 

 

There would be two major bidders for the IPL TV broadcasting rights, namely Sony Pictures Network and Star Indian Private Limited. But there are speculations of other players to enter into the fray like Viacom 18 network (who had given a try in 2012 to grab cricket rights from the BCCI, which was won by Star India Private Limited), ZEEL (who haven’t tried for the cricket rights since the closure of ICL), Discovery Networks (Interested to enter the sports broadcasting arena in India and IPL could give them a superior push among their peers), and many more which may not be in the limelight today.

 

So let’s analyze all the parties interested in the cash-rich IPL broadcasting venture and future prospects of the controlling board with the outcome of a good partnership. I won’t discuss about what price would be right or who is the just to win the broadcasting rights, but I will try to make my point clear in easy business terms.

 

Interested Parties

 

 

1. Sony Pictures Network

It was this network, which bagged the rights for the Indian Premier League in 2008 along with the Singapore-based World Sports Group for a billion dollars.

 

At that time no one had the guts to invest in the untested startup, but SPN (then MSM) took the risk to do so on many factors that India had won the 2007 ICC World T20, lack of any cricket match rights as their contract for telecasting ICC matches in India has expired in 2007, etc…

 

There was immense speculation on whether the league would run or not, will it get the broadcasters the invested resources back, etc… until the first ball of the match was bowled.

 

They had a difficult time in getting sponsors on board (being only 7) without any spot buyers, Vodafone, DLF, etc… was the only top category sponsors on board. Sponsors jumped the bandwagon now, but still there are vacant spaces in the associate sponsors list making it a black spot on the league’s popularity.

 

The Sony Pictures Network has extensively advertised the IPL on all platforms being Outdoor Media or Print Media or Advertisements on their own network channels which is attributed to the success of the untested startup property (IPL).

 

The inaugural season was telecasted on Set Max and Sony SAB for the last mile reach of the IPL matches to the audiences in different languages (pre-Digitization era). Sony SAB was launched as a 24-hour comedy channel post inaugural IPL season making it a successful Hindi GEC.

 

There is no doubt that SPN has generated good revenues and most likely profits too from the IPL broadcasting, they have witnessed and being a part of the ups-and-down of the IPL. Building a brand is easy due to the initial mad rush, but SPN has stood by them when the matches were increased from 60 to 74 in the fourth and fifth season, thereby making them enter into the foray of weekday afternoon matches which was a big dent to the viewership of SPN. Weekend afternoon matches earn good viewership, but Weekday afternoon matches have a trouble to garner good viewership. This was a testing time for SPN but they cracked it.

 

SPN has brought in a lot of catchy ideas to get viewership for the Indian Premier League since its inception in 2008.

 

IPL rights

Sony Pictures Network has advertised and built the brand IPL since its inception with good CSR advertising

 

After all this discussion comes the Right of First Refusal (ROFR) clause in the broadcasting agreement between SPN and BCCI for the untested startup “IPL”.

Right of First Refusal was included in the agreement for the first time in broadcasting history (not there in any of the agreement, whether it is ICC cricket matches, matches on the Indian soil, etc…) and today there is an outcry that this clause will be a hurdle to fair bidding on IPL TV rights.

 

But Sony Pictures Network has worked a lot to develop the IPL as a cash rich property, making it morally correct for the clause of Right of First Refusal for the broadcasting rights in India. This clause gives SPN a fair chance to stand their investment and efforts to milk out profits of their 10 year stint of broadcasting IPL in India.

 

 

2. Star India Private Limited

 

Star India has invested a large sum of Rs 25000 crore to develop sports properties in India and bagged cricket match rights of priced ICC matches and matches played in the Indian soil for a large sum piping out their closest rival SPN for these rights.

 

They have developed different sports in India like Kabaddi (Pro Kabaddi League ran to become the second most watched sport in India after IPL), Football (Hero Indian Super League), etc… They have rights for the Hero Hockey India League for broadcasting the matches for five years in India.

 

Indian Premier League IPL rights

Star India Private Limited has the TV and digital rights of all famous Indian leagues except IPL

 

The only missing property in the entire ecosystem of the sports offering by the Star Network is the most lucrative league (IPL). Secondly, they already own the digital rights for the Indian Premier League in India, which has successfully promoted Hotstar as a brand. Check my post on Hotstar’s success due to IPL broadcast for free on the platform.

 

3. Viacom 18, ZEEL, Discovery Network and others

Viacom 18 was a forerunner to grab the broadcasting rights for cricket matches played on the Indian soil in 2012. It is always said that a network must be present in news and current affairs, kids, music, movies, Hindi and regional GECs and sports to be an established network. Viacom 18 launched India’s most successful GEC Colors TV in 2008, acquired ETV channels to enter the regional GEC space, CNBC TV18 for news and current affairs, etc… making it competent to the established three networks in India namely SPN, Star India and ZEEL. Sport is a vital piece missing in the Viacom 18 network, which could get an initial push through a successful IPL bidding.

 

Discovery Network runs the Eurosport channel in Europe is interested to target the world’s youngest country which is a house of viewers for all types of sports in the world, IPL would give the channel a motive to enter the sports broadcasting arena.

 

ZEEL may enter the cricket telecasting space after a long gap. But their strategy currently doesn’t allow them to invest heavily on sports as they believe on homegrown concepts to run their channels on the network, making it the most profitable and loved broadcaster in the world.

 

EDIT: Date: 20 September 2016

ZEEL’s Ten Sports was acquired by Sony Pictures Network in August 2016 for Rs.2600 crore making a two sided contest between Star India and Sony Pictures Network for sports broadcasting in the Indian sub-continent and other Asian markets. Click to know more from my detailed post on the acquisition.

 

What would happen if any one of the listed network gets the rights!!!!!!!

 

If Sony Pictures Network gets the rights, it justifies their launch of two sports channels on the backing of IPL. It will be a win-win situation for ESPN too, as the Walt Disney Channel will get to taste the success of IPL in the partnership for a long period. But the major question arises that how would BCCI deal with Star India. They have purchased the rights for all cricket matches except IPL till 2018 at an average price of Rs. 40 crore per match. There may be a misunderstanding with the BCCI that Right of First Refusal (ROFR) has left no room for Star India to have a healthy competition under the administration of BCCI. Pleasing a large broadcaster by giving a good justification would be a task for BCCI.

 

IPL rights

SPN and Star India Private Limited are ready to lock horns to win the broadcasting rights for the IPL for the next tenure

 

If Star India Private Limited gets the rights, then SPN would be left with no cricketing activities in India till 2018 making Star India a superior monopoly in the sports arena, having the telecast rights of top three Indian Leagues (Cricket (IPL); Kabaddi (PKL); Football (ISL)) plus Indian Cricket Matches in India till 2018 and ICC priced matches till 2023. The broadcaster can then dictate the advertisement rates and carriage rates on their network for the sporting properties, making it difficult to control by any governing body in India. But BCCI must justify why they did not grant the rights to SPN who developed the product when no broadcaster trusted it in 2008. If Star India wins the deal, it would be a major dent to the sporting ambitions of SPN which wants to use sports as a revival drive (sports is mostly male oriented in India), audiences from these avenues will act as a feeder to the network’s flagship channel to get stable ratings and earn profits. SET India is struggling to perform well since it lost the 2nd most watched Hindi GEC tag in 2011. We must remember that large networks invest in sports to not make profits but to gain traction to their existing channels on the network.

 

For the rest of the three networks, it would be an added bonanza to their existing network opening new avenues for growth of different sports and fierce competition will help all channels to strive to not only make profits but give superior experience to the end users.

 

Let’s hope for the best as they may be chances of a smaller contract of maybe 3 to 5 years such that BCCI can milk more revenues out of the IPL. The BCCI may work out a formula to please both the networks (SPN and Star India) as both have worked for the development and promotion of Indian Cricket to the maximum potential so disappointing anyone of them could make a dent to the reputation of BCCI. It was expected for three major competitors earlier like in 2004 for matches on the Indian soil (ZEEL, Sony and ESS) but today only two competitors are present due to the ICL stint between ZEEL group and BCCI in 2007.

 

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