Broadcast rights to rake in Rs 19,000 crore for BCCI for 10-year-period

New Delhi: The highly anticipated tender invitation for broadcast and digital rights by the cash-rich Indian Premier League will be issued very shortly with the BCCI expecting bids ranging from $2.5 billion to $3 billion or Rs 16,000 crore to Rs 19,000 crore for a 10-year period.

Indian sports broadcasting has already seen consolidation in the run up to the big event with Sony Pictures Network India buying out Ten Sports Network from Subhash Chandra-owned Zee for Rs 2,600 crore.

This consolidation leaves a duopoly in its wake for Sony, already partnering with ESPN, now has a flanking device through the Ten acquisition. All told Sony will now have nine sports channels once the Ten deal closure happens — Sony Six (2), Sony ESPN (2) and five channels of Ten Sports.

Sources revealed to Financial Chronicle that BCCI has approached the big players asking them to participate in the bidding process. In fact, Sony, the incumbent rights holder wanted to invoke its Right of First Refusal which has been turned down by the BCCI saying that it will follow a completely open and transparent bid process.

With Sony/MSM agreeing to forsake the ROFR and planning litigation, it paves the way for the ITT to be issued. Bidding is expected to be extremely aggressive and the practice of submitting technical and financial bids will be followed.

Once the bids are found to be eligible, the highest financial bid will take the rights. Pertinently, Sony has the broadcast rights for 10 seasons (2008-2017) including the 2017 avatar. But as soon as season 9 in 2016 concluded, the renewal conversation began with BCCI informing various players on the new 10-year bidding process..

Mr N.P. Singh, CEO of Multi Screen Media, which holds the rights, told FC, “I am cautiously optimistic about retaining the rights, the bidding will be very aggressive for one of India’s longest running festivals.”.

It is believed that for Sony, the IPL rights are crucial given that it has invested Rs 2,600 crore to bolster its sports network. For MSM/Sony, IPL is intrinsic to its core as a centrifugal force for its entire business proposition. They will clearly bid over the top and this could be in the vicinity of $3 billion..

Sony has also made money hand over fist from the India ka Tyohar over the last nine years, consistently selling its inventory at fancy prices despite several taints along the way..

“Indian Paisa League”, as the IPL has rightly been called, has been embroiled in numerous shenanigans including spot fixing, betting, police investigations etc. Franchises have been turfed out for misdemeanours and the rough and tumble of controversy has seen the sheen wear off with sponsors walking out — DLF and Pepsi being two cases in point. And yet, it has remained India’s most durable brand surviving economic downturns and crisis..

So, why is everyone chasing the Golden Fleece? IPL 2016 made a gross collection of Rs2,500 crore ($378.78 million), of which Sony Pictures Network India made an overall revenue of Rs1,200 crore (up from Rs1,000 crore in 2015), the highest. This was followed by the eight IPL franchises that earned Rs200 crore-230 crore together..

Interestingly, BCCI generated '220-250 crore from on-ground sponsorship, and HotStar, the digital rights holder, got around Rs40 crore. The Rupert Murdoch-owned Star India too has upped the ante with its enlarged sports broadcasting network in India, as many as 10 channels — four of them HD and two Select HD. It is also the sponsor of the Indian cricket team. It has pumped in big bucks in incubating homegrown sports like kabaddi successfully. It also broadcasts the Indian Soccer League, the Indian Badminton League and Hockey India league..

Star which has an all encompassing cricket strategy with both BCCI and ICC rights, wants to complete the triangle with the IPL rights. In November 2013, Star India had stated that it would invest more than Rs 20,000 crore to expand its sports coverage in India. In February this year, Edelweiss Securities had valued Star India, the Indian subsidiary of 21 Century Fox controlled by American media tycoon Rupert Murdoch, at $14.3 billion (Rs 97,011.2 crore at that day’s exchange rate of Rs 67.84 to one US$) despite the company reporting losses in its spots business..

While Star India boss Uday Shankar could not be contacted, the mood in Star India is that “IPL is an immensely popular and powerful sports tournament with great salience and its format is attractive for Indian audiences. When it comes to market, Star will bid aggressively. While the rights value will obviously be overweight on Television, make no mistake ours will be a very measured response for both TV and digital.”.

During the Lalit Modi dispensation, MSM had coughed up over a billion dollars for the 10-year broadcast rights. This time, industry analysts reckon that the sky is the limit.

Moreover, while the general impression is that the rights battle will be a duopoly with 21st Century Fox-owned Star India as the other bidder, BCCI sources revealed that there could be multiple bidders in the fray despite the high cost involved of upwards of Rs 1600 crore per season..

Discovery Communica-tions-owned and operated pan European sports television network Eurosport, which has been wanting to enter the burgeoning Indian sports broadcast market, is likely to be the surprise bidder along with possibly a very large telecom which has a business model predicated on data and live video streaming..

The Eurosport network of channels is available in 54 countries, in 20 different languages, providing viewers with European and international sporting events. Eurosport has a large bouquet — Eurosport 1, 2 France, British, Portugal, Spain and the most recently launched 3D..

BCCI sources revealed that Jio will definitely be one of the bidders for digital rights in India. Whether it bids for the broadcast rights in conjunction with a broadcaster or through its own network isn’t known. Though Reliance Industries owns the CNN-News 18 television bouquet, it does not have a sports channel of its own yet. But that can be rigged up in next to no time..

Given that IPL broadcast rights are from season 11 onwards (2018), there is enough time. In the eventuality that Reliance Jio does bid, it is not known whether there is any conflict of interest clause that will be triggered given that it is an existing franchisee as well..

There is no clarity whether other telecoms like Airtel or Vodafone will also show interest in making such a high priced bid given that they are debt strapped and a punt of this magnitude would add leverage to their balance sheets. Further, they don’t have television networks as part of their quiver.

Jio appears best placed in this regard and billionaire Mukesh Ambani has no dearth of cash. It is also believed that those entities which have been in litigation with the BCCI in the past like Nimbus owned Neo Sports and the Zee Group will not be allowed. In any case, Zee seems to have exited its sports business with the sale of Ten Sports. This once again proves that cricket in India is inflation adjusted and recession proof.