Auctions for IPL rights likely to descend into all-out war

Stakes high for Sony, STAR; Amazon, Jio join in

It promises to be a no-holds-barred battle for the broadcasting and digital rights of the lucrative Indian Premier League (IPL), to be auctioned in the first week of September, between arch-rivals Sony Pictures Network and STAR India. The two companies dominate the Rs 2,000-crore cricket broadcasting market and are neck and neck in terms of inventory.

Sony Pictures Network is betting aggressively on the game after taking over Ten Sports this year and the 60 days of cricket in the IPL whose rights they currently control generate over Rs 1,200-1,300 crore in advertising, constituting a substantial portion of its sports revenue, according to industry estimates. If Sony Pictures Network loses the IPL broadcast rights, it will be left with a far smaller cricket inventory that will include matches the Indian team plays in South Africa, West Indies, Pakistan, Zimbabwe and Sri Lanka. These generate limited revenue. The Indian team is going to South Africa in the beginning of 2018 to play about 11 matches.    

The IPL is crucial for STAR TV because its cricket inventory might decline sharply in 2018 as many of the rights it holds come up for rebidding. STAR TV this year has broadcasting rights for 39 of the 112 matches relevant to India, including IPL and International Cricket Council (ICC) matches, matches the Indian team plays abroad, and matches conducted by the Board of Control for Cricket in India (BCCI).

In 2018, this number will fall to 13 matches as STAR TV’s rights for the Indian team’s matches in Australia and England come up for rebidding sometime this year. And the number could fall further if STAR TV loses rights for the BCCI international matches played in India, which also come up for renewal in March 2018.

STAR TV now has rights for matches in Bangladesh, ICC matches and BCCI matches. This year, it expects to generate Rs 600-700 crore of advertising revenue from cricket. It needs IPL to shore up its cricket offering in 2018. STAR TV has the rights in 2019 for the ICC World Cup.

Also, STAR TV’s  digital foray through its over-the-top (OTT) platform Hotstar is built on the popularity of cricket. So, retaining the IPL is crucial to ensuring it has enough cricket content. STAR TV also has digital rights for all ICC matches, including the World Cup and BCCI matches in India.

But retaining these rights, which it bought in 2015 for Rs 302 crore for two years, will not be a cakewalk. Tough competition is emerging from Amazon Prime, Netflix, Reliance Jio and Sony Pictures Network. None of these contenders is a pushover.

Digital rights are far more lucrative now than in 2015, when 4G telecom networks were in their infancy and data plans were expensive, OTT platforms were not in fashion, and Amazon Prime and Reliance Jio had not yet joined the party. Prices at this auction could go through the roof.

STAR TV has, of course, made good money in the digital space – the number of viewers for IPL 10, according to estimates, reached 130 million on Hotstar and other STAR TV OTT platforms — and it raised over Rs 200 crore from advertising sponsors.    

For Reliance Jio, which is looking at ways to increase data use on its telecom network, the IPL rights could boost the OTT platforms it is building. “Reliance Jio is buying content for its platforms, be it films, music or media. Cricket will give it a much-needed boost,” says an executive with a digital company. 

Amazon Prime, too, is looking at more India-centric content and there can be nothing more attractive for it than cricket.