NIMBUS: On the backfoot

With DD's resurgence, Harish Thawani's many detractors are back in business.

Last year, Nimbus Communications chief Harish Thawani astounded the broadcasting world by winning the rights to cricket matches in India for an unheard of $ 612 million "� about Rs 2,724 crore at the prevailing exchange rate "� for four years upto 2010. A few days ago, it may have reached another milestone "� one it may not cherish "� by heralding the resurgence of Prasar Bharti as a sports broadcaster.

In an understanding thrashed out just before India and Pakistan took guard in the series opener on Monday, the public broadcaster argued that a large part of the revenue from the preceding series against Australia came because of Doordarshan's wider reach and viewership, and bought the right to market commercial time on its own by paying Nimbus Rs 81.5 crore. With this, Nimbus lost its status as the 'official revenue management company' for both one-day internationals and Test matches.

Prasar Bharti has for long been a thorn in the flesh of private broadcasters because it shares the feed for events of national importance (read: international cricket matches) which would have otherwise been exclusive to the rights holder. Under the arrangement, 75 per cent of the revenue earned by sales of advertising spots on DD goes to the rights holder. However, private broadcasters say this is acutely short of the money they would have made if the rights were exclusive.

The new arrangement may cause discomfort to Nimbus, nearly 85 per cent of whose inventory was being sold as a composite package of its own channel, Neo Sports, and DD.

Things have changed quickly. Till the last weekend, Nimbus was selling commercial time as a two-channel package for Rs 3.5 lakh to Rs 3.75 lakh for a 10-second spot. Neo alone was fetching about Rs 2 lakh a spot. According to industry sources, Neo is now offering a 10-second slot for Rs 1.4 lakh to Rs 1.8 lakh, in some cases for as low as Rs 1.2 lakh.

Since the feed on DD and Neo is identical, advertisers have plumped for DD's wider reach. Neo reaches only 45 per cent of the 68 million homes in the country that are connected to satellite television. Of the 2 million subscribers hooked to the two major direct-to-home service providers, it is on the Tata Sky platform but not on Dish TV's. DD reaches each of these 70 million homes and another 42 million that get terrestrial signals.

In retrospect, the break-up of Nimbus' distribution alliance with STAR India may have been a severe blow. "With the deal falling through, Neo had to begin building its distribution from scratch," said a media analyst.

The many detractors of Thawani have repeatedly insisted that he bid over the top for the rights. Thawani quelled much of the criticism with his smart deal making, persuading marquee investors like 3i, Cisco and Oman International Fund to shell out Rs 522 crore. He also managed to squeeze out a Rs 257 crore discount from Board of Control for Cricket in India when it seemed certain that the signals would not be encrypted.

"In no way are we losing money. Going by the size of the deal (with DD), Neo will earn Rs 10 crore to Rs 20 crore more than what it would have," said Shashi Kalathil, chief executive officer, Neo Sports Broadcast.

However, the detractors are back in business. "The bid amount was too high for any broadcaster to make money. With the feed shared with DD, the matters are worse," said the executive of a rival channel. For a sports channel, 55 per cent of the revenue is generated through subscription. "If Neo continues to share feed with DD, the subscription revenues will be hit badly," said a leading cable operator.

The silver lining for Nimbus is that, with the impressive cricket calendar, things can quickly get better if the ticklish issue of distribution could be addressed.