Media rights auction: STAR India ends Sony's IPL innings

To shell out Rs 16,348 crore for next 5 seasons

In a clean sweep, STAR India has snapped up the global media rights to the Indian Premier League (IPL), with a composite global bid of Rs 16,348 crore for five seasons (2018-22), pipping to the post 12 rivals.

With this win, STAR India has become the undisputed king of cricket broadcasting in the country, unseating its arch rival Sony Pictures Networks, which held these rights for the past 10 years. 

The win was crucial because STAR India’s rights to the cricket matches that India plays in the country under the aegis of the Board of Control for Cricket in India (BCCI) expire in March next year, and the rights to the Australian and English boards are also up for review this year, leaving the broadcaster only with the matches that India plays in Bangladesh.

As a result, STAR would have had only 13 cricket matches to telecast in 2018. That is one-third of what it has in the calendar year 2017. But with 60 days of extra cricket coming to STAR India’s kitty in the form of IPL rights, the company in 2018 will telecast at least 73 days’ cricket, or over 70 per cent of the overall cricket that will be played.

In 2019, when the ICC World Cup is held, it will have more than 130 days of cricket to air. More importantly, the format of the IPL ensures that STAR India has at least 60 days of highly monetisable cricket every year for the next five years, in addition to the events under the aegis of the International Cricket Council (ICC) in at least three of those five years.

In contrast Sony, which had more than 70 per cent of the cricket in 2017 in its bailiwick, will see its numbers drop significantly in 2018, when it will have the rights to India’s South Africa tour, in which there will be 12 matches.

However, it can increase its exposure to cricket by grabbing some of the India-related cricket which will come from bidding. The testimony to IPL’s growth as the premier sporting property of the country is reflected by the fact that Sony had bought the TV rights of IPL for India for 10 years for Rs 8,200 crore.
 

“We needed the IPL rights because our rights to the BCCI international matches are up for review next March. In the competitive environment of sports broadcasting today, we did not want to take anything for granted and it’s nice to have the IPL after living without it for the past 10 years. We are excited about the digital platform because it has seen tremendous growth and our own experience with the IPL on Hotstar is testimony to that,” said Uday Shankar, chairman and chief executive officer, STAR India.

He added that the network would look at licensing the ex-India media rights to suitable partners in different markets, as it does with the global media rights it currently has for the ICC and BCCI matches. “We will look at licensing or subletting the rights. We’ll be paying a huge amount for the global rights. So wherever we can monetise them, we shall do so through licensing. We may, however, look at retaining digital rights in certain overseas territories so that we can launch Hotstar in those markets,” Shankar added.

Under the new rules introduced by the BCCI, the media rights have been carved up in manner that they apply to seven territories, and television and digital rights for India are bid for separately. However, companies could make one composite global bid, which could be higher, lower, or the same as the sum of all their individual bids. In case the global composite bid by a company is higher than the sum of the highest bids in individual territories, the rights would be awarded to the global composite bidder, as was the case with STAR India. 

The sum of the highest bids in the individual categories was Rs 15,819.51 crore, Rs 528 crore lower than STAR India’s global composite bid. The sum of all of STAR India’s individual bids was Rs 7,882.47 crore, significantly lower than its global composite bid.

Had things not gone its way, STAR India might have ended up with neither television nor digital rights in India, the two most important categories of rights for the IPL. 

STAR’s bid for television rights in India (Rs 6,196.94 crore) would have fallen far short compared to Sony Pictures Network India’s (SPN’s) bid (Rs 11,050 crore).  It would have lost the battle for digital rights also, since its bid of Rs 1,443 crore would have been topped by Facebook’s bid of Rs 3,900 crore. In the India digital rights category, STAR India’s bid was a distant fifth, with Airtel bidding at Rs 3,280 crore, Reliance Jio bidding at Rs 3,075.72 crore and Times Internet at Rs 1,787.5 crore. “We were clear about one thing — we did not want to win one platform and lose on another. Given the way digital has grown and the importance of TV, we wanted to be sure to have both. So the individual bids weren’t really to win just one platform. Yes, it was a risk, but we had our math in place,” said Shankar on STAR India’s bidding strategy. 

So where does this leave SPN? Indranil Das Blah, chief operative officer and partner at CAA KWAN, a sports marketing and talent management agency, said that while the network would suffer because of the loss of the IPL rights, it could also see this development as an opportunity. 

“Sony has suffered a blow. Apart from the IPL, it has a few marquee properties like FIFA events, Euro, and the National Basketball Association (NBA), but none of these offers the reach that the IPL does. However, it could look at this as an opportunity to invest in sports IPs (intellectual properties) like STAR has with kabaddi and football. It would be great for the sports environment in the country, and Sony could benefit from it as well.”

Apart from the IPL, Sony has the rights to the South Africa, Pakistan, and Sri Lanka cricket boards. In other sports, Euro (football), FIFA event (football) and the NBA form its most prominent sports properties along with the Australian Open in tennis.

STAR is banking on a huge increase in digital advertising. Last year it made about Rs 200 crore from advertising on digital, but it expects that this would go up to Rs 700-800 crore annually with the introduction of 4G services and the popularity of the net. It also expects that advertising revenues from broadcasting should go up by 10-20 per cent annually from the Rs 1,300 crore that Sony made this year through the IPL. 

It is banking on the presumption that it will make much more money by selling the global rights across the world than the players did earlier. 

“If you take the value of the highest bidder for broadcasting at Rs 11,000 crore, it translates into a cost of over Rs 2,200 crore per year for five years. It (STAR) should be able to make that kind of money from advertising," said a source close to STAR India.