Nimbus secures Rs 600 cr bank guarantee

Nimbus Communications, the promoter of cricket channel Neo Sports, is in the final stages of securing a Rs 600 crore bank guarantee as a part of its staggered rollout payment to the Board of Control for Cricket in India (BCCI) for telecast rights for 2007-08.

As a part of its payment schedule, Nimbus has to furnish bank guarantees for each financial year. For 2006-07, it had to furnish a bank guarantee of Rs 400 crore, while for 2007-08 the amount is about Rs 600 crore. This has to be submitted to the BCCI on July 15.

Nimbus has already made payments of Rs 523 crore for 2006-07, while it has to pay Rs 517 crore for 2007-08.

Nimbus had secured the five-year telecast rights (2006-2011) from the BCCI in 2005 for about Rs 2,730 crore. But the law on mandatory sharing of sports with Doordarshan passed in March resulted in significant revenue loss for Nimbus.

As a result, the BCCI compensated Nimbus for Rs 257 crore from the total amount. Nimbus also managed a further reduction of about Rs 200 crore as a result of some cancelled matches early this year.

Shashi Kalathil, chief executive of Neo Sports Broadcast, said: "While we are at an advanced stage of closure and are happy with the progress, the deal is not yet done and cannot be announced as published in a section of the media."

He went on to say that the bank guarantee is in the range of Rs 600 crore. The BCCI executives said that a bank guarantee of about Rs 600 crore was in the offing from Nimbus and the payment for 2007-08 will follow shortly.

For Nimbus, the next big bet is on the tour of the Australian cricket team to India in October. According to sources, the Australian tour is being valued at Rs 200 crore.

To ramp up its distribution front, Neo Sports said it would be leading an independent distribution initiative. About the initiative, Kalathil said: "The independent distribution route allows us a rapid ramp-up, better long-term control and superior monetising. For the next two to three months, the focus would be on getting distribution reach maximised for Neo Sports and Neo Sports Plus, our 2 channels."