Media rights auction: IPL’s next big battle royale

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The underdogs had a field day in IPL15 which garnered a record sponsorship of over ₹1,000 crore and a new title sponsor in the Tatas. New franchises Gujarat Titans led by Hardik Pandya and LucknowSuper Giants led by KL Rahul put up a scintillating performance in the T20 cricket league, even as popular franchises Mumbai Indians and Chennai Super Kings shocked the fans with their poor run. Who would have imagined the Gujarat Titans winning the trophy on their very first outing?

The question is whether IPL’s next battle to be played off the pitch – the auction for media rights – will also hold similar surprises. Lots of spins on this auction, touted to be worth almost ₹50,000 crore, for the odd ten players, who picked up the bidding documents, especially for the incumbent Disney Star, and expectations are that we will see an uphill battle, although the price is asking.

Media consultants estimate that the combined rights (global plus digital TV rights) could range between ₹40,000 crore and ₹50,000 crore – a huge increase from the Rs 16,347.50 crore Star fetched in 2018.

Over the past month, many naysayers have pointed to Tata’s declining IPL viewership – a reported 33% drop – and reduced advertising rates to question the high price of media rights, but expert opinion is that the prize hike is justified, and will have no impact although there is room for innovation in the tournament format.

The asking price

A senior media analyst justifies the increase in media rights by pointing out that the previous winning bid five years ago was for 60 matches. Now there are 74 matches plus the annual inflation increase. It also says digital viewing rights have been under-indexed

Advertising firm Rediffusion chief Sandeep Goyal, an ardent commentator on IPL’s business, believes that while the asking price may be high, bidders will fight furiously for it. “For media companies, sports rights are always seen as the engine while everything else is like the bogies of the train. The ascendancy of corporations and media groups is in many ways dictated by whether or not they own the IPL rights. For example, during the years when Star India had the rights, they beat all competitors by far more miles. It was the same with Sony,” he says.

The same thought is echoed by Shailesh Kapoor, Founder and CEO of Ormax Media, who says the TINA syndrome will ensure bidders shell out whatever BCCI asks. “There just isn’t any other content with the kind of eyeballs that IPL gets – back when you still had a Saas Bahu or a KBC,” he says.

As he also points out, IPL is the engine that drives digital subscriptions. For Hotstar, India would contribute up to 30% of its global revenue. In contrast for Amazon and Netflix, India brings in just 5-10% of their revenue. IPL is the differentiating factor.

For franchise owners too, a lot depends on IPL media rights, as a large part of their income depends on it. With box office revenue now at zero, and merchandise and other revenue yet to take off, media rights and sponsorships are all the more important. Dabur’s Mohit Burman, who is co-owner of the Punjab Kings franchise, describes how it took the team seven long years to break even and how difficult the past two years have been. Also, as he points out considering the high amounts that the owners of the new Lucknow and Gujarat teams paid to buy these franchises (₹7,090 crore and ₹5,625 crore), they must have considered the media rights to come when they have made their offer.

Interestingly, Burman issues a caveat, saying BCCI should not overstate media rights given the difficulty of obtaining publicity. “I think there has to be some kind of common sense because today the ad rates (on IPL) are quite high. There are comparisons to the Super Bowl but we don’t have the eyeballs like This sport. Media rights must not be bought by companies at such high prices that they become unaffordable for advertisers and it becomes difficult for media companies to get their money back.”

Although IPL 15 broke all records in terms of sponsorships, recessionary trends had an impact on publicity. Startups that have contributed the bulk of advertising are seeing their valuations plummet amid a funding crunch, even as FMCG companies face inflationary and margin pressures. Although the next IPL is a year away, media planners believe it would be difficult to attract publicity. Industry estimates suggest that Star may have been roughly successful in recouping its investment in IPL.

The drop in viewership in IPL 15 won’t help either. Although a fraction of the audience has gone digital, there are concerns that the ten-team format will cause fatigue.

“The addition of two teams lengthened the season. Also, 15 years later, if I have to judge, only two teams MI and CSK managed to create a fandom and these two teams did not do very well. This factor therefore also contributed to the drop in the number of viewers, ”explains Sandeep Goyal.

Vinit Karnik, Head of Sports, Esports and Entertainment, GroupM South Asia agrees that lack of team loyalty has played a role in the drop. “We had a mega auction and as a result key players changed teams and so it will take a season to retain teams, especially for the two new teams.” He also says, “Viewing habits have changed. Due to Covid, the digital audience is growing faster than expected. Therefore, these numbers will have to be looked at from a very different angle.

Goyal thinks IPL needs a serious overhaul in terms of format, talent and innovations. “Most of the best players in the world don’t play in the IPL anymore,” he points out.

Asked for suggestions on how to improve the team, Burman said, “Ideally, that’s BCCI’s prerogative. But I think one innovation is to take this global league to expand its audience base. Maybe a shorter caravan version in countries like the UK and South Africa will help.

To Goyal’s criticism of franchises not investing in consistent off-season fan engagement, he says Punjab Kings will step up the game on social media. “Plans are underway and much of the archival footage with players has already been shot. We are in the process of using more engaging content and reels to keep it running throughout the year.

Who could get the rights?

Finally, according to experts, the rights will go to those who are most desperate. And those appear to be Star and the new Uday Shanker -Viacom Sports 18 combination. Also, pure digital players may not be favored yet.

Sandeep Goyal says: “I think serious bidders will be Star India, Zee, Sony and the Viacom18-Uday Shankar-Murdoch campaign. This will be a consolidated game and not a pure digital game. Nobody knows cricket like Shankar and he knows the art of monetization way better than anyone.

For Star, Zee and Sony, Goyal believes, if they could secure the cricket rights, it would have a huge impact on their network of channels, including GECS. “There is a cross-pollination of benefits across the network that is priceless.”

According to Ormax’s Kapoor, “Cricket is an investment that has intangible benefits.” He thinks Star would be most desperate to retain the rights, because if they lost them, the cascading global impact on revenue would be high.

However, this year the BCCI has tossed plenty of curve balls in its bid documents – such as a controversial special non-exclusive package (Bundle D) that allows those who cannot win media rights access to certain matches through digital. This could open a window for pure digital players like Amazon and Apple.

That’s the game !

Bidders in the race for IPL media rights

Amazon

disney star

Reliance Viacom Sports18

Zee entertainment companies

Sony Corp Group

Dream Sports Inc

Alphabet Inc (Google)

SuperSport, South Africa

Apple Inc.

Media rights packages

Bundle A – Indian Subcontinent Broadcast: The base price in this category is ₹49 crore per game. The overall base price of 74 Games would be ₹18,130 crore for five years.

Package B – Indian Subcontinent Digital Rights:The base price of this package is ₹33 crore per game. For five years, the calculation is ₹12,210 crore.

Package C: Non-Exclusive Package (DIGITAL): This includes 18 games and the reserve price in this group is ₹16 crore per game. At 74 games per season and calculated over five years, the price of this package is ₹1,440 crore. The 18 matches in this package will be – opener, 4 playoff matches and 13 evening double header matches

Package D: Rights from the rest of the world (outside the sub-continent): The base price of this package is ₹3 crore per game. The combined value of the reserve price is ₹1,110. crore for five years.

Published on

June 07, 2022

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