Sandeep Goyal
Apr 05, 2018

Blog: Star reaches for the stars with BCCI media rights

BCCI might be laughing its way to the bank and Star comes out smiling. But what does it mean for the advertising business?

Picture courtesy: www.bcci.tv
Picture courtesy: www.bcci.tv
Congratulations Uday Shankar! Congratulations Sanjay Gupta! Congratulations Star India!
 
But actually a bigger congratulations to Rahul Johri at BCCI! What a windfall for the BCCI. First the IPL. Now this.
 
Do I however see glum faces at Goafest where all the head-honchos of media buying agencies have gathered for the weekend? Star India now has the kind of monopoly where it can raise rates for ad-spots on cricket like never before. The media agencies tried cartelisation a few weeks ago to beat Star India down on the IPL rates. They succeeded partially. But now, Star has the entire cricket business by the b@**s. It would not be unfair if this time it is Star that decides to squeeze some b@**s!!!    
 
When Anirudh Chaudhry, treasurer of the BCCI tweeted at 4:07 pm earlier today, that Star India had won the India cricket rights for the next 5 years for Rs 6,138 crore, he got the entire world of Indian cricket abuzz and aflutter. Star India had once again drubbed all competition including the mighty Reliance Jio to take home all of Indian Cricket for the next five years. 
 
I had always expected Star to beat Sony. I was almost sure of that. I just felt it in my gut. Then there were rumors that Sony had partnered with Facebook. But I still was sure that Star would win. But when Reliance Jio, with the deepest (and most determined mindset) pockets in the world, joined the fray on Day 1 of the bidding, to be really really honest, I wasn’t no longer so sure of the outcome of the bidding slugfest. Jio was quite capable of driving up the bids to stratospheric levels. They have shown they can do it in telecom. They can surely do it in television. 
 
The auction started on day one with an initial bid of Rs 4,176 crore, and ended the day at Rs 4,442 crore. The teams at Star, Sony and Jio must have remained up all night re-visiting their hypothesis and their spread-sheets. The bids continued to climb on day two ending on Wednesday at a whopping Rs 6,032 crore after eight intense rounds of bidding. The finishing line did not seem anywhere in sight. Given the aggression that had been witnessed over the previous two days, there were feverish rumors that the final number would go past Rs 7,000 crore! For a total of 102 matches (22 Tests, 42 ODIs and 38 T20 Internationals) spread over 2018 to 2023 (2018-19: 18 matches, 2019-20: 26 matches, 2020-21: 14 matches, 2021-22: 23 matches and 2022-23: 21 matches) this was going to be a windfall for the BCCI and yet another feather (rather festoon) in the cap of its young, dynamic and aggressive CEO Rahul Johri. 
 
Therefore, in a manner of speaking, if Star got the rights at (a mere!) Rs 6138 crore, after the mindless frenzy of the first two days, then the closing figure is actually a steal.  
 
For Star India which already has the entire IPL rights for the next 10 years, and has all the ICC rights too, the favourable outcome on the India rights for the next 5 years gives it a clear monopoly over the domain of cricket. After struggling a bit in the initial few weeks against a common front put up by a ginger group within the Advertising Agencies Association of India (AAAI) (where I too played a small role on behalf of Star) Star India (to their credit) have managed to push up the effective rate for a 10-second spot from last year’s Rs 6-6.5 lakhs to upwards of Rs 9 lakhs this year for the forthcoming IPL that starts this Saturday. After initial hesitation and hiccups, Star had already signed about 35 clients by early March. That number could well be doubled by the time the first ball is bowled at IPL-11. This is despite some very bearish posturing by the large media buying agencies who tried very hard to keep the IPL cricket rates down. Finally, they blinked. Star triumphed.
 
While the battle was in progress with the media agencies, in past weeks Star India also had a big war on its hands with the distribution part of the television business. Star’s rivalry with Zee’s Dish TV is already well-known. And Dish now has Videocon DTH too. Both upped the ante in past weeks refusing to carry Star TV’s sports content. But the biggest dispute surfaced with Airtel DTH with a nasty round of ads and warnings issued in the public domain by both sides. Once again Airtel blinked. Star triumphed. 
 
The biggest win by far for Star however has been the absolute monopoly its Hotstar OTT platform will have in the digital space. Competitors like Facebook and Google were expected to compete for rights this time but chickened out. Last time Amazon had been expected to be in the fray. But they too kept away from the IPL bidding and did not even surface for the India rights. The likes of Airtel had also put in an appearance at the time of IPL bidding. This time they too were conspicuously absent. Ajit Mohan, the CEO of Hotstar has done a fabulous job over the past few months building Hotstar into really hot property with over 100 million live subscribers. 
 
Last but not the least, the 100% monopoly that Star India now enjoys will also help it grow ROW (Rest Of World) markets, especially for pay-TV. The large amount of Indian diaspora around the world is a veritable goldmine waiting to be exploited and monetized. For the first time ever, with a single window to the world, Star can control both distribution as well as pricing. Hitherto, no broadcaster has ever been actually able to make money from brand advertising on cricket in any serious kind of way. By offering a combo of Star + Hotstar to these overseas markets, Star India can create a viable and visible revenue stream. 
 
To be honest, for advertisers on cricket, the Star monopoly is possibly not such good news. No longer can their media buying agents either play divide-and-rule or defer decision making on sponsorships and spots till the broadcaster starts to sweat. Star’s position is impregnable. It is Advantage Star all the way. 
 
While it is good news all the way for Star, it is equally if not more good news for BCCI. They have raked in the kind of moolah they perhaps never ever expected. That too through the world’s first sports rights e-auction. 100 per cent transparent. For that once again, kudos to Rahul Johri. He has proved once again what a good CEO is all about. 
 
For now, cheers Star! I hope Uday and Sanjay invite me to the celebrations. After all I have been their most bullish well-wisher. Before I close, I believe advertisers on cricket should really not feel sad or threatened. For those for whom cricket is important, now is the time to make long term commitments and build bonds of friendship with Star TV. I am sure they would welcome genuine supporters of the game, and create lasting value for such partners over the next 5 years. It could be a win-win for all.
 
(Sandeep Goyal is an active player in the cricket media buying space from his days as Group CEO of Zee Telefilms (where Buddha Telefilms was part of his domain) and from when he was chairman, Dentsu India.) 

 

Source:
Campaign India

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