The BCCI tender for media and digital rights have opened today. Way back in 2008, Sony Pictures Network won the IPL media rights for a period of 10-years, bidding what was then considered a mind-boggling, and eye-popping, Rs. 8,200 crore. Since the internet was not such a major phenomenon ten years ago, BCCI figured an available monetization aperture later and in 2015, the BCCI put out a tender for global internet and mobile rights of the IPL. Novi Digital, a Star India entity, won the rights for a 3-years period ending 2017 for Rs. 302.2 crore beating Multi-Screen Media (Sony) and Times Internet. The opening of the bids later today will bring to a close the fresh tender process for the media and digital rights to the Indian Premier League (IPL) for a 5-years period from 2018 to 2022.
Both television and digital rights are up for grabs for the Indian sub-continent, and media rights for Rest of the World. The BCCI’s CEO, Rahul Johri, has gone on record estimating that the rights will fetch in excess of Rs. 18,000 crore. Going by straight percentages alone, if the earlier rights cost Rs. 8,200 crore (TV) and pro-rated Rs. 1,000 crore (digital) for a 10-years period, if the BCCI estimates are correct, the rights are likely to cost 400% more this time around! That is indeed a very very steep rise, to say the least.
As an avid watcher of this space, I wish I could today be a fly on the wall when the BCCI bids are opened. I am sure the bidding is going to be very very aggressive. A good 20 odd players have picked up the bid documents … Star India Pvt. Ltd., Amazon Seller Services Pvt. Ltd., Followon Interactive Media Pvt. Ltd., Taj TV India Pvt. Ltd., Sony Pictures Networks Pvt. Ltd., Times Internet Ltd., Supersport International (Pty) Ltd., Reliance Jio Digital Services Pvt. Ltd., Gulf DTH FZ LLC, GroupM Media India Pvt. Ltd., beIN IP Ltd., Econet Media Ltd., SKY UK Ltd., ESPN Digital Media (India) Pvt. Ltd., BTG Legal Services, BT PLC, Twitter Inc., Facebook Inc., DAZN / Perform Group, Discovery, Yupp TV, Airtel and BAM Tech and Oath (Yahoo). This is quite an eclectic list. Besides Star and Sony who were in any case expected to be there, it is interesting to see the likes of Reliance Jio and Airtel, both telecom operators on the list at one end, and equally interesting to see Amazon, an e-commerce player getting into content in a big way now, at the other end. Equally interesting is the presence of Twitter and Facebook. Obviously the digital part of the tender is going to hopefully see some major action. Surprising also to see Discovery amongst the hopefuls, as they were not really earlier known to be ever interested in serious sports. Another surprise entrant in the arena is Group M who have not been known in the past to be bidding for rights of any kind in India and have largely remained buyers of inventory on behalf of their clients. So, the cricket bidding space is obviously fairly crowded, and heated, and should see a lot of money power being exhibited as the day progresses.
Contrary to all that has been written in media in preceding weeks, I am hoping Rahul Johri’s prediction of the rights costing Rs. 18,000 crores actually comes true. Media pundits would of course curse me for wishing that to happen because if the cost of rights goes up exponentially, everything downstream will also have to spiral up equally exponentially. Now, my belief is that there is nothing wrong with that. In India, media is still a highly ‘pygmyised’ industry. Our largest media houses … TOI or Star … are in the vicinity of barely USD 1-1.5 billion or about Rs. 7,000-10,000 odd crore, give or take a bit. In contrast the big players in corporate India are far larger. HUL today nudges about Rs. 35,000 crore in top-line. ITC tips the scales at Rs. 55,000 crore. Airtel is Rs. 62,000 crore in revenues. Hero Motocorp is big too at Rs. 30,000 crore. Maruti grosses Rs. 77,000 crore. Reliance Industries of course is in a different stratosphere at Rs. 2,65,000 crore. Indian media requires a push-up like the current cricket media rights to give it size and scale. I am sure this is not the view point of most media professionals around me, but then I have never hesitated in having a contra-view.
Television advertising rates per se have remained in doldrums for years and years now. The likes of HUL (and I am singling them out only as an example) have ensured that their stranglehold on the GEC market kept cost of both sponsorships and spot rates on a tight leash, year-after-year. Almost every year one or the other major channel networks goes into an eyeball-to-eyeball confrontation with HUL, especially closer to the festive season around Diwali. Finally peace is restored, rates go up by mere decimal points and the networks have little choice but to do business at unfavourable terms in what is a highly fragmented market and where HUL and its media buying agencies are able to play one channel against another. This low revenue reality has meant that Indian television has not really invested in higher cost content creation. An episode on GEC typically used to cost Rs.4-5 lacs ten years ago. It doesn’t cost vastly more even today, bar rare exceptions. For the medium to grow, for the business to grow, this vicious cycle has to broken.
Cricket may just about offer that opportunity. Conservatives will surely tell you that mobile phones, telecom operators, e-commerce players, two-wheelers, cars, soft-drinks, banks and credit cards, e-wallets, IT and OA, deos, apparel and accessories, travel and occasionally real estate are the lead categories on cricket. About 20 top advertisers account for 50% of the spends. The top 50 would make up 90% of the entire volume and value in cricket spending. Moving the needle on rates in this small group of advertisers is going to be very tough. My view is exactly the opposite. The IPL title rights were bagged by Pepsi in 2012 for Rs.396.8 crore for duration of five years. The contract was terminated in October 2015 after which VIVO stepped in to buy the title rights of the IPL, shelling out nearly Rs.200 crore more for the years 2016 and 2017. VIVO then renewed the contract with a massive 554% rise in sponsorship money to Rs. 2,199 crore. The second highest bidder, Oppo, also quoted a whopping Rs. 1,430 crore. Moral of the story? Advertisers are willing to pay for cricket and as an industry, media houses should not shy away from extracting best value for the business as a whole.
I am sure the eventual fight for the major broadcast rights will narrow itself down to Star versus Sony, surprises notwithstanding. Even their most optimistic calculations must be showing a wide gap between Rahul Johri’s expected number and what cricket advertising rates currently fetch from clients. But then, the above example of VIVO should provide some confidence on what advertisers could pay for cricket content.
A lot has to change. Somehow, advertisers and their media agencies, have hitherto fought shy to pay ‘fair’ price for live cricket over the years. BCCI, on the other hand dealing with the same advertisers directly has been able to extract far better prices. With media rights today headed seriously northwards today for sure, those brands who would want to be on live cricket will have no choice but to pay far far more because the rights are going to cost far far more. Actually for the new media rights owner, this is going to be a business of who blinks first. So far the clients and media agencies have always got the better of the broadcaster. This time around, having paid astronomical figures to acquire the rights, the new owner will have to show more muscle.
A lot is obviously also going to change on the ground in terms of distribution. Jawahar Goel of Zee has already been making the rounds of the powers-that-be complaining that Star winning the rights for the IPL, in addition to their current India rights, could position them in a monopoly. This monopoly would most impact the distribution to MSOs and to DTH and force much higher levels of ‘declarations’. This will also mean that the cricket fan at large will have to pay far far more to watch the game on television at home. There is going to be obvious resistance but the same cricketing fan has moved from paying just a few rupees for Bollywood movies a few years ago to paying a king’s ransom today at a PVR. So nothing is really impossible.
I write this piece today with one single intent: the business of media, this tiny-little industry of ours, needs to seriously grow up. In size and in scale. The cricketing rights may look expensive but we have seen this happen in telecom and we can see this happen in broadcasting too: the higher you go, the farther you see.
(Sandeep Goyal is a die-hard cricket fan besides being an advertising and media professional of 33-years standing.)
(Update at 12:30 HRS IST) Amazon, ESPN and Yahoo! have not turned up to place their bids.