DAN Interviews

IPL Media Rights: Impact on Ad Rates, Starís Dominance and The Way Ahead for Sony

05 Sep 2017

Star India has won the global television and digital rights for the Indian Premier League (IPL) for a period of five years, from 2018 - 2022, on Monday. Their bid of Rs 16,347.5 Crore was stated as the highest bid (consolidated) making it the biggest rights sale in cricket history. Previously, Sony Pictures held the broadcast right for IPL since 2008, which it bought from BCCI in Rs 8,200 Crores for 10 years. The global digital rights of IPL were handed over to Novi Digital (three years) in 2015 for Rs 302.2 Crore.

As per published reports, Sony's individual bid for broadcast (TV rights) was Rs 11,050 Crore compared to Star's Rs 6,196 Crore. But as per rule, the companies could form a consortium and if its consolidated global bid happened to be greater than the sum-total parts of every individual bid, they stand to win the rights. Accordingly, the sum-total of other bids, excluding Star consortium, was Rs 15,819.51 crore which is at least Rs 500 crore less than Star India's consolidated bid.

Initially, 24 companies picked up rights papers to contest for the several rights up for grabs in the auction organized by the BCCI. Several big companies like Facebook, Amazon, Twitter, Yahoo, Reliance Jio, STAR India, Sony Pictures, Discovery, Sky, British Telecom and ESPN Digital Media purchased the bid. The bids were divided into television and digital rights. However, only 14 of the 24 names turned up with their respective bids, which meant that there was no participation by the likes of Yahoo, Amazon and ESPN digital. After evaluation, BCCI announced that for broadcast rights, Star and Sony had emerged as eligible candidates while Times Internet, Reliance Jio, Airtel and Facebook could rightfully bid for digital acquisition.

Ad Rates

This is one of the biggest developments in the media and advertising industry in 2017. In fact, the word is out that Star will recover this money from ad revenue, and if thus happens, advertisers will have to shell out much more than what they had to so far for buying IPL spots.

Nandini Dias, CEO, Lodestar UM India thinks that the development could change the equation for entire media industry. "A big congratulations to Star India for the win. The bid for IPL has probably changed the equation for not only cricket and sports but for all media. The table will move up and it is expected that the rates for the ad slots will also go up dramatically. As per rough calculations, the ad rates are expected to go up to Rs 15-17 lakh per slot on television and Rs 2.5/impression on digital. This will be around 200% jump of rates on television and 300% jump of rates on digital,"shares Dias.

However, Dias warns that while the industry is struggling to sell, there have been advertisers who have agreed to the increased rates. And, in the current tough times this kind of inflation may not be very good for the industry.

Sujata Dwibedy, EVP, Carat Media thinks that since that Star India has pumped in a huge amount of money, they would like to make profits on it through ads. "This could mean that the ad rates might shoot up to 2x or even more, which many advertisers may not be willing to pay. While the properties such as 4s or 6s, sponsorships will continue to attract advertisers, the increase in rates for individual spot buys might affect the media plans for many advertisers," shares Dwibedy.

She further adds that the development will invite mixed reactions from the media agencies and brands. "It is good that the rights are consolidated with one broadcaster, which makes it better for agencies as they will have to deal with one broadcaster instead of two or three players for the same property. There will be more bundled deals including television and digital offering more room for innovation such as in-stadia branding, extra innings branding and other areas. However, one must wait and watch the jump in the quantum of ad rates that will be demanded by Star India for IPL," shares Dwibedy.

As SK Swamy points in his tweet, the total sum is approximately Rs 75 Crore a day or Rs 25 crore per hour or Rs 1.5 Crore after every over of an IPL game. Experts are estimating that the BCCI will now earn Rs 55 Crore approximately from an IPL match compared to Rs 43 Crore, ironically, for each international match that India play.

To this Vinit Karnik, Business Head, ESP Properties mentions that it is too early to talk about what kind of ad rates Star India will be demanding for IPL. "We will have to wait and watch. However, it is a massive leap for Indian sports and its media rights that now can stand next to some of the biggest boys in the history of sports worldwide," shares Karnik.

Star India Dominates Sports 

In last few years, Star India has emerged as a big powerhouse in sports broadcast by creating a huge ecosystem around it. They took the risk in nurturing some less popular sports in the country such as Kabaddi and Football, started the trend of multiple sports channels (Star Spots 1, 2, HD1, HD2) and established a huge OTT platform Hotstar that is fulfilling their digital ambitions. Now, the broadcaster has rights for lesser known Indian sports (some of them have extremely high viewership), global cricketing event, and with IPL in their kitty, they now seem to looking at a monopoly in the segment.

Karnik says, "Star India has shown its efforts in last 5-7 years towards sports by creating a huge ecosystem around it. Previously there used to be a time lag for five minutes between the television broadcast and digital broadcast, but now with Star India consolidating the media rights, the delay will be gone and both the broadcasts will be simultaneous. It clearly reflects a long-term thought," shares Karnik.

Sony Pictures Networks, on the other hand, has been at the helm of promoting IPL since its origin. In last 10 years, the broadcaster brought nearly two months of cricket to the audiences on Set Max and people were glued to their television sets during this time. It has been one of the biggest revenue churners for the entire network. There is no doubt that the IPL is a huge loss to Sony Pictures.

Dwibedy says, "The property was a huge revenue churner for the entire network along with eyeballs. IPL provided them great buzz which was much more than their other shows. The network has a huge task ahead of them to make up for this loss," shares Dwibedy.

Adding to this, Dias comments, "Star has a larger footprint than Sony in regional, FTA, sports and digital. They will bring all its resources into play for the IPL. Also, the broadcaster will try push the IPL to global markets via Hotstar and television. This will be a huge push to the cricket in some of the western markets. On the other hand, Sony will have to rethink on its strategy."