MUMBAI: The Board of Control for Cricket in India's (BCCI) decision to reduce the period for Indian Premier League (IPL) media rights from 10 years to five has been praised by the cricketing world. In the tender floated by the board in September 2016, the broadcast rights were to be given for 10 years and digital rights for five years. The bidding process was cancelled due to a standoff between the BCCI and the Supreme Court-appointed Lodha panel.
Now, by bringing both the rights to five years, BCCI has accepted that the gap between the two mediums, broadcast and digital, is narrowing rapidly. However, what isn't clear yet is whether the new tender will allow the board to compare consolidated bids with bids for individual rights in a scenario where bidders put one figure for all three rights without specifying the price for each right separately. The rights have been divided into three categories - Indian subcontinent television rights, Indian subcontinent digital rights and the rest of the world media rights (broadcast and digital). Interested parties will be asked to submit bid or bids for any combination of these.
The question industry people are now raising is: How prudent has the BCCI been in not floating the digital rights separately for all regions? Says a senior industry executive: "By allowing consolidated bids, BCCI is restricting market forces from individually valuing media rights. It is likely that the BCCI sees the interest of broadcasters as primary because that's the bigger revenue pool, or the board is apprehensive of taking the risk of floating digital rights separately because it doesn't believe the market has warmed up for separate pricing of digital rights yet."
Ashish Bhasin, the chairman and CEO at Dentsu Aegis says, "Smartphone penetration in India is about 20%. In two years it will reach 30% or higher, which will be an inflection point. It's clear that the digital platform should be treated on its own merit."
Jatin Ahluwalia, founder and CEO at Seven3rockers Technologies, says the BCCI has certainly been more transparent in the tendering process this time than earlier where the broadcaster was at a distinctive advantage. "But it also needs to recognise the emergence of small start-ups who can only bid for digital and not broadcast," he says.
In the past, BCCI used to ask for separate bids for each rights on offer. This was done away with last year when the BCCI floated the tender for IPL media rights in September.
There is nothing wrong in a broadcaster preferring complete ownership by having both television and digital rights, but it should do so by winning both the tenders through separate price bidding.
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The BCCI seems to believe that the market hasn't yet grown enough for it to float digital rights separately. That's why it has sought to add the condition that digital streaming will be deferred by five-minutes, unless the broadcaster also buys the digital rights and is allowed live streaming for no extra fee. An advertising industry executive has a question for the board that should settle the debate: "In the previous (September) bids that were cancelled, how many parties bought the tender to bid only for digital rights vis-a-vis those who were bidding for broadcast rights? By comparing the two, the board should be able to know how much interest is already there in digital-only rights."
The bidding process is likely to start in early June and will be completed by July.