Passion, engagement, impact and revenue —very few sectors can deliver on all these parameters in the manner sports can. The global sports industry is estimated to be around $600–700 billion, with India grabbing a prime share. Evolving from a one-game nation to a formidable power with many new platforms, India has become a key market to watch out for. The years 2008 and 2014 were crucial turning points for Indian sports: first came the Indian Premier League (IPL) in 2008, and then several promising leagues in non-cricket sports in 2014.
According to a KPMG report, the Indian sports sponsorship market — comprising on-air, on-ground, team, franchise fee and endorsements — grew 12.5 per cent y-o-y to Rs 5,190 crore in 2015. Many corporates today are betting big on sports to build brands, primarily due to its ability to attract a large numbers of viewers. For instance, digital wallet and e-commerce player Paytm has committed Rs 500 crore over 2015–19 to the sports category, and is likely to target upcoming leagues in the country.
Lately, the sports broadcasting landscape in India has transformed significantly. Broadcasters are increasingly looking to diversify their portfolios with a variety of sports other than cricket to keep the viewership rising. With over 675 million people having access to a TV in India, it is the second-largest market for broadcast media after China, plus the sports genre has the potential to drive subscription revenue in addition to advertising revenue.
The two major broadcasters in the country — Star India and Sony Pictures Networks (SPN) — are competing intensely to acquire international sports properties. SPN, in fact, made a big move in August 2016 when it acquired Ten Sports from ZEE to diversify its portfolio. Before that, it joined hands with ESPN, marking the return of the global sports brand in India. Sports broadcasting in India has taken a new turn with the advent of various sports leagues. Broadcasters are vying for fresh properties, through global biggies and homegrown leagues, to increase their portfolio of TV channels as well as digital platforms.
Sony Pictures Networks India announced the rebranding of its sports channels bouquet following the acquisition of Ten Sports September 2016 for a reported $385 million. Along with announcing Indian cricket legend Sachin Tendulkar as its brand ambassador, Sony also launched two new sports channels under its new “Sony Ten” brand, taking its overall tally to 11. This includes five standard-definition sports channels, their high-definition mirrors, and an HD golf channel.
This also means that Sony now has one more sports channel than its main competitor, Star India, who has 10, including six SD and four HD channels. All this – the acquisition, rebranding and launch of new sports channels – signals an attempt by Sony to break Star’s dominance in the market.
The BCCI Chief Executive Officer (CEO) Rahul Johri says the revenue generation from the IPL media rights auction could be “historic”, considering the huge interest shown by various stakeholders. The bidding for various media rights auction of the cash- rich league for a five-year period from 2018-2022 will take place in Mumbai. The rights have been seggregated in two categories — broadcast and digital (internet and mobile) rights. The rights on offer are Indian sub-continental TV rights, which is the most coveted along with emerging Indian sub- continent digital rights. There is also rest of the world media rights on offer which includes key international markets like the Middle East, Africa, Europe, USA, Australia and New Zealand. There are predictions that BCCI could be richer by more than Rs 20,000 crore through their earnings from the rights. In 2008, Sony Pictures Network won the IPL media rights for a period of 10 years with a bid of Rs 8200 crore.
Now This Year, Star India Pvt. Ltd won television, digital, Indian and global media rights to the India Premier League (IPL) for the next five seasons for Rs16,347.50 crore, outbidding rivals such as Sony Pictures Networks India, Facebook Inc. and Bharti Airtel Ltd. This effectively puts IPL in the top tier of global leagues such as the UK’s Premier League and the National Basketball Association in the US. And it gives Star, the Twentieth Century Fox company which already has TV rights to all tournaments organized by the International Cricket Council, including the Cricket World Cup, and all matches organized by the Board of Control for Cricket in India (BCCI), a virtual stranglehold over all cricket media rights in India. “IPL is a very popular property and we believe a lot more value can be created for the fan across TV and digital,” Star India chief executive Uday Shankar said at a press conference in Mumbai shortly after the results were announced. “We have significant presence in TV in India, a robust digital platform that we plan to take global and our channels are globally distributed.” Star India was the only firm to put in a consolidated global bid. Its consolidated bid exceeded the Rs15,819.51 crore sum of the top individual bids across categories.
Broadcaster Sony Pictures, which bid Rs11,050 crore for the television rights in the Indian subcontinent, had the highest in that category. Sony was the official broadcaster of IPL between 2008 and 2017. Facebook had the highest bid for IPL’s internet and mobile rights for India at Rs3,900 crore. Reliance Jio Infocomm Ltd bid Rs3,075.72 crore for the internet and mobile rights. Rahul Johri, chief executive of BCCI, said all bidders played to their strengths and bid aggressively. BCCI received 14 bids for television, internet and mobile rights to IPL. Shankar added that Star India’s sports strategy was not just restricted to cricket but equally focused on the development and growth of non-cricket sports at the grassroots level. In 2013, Star India invested $1 billion to expand sports programming beyond cricket and broadcast sports content in Indian languages. Sports marketing executives said Star India’s consolidated bid will work to its advantage and that the final bid price could potentially fetch a return on investment. “In isolation, the room to play with these media rights could be limited,” said Vinit Karnik, business head (entertainment, sports and live events) at the media buying agency GroupM.
“With both TV and digital rights with Star India, there is likely to be no lag period between the live stream on Hotstar and Star Sports. Besides that, the Indian media landscape is changing, and the distribution revenue from channels will be far higher compared to 10 years ago. Both subscription and advertising markets will mature further, also working to Star’s advantage,” Karnik added. In 2017, during the 10th edition of IPL, Sony is estimated to have earned Rs1,200 crore as advertising revenue and Hotstar, which had the digital rights, Rs120 crore. Star will have to significantly better those numbers (earning more than double those every year) for it to make profits on its IPL investment. Shankar said Star sees its bid more as a five-year investment than a one-time deal that has to be immediately profitable.
Victory for judgement
The Supreme Court, upheld a Delhi high court ruling of 2015 and said that Prasar Bharati can air the feed it gets from private sports broadcasters only on its terrestrial network and its own DTH (direct-to-home) platform, Free Dish. This comes as a big relief to Star India Pvt. Ltd, which in 2012, paid Rs3,851 crore for the television, mobile and internet rights to all matches organized by the Board of Control for Cricket in India (BCCI) up until 2018 and has been sharing the feed with DD. The judgement is being seen as a stunning victory for Star India and other private sports broadcasters who will now have no competition to their feeds on private cable and DTH platforms. Earlier DD channels on cable and DTH also telecast the matches under the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007.
The state broadcaster is still examining the ramifications of the verdict. It may be noted that a section of the Cable Television Networks Act makes it mandatory for all cable operators and DTH to carry two Doordarshan channels. So is the SC judgement coming in the way of the government notification? Will DD black out its channels to cable and DTH operators when a match it shares with a private broadcaster is on? Will DTH and cable operators be asked to switch off the channels? Or will DD eventually have a dual feed and show different programmes on cable and DTH while telecasting “sporting events of national importance” on DD Free Dish and its terrestrial network?
There are no easy answers to these questions as it is a complex matter which Prasar Bharati CEO Shashi Shekhar Vempati says is being studied. When the judgement came DD was airing the India-Sri Lanka cricket series although the rights were with Sony Pictures Networks. So it ran a ticker which said that the feed was not meant for cable TV operators. However, in the future that may not be enough. Asked about the way forward, Vempati said it was premature to comment. The silence at Prasar Bharati contrasts with the celebration among private broadcasters. The victory for Star India has indeed been spectacular and the implications for other private sports broadcasters heartening. To be sure, the rights to sports properties are acquired at steep costs. In India, however, till 1995, sports broadcast was the monopoly of Doordarshan and the sports broadcast rights with bodies like BCCI fetched little value. But after the opening up of the broadcast industry to private firms, the value of media rights of sports properties has been rising. Clearly then, the value of a sports event is determined by market forces and is a function of the popularity of the game and the entities competing for it. For instance, globally, rights to sports such as football in the UK, rugby in Australia, cricket in India, American football, basketball and baseball in the US are expensive. These rights are cyclical in nature and are granted by sporting organizations for a finite period, between 3 and 10 years, to a broadcaster that pays the highest value for them.
Interestingly, in India, events of “national importance” are notified by the information and broadcasting ministry. Any event that the ministry deems fit is considered to be of national importance and the list includes various cricketing events, tennis, hockey, and football matches as well as the Olympics and Commonwealth Games, among others. While Prasar Bharati has had a great run till now, benefiting from the mandatory sharing of these events, it’s now the turn of the private sports broadcasters to make the most of the development. The recent judgement will bump up revenue and profit for sports broadcasters. It gives a huge fillip to Sony and Star—the two broadcasters which currently enjoy rights to important sporting properties. The two media organizations will get a better value for their money. They will be able to monetize their properties better as both their subscription and advertising revenue will go up. However, there are some concerns raised by distribution networks (cable and DTH) which feel that they will lose their negotiating power with the broadcasters who may end up being a little high-handed since they will have a monopoly over sports events in cable and DTH homes unlike earlier when the matches were available on DD as well.
To be sure, though, the sports broadcasters may not be able to increase the channel prices immediately as currently the prices of TV channels including the sports channels in India are regulated by the Telecom Regulatory Authority of India (TRAI) and the maximum retail prices of TV channels including sports channels is capped at Rs19 per subscriber per month. But Star has challenged the authority and jurisdiction of TRAI to fix the price of TV channels and the matter is pending in the Madras high court. If the court quashes the pricing regulations, the story of sports channels in India could change. For now, the judgement protects the rights of the broadcasters and the consumers. Broadcasters who pay big sums to buy exclusive sports content are protected as they are in a much better position to recover their money. And consumers who don’t have access to pay TV can enjoy this content on Free Dish or DD’s terrestrial network. It’s a win-win for all.
Undoubtedly, there is immense scope for expansion of sports in India, especially since it is a high-growth economy with an ever-growing middle class with more disposable income and leisure time. This situation has resulted in a rapid rise in advertising; most local and international companies are aggressively targeting this lucrative but underdeveloped market through sports. However, to ensure a strong foundation for development of sports in India, the country needs to focus on three major aspects — governance and infrastructure, culture, and focused-approach to winning medals. With these in place, Indian sports will unleash its full potential sooner than expected.