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Sony-ZEEL deal will boost television industry

The landmark $385-million deal between SPN and ZEEL will help in a lot of ways, say experts

Sony-ZEEL deal will boost television industry

The landmark $385-million deal between SPN and ZEEL will help in a lot of ways, say experts

Archit Ambekar | Mumbai | September 2, 2016


A veteran once rightly said, ‘There will be consolidation across industries and a time will come when only two or three players will be there.’ It seems that is slowly happening. In the e-commerce space, Flipkart’s Myntra recently bought Jabong. And now television has seen a landmark deal with Sony Pictures Networks India (SPN) acquiring Ten Sports from Zee Entertainment Enterprises (ZEEL) for a whopping $385 million (approximately Rs 2,600 crore).

The sports market in India has been a three-player market for a while now. With this acquisition, the market has become a race between two players -- SPN and Star India.

SPN, which currently comprises three sports brands – Sony SIX, Sony ESPN and Sony Max, will add seven channels (SD+HD) feeds from Ten Sports. The network has been host to one of the most iconic events Indian Premier League (IPL) for the longest time now. The network earlier this year made its sports presence stronger by partnering with ESPN. With that the network grew its football portfolio in the Indian sub-continent.

It is now for Star India to compete with SPN when it comes to bidding for sports properties. Meanwhile, ZEEL has been looking to sell Ten Sports for a while now. Having acquired Ten Sports in parts from Dubai-based Abdul Rahman Bukhatir’s Taj Group in 2006, the conglomerate realised that it is not making enough money from the sports channels.

Ashish Bhasin Ashish Bhasin

The deal is one of the biggest that happened. But is this something that will worry the industry? According to Ashish Bhasin, Chairman and CEO of Dentsu Aegis Network, India and South Asia, “Ten Sports is known for certain cricket properties and it is good for Sony because they will be able to consolidate sports properties like IPL. As far as advertisers are concerned, it doesn’t really matter much on who owns the channel because what they are really interested is the eyeballs. How many people watch what they are watching irrespective of the fact of who owns it.”

Bhasin added, “For the consumer, it is irrelevant which channel brings them the match. The fact is that they are interested in watching the content. From a channel’s point of view, consolidation always helps users get the economies of scale. The properties that monetise well in India are cricket. Today after so many years, over 84 per cent of the total spends goes into cricket. How well a sports channel does depends on what cricketing property they have.”

With the consolidation, revenues between the two networks will be streamlined. It is true that large monies go in cricket, but today the sports viewership is seeing a drastic change. A recent example is Rio Olympics which got some good eyeballs in the Indian sub-continent.

Anita Nayyar Anita Nayyar

Anita Nayyar, CEO, Havas Media, said, “In sports, ad rates are largely dependent on acquisition costs. Given it has become a two-horse race and events will be split between them it may not be very good news for advertisers. On the other hand, both the channels have to sell the events and hence a considered call is expected for a win-win situation.”

Nayyar says ferocious bidding for broadcasting will completely depend on the kind of sports properties being bid for.

Vinit Karnik Vinit Karnik

Vinit Karnik, Business Head, ESP Properties, said, “The Sony Pictures Networks India and Ten Sports deal will surely boost Sony's domestic and international sports portfolio. This is great news from a sporting industry standpoint in India. The acquisition will strengthen SPN’s offering for viewers of cricket, football, WWE and so on, complementing their existing portfolio. Additionally, the deal will also bring exciting sporting action such as English Football League Cup, Moto GP, Tour de France, Golfing Tournaments and rights to major sporting events such as the Commonwealth Games and Asian Games to Sony. This will help them build a robust distribution network base as well.”

It is time to see if SPN merges the channels to channelize its sports portfolio or keeps it separate like what ZEEL did when they acquired it.

premjeet-sodhi Premjeet Sodhi

Speaking about the impact of the deal on the industry, Premjeet Sodhi, COO, Initiative Media (part of IPG Mediabrands), said, “Sports enthusiasts follow sports events and their loyalty to channels/ media groups is not very strong. Successful sports events will have demand irrespective of the broadcast platform. The advertising rates of such properties are driven more by the acquisition cost of the property and their success depends on how well these are packaged and marketed by the broadcaster. That also drives the advertiser interest to invest in the sporting property. In India, sports as a genre is growing and has been delivering great results for clients and therefore marketers are also willing to put in their strategic investments in sporting properties.”

Basabdatta Chowdhury Basabdatta Chowdhury

Basabdatta Chowdhury, National COO, Starcom India, says it is a good thing for the industry. She feels that with this deal, IPL and Cricket World Cup revenues will be cannibalised better. Chowdhuri jokingly says that two parties are better to bid; the third party is actually a spoiler. “It seems that BCCI’s job has become easier now and things are likely to get rationalised. Ad rates won’t go up,” added Chowdhuri.

The deal has only made the industry a better place. Star India and SPN will now be able to channelize their revenues from sports properties better. Given the fact that India is a nation where cricket is one of the major events, the networks won’t enter into each other’s revenues. Well the war has just begun and one will see what each one brings to the table.

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