E-auction of IPL media rights will change the game, say experts

With BCCI opting for an e-auction, instead of closed bids, in the name of transparency for IPL media rights which will be up for grabs in the next two weeks, it is set to be highly rewarding for the Board but will lead to a tough battle between the bidders.

“Earlier BCCI was saying IPL media rights tender will be a closed bid which would have brought about Rs 20,000 crore. It is now evident that they themselves had doubts that the bid amount will be skyrocketing high. That’s why they have decided to go for an e-auction to make the bidders clash with each other, which may change the game,” an industry expert said.

Star India in 2017 had bid combinedly for standalone India broadcast, standalone global broadcast and standalone India and global digital rights. The bundled offer of Rs 16,347 crore should be seen in entirety. If you look at the bids for standalone rights, Sony was the highest bidder for TV at Rs 11,050 crore and Facebook was highest bidder in digital at Rs 3,900 crore. But Star saw business sense and opportunity in the combined play. And this is going to be the game plan which most large media networks will follow this time too.

While at first it might look like there are many contenders, but the broadcast-plus-digital play has made the game difficult for digital-only companies. 

“I can see the final competition boiling down to three players - Disney, Viacom18 with Uday Shankar and Sony-Zee,” the expert said.

When asked how is this going to play out between three top contenders, he explained, “The Walt Disney Company India President, K Madhavan, came on record to say Star India did not make profits out of IPL when he said they are in investment mode. When he says Disney will have an aggressive ‘limit’ for IPL, he made a business sense.”

“I believe Sony-Zee are in the stage of merger and they will leave the game if the bid price escalates to the level which can hurt their balance sheet. The joker in the pack will be Uday Shankar’s re-entry with Reliance. Even as the proposed deal is apparently at an initial stage and Reliance is a conservative player, Shankar is expected to build Viacom18’s Sports network. He knows that the IPL is the shortcut to achieve this ambition. ​​And if Uday Shankar leads Viacom18’s bid, in all probability he will grab the media rights once again,” the expert added.

How far can the bid go? 

Sony had bought the media rights for 10 years at Rs 8,000 crore in 2008, but Star India had to shell out Rs 16,347 crore in 2017 to pick the rights for five years.

“If it became 4X in 10 years from Sony to Star India, it has the potential to go 2X in five years. Building business is one thing but I don’t think anyone will bid beyond business sense. Particularly in a period like this where almost all the sectors except EdTech-FinTech are down,” said a senior broadcast executive at one of the leading broadcast networks.

There are three cricketing properties - ICC, BCCI and IPL. If one network gets all the three properties, it does not need anything else. 

According to sources, everyone will go after IPL because it offers sports plus entertainment content for over two months. The other reason is that IPL is exclusive, whereas other properties are shared with Doordarshan. 

“A broadcaster needs at least two of these properties to be called a winner in sports broadcasting. If these three properties go to three networks, no one is an absolute winner. However, IPL rights winner will always have an upper hand,” said the executive quoted above.

For full capitalisation on IPL media rights, one needs to have around 6-7 standalone sports channels including regional feeds and strong digital presence. Besides that, the experience in sports broadcasting is another important criterion one has to fulfil. As of today, Viacom18 does not have any experience but they are building their sports business slowly and they might be ready by the next year’s IPL season.

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