IPL media rights: Here's how Disney Star's TV pick makes business sense

The world’s richest cricketing body, BCCI, has considerably increased its wealth after selling the TV and digital rights for the Indian Premier League (IPL) for the period 2023-27 for a whopping Rs 44,075 crore. 

While TV rights has gone to Disney Star India for Rs 23,575 crore, at the rate of Rs 57.5 crore per game, Reliance-backed Viacom18 led by top media executive Uday Shankar has bagged the digital rights for Rs 20,500 crore at the rate of Rs 50 crore per game.

Disney’s Chairman of International Content and Operations, Rebecca Campbell, led the bid from the front and made sure that the incumbent media rights holder successfully defends at least one of the two crucial rights. Campbell’s presence had instilled confidence in her team and everyone was sure of retaining at least a part of the IPL media rights.

How Disney’s strategy played out

Any M&E player or media analyst would effortlessly tell you that only Disney Star was in the position to monetise the broadcast rights to the fullest, as of today. And the network played on its strength in order to protect its P&L.

Many believe that TV is falling and viewers are migrating to either Free TV or digital and if this trend continues, any broadcaster will struggle to justify such a high acquisition cost.

“While such deterrence would have held others, Disney Star had the confidence on its infrastructure it built over the last 5-6 years,” said a Disney Star executive. 

The number game

The revenue figures for 2022 suggest that Disney Star would be able to defend its decision to pick broadcast rights at the rate of Rs 57.5 crore per game.

The estimated overall revenue from IPL in 2022 was around Rs 5,500 crore. This includes advertising, distribution, digital subscriptions and revenues from international distribution. 

Excluding the digital revenues of roughly Rs 1,100-1,200 crore and international distribution revenues of Rs 200-300 crore, the overall India TV revenue from IPL comes to around Rs 4,000-4,100 crore, which includes income from advertising and distribution.

Going by this Rs 4,000 crore figure, Disney Star earned around Rs 54 crore per match from broadcast in 2022.

The difference between the cost of acquisition and earnings is hardly Rs 3.5 crore but other operational costs make this difference significant. 

“For those who think that Rs 3.5 crore difference would be easy to cover for Disney Star, first of all, this difference is more than what meets the eyes owing to other operational costs. If it is said that Star finally made no profit and loss by the end of the previous five-year deal, this will be true for 2023-27 rights as well,” said a former broadcasting industry CXO, who has dabbled in sports broadcasting as well. 

No one is very optimistic about the growth coming from distribution. This will bring the entire burden on advertising. This will go at its own pace. “At best, one can hike the ad rates by 20% every year. The advertising volume growth will also play a big role. In 2022, Star was able to manage at least 15% growth in rates and volume,” he added. 

A head of a media agency estimated the 2022 TV advertising revenues from a very conservative angle in the region of Rs 2,500-2,700 crore. 

“That comes to Rs 37 crore of advertising income per game. Given that Star would surely be considering the distribution revenue of around Rs 800 crore as the cover for operational costs, the network has a large gap to fill. In my view, it will take at least 3-4 years for them to meet the cost,” the media agency head said.

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