Wednesday, May 25, 2022

‘Right market price’ as BCCI eyes IPL media rights bonanza

Past is the reference point when it comes to price estimates for big ticket auctions, and none will be bigger in Indian sport or world cricket than the June 12 e-auction for the Indian Premier League (IPL) media rights (2023-27). That is why BCCI has ensured that when bidding starts it will already have been assured the double of what it earned from the last rights cycle— ₹16,347.50 crore.

Though the collective reserve price is pegged at around ₹33,000 crore, bidding is sure to go much deeper in each of the four categories on offer. “I’ve no doubt that with this process there will not only be revenue maximisation but also value maximisation,” BCCI secretary Jay Shah said on Tuesday.

Will the IPL rights revenue touch ₹50,000 crore this time? Will digital rights fetch more than linear TV revenue? Keeping the digital (India) and TV (India) under separate categories could fast-track this process. The reserve price for TV rights is not significantly higher than digital. If the last auction had these rules, Sony as top bidder in the TV rights category ( ₹11,050 crore) and Facebook with the highest digital bid ( ₹3,900 crore) would have been the winners.

It can be argued that current rights holders Star would then have used a different strategy. They didn’t bid aggressively in the ‘digital only’ and ‘TV only’ categories the last time. Star’s winning consolidated bid (TV India + digital India + rest of the world) was only 3.34% more than the combined value of the highest bid for separate categories.

“What we are looking for is the right market price for each vertical,” a BCCI official said. “There are a few players who may want only digital. Some may want only linear. There are those who may want both. In a consolidated bid, you don’t get the true value of each segment.”

DIGITAL FOCUS

While big TV players are few—Disney Star, Sony-Zee and Reliance Viacom 18 (soon to launch a sports channel)–BCCI wants the digital bid to take flight, aware that digital penetration in India could speed up with the imminent rollout of 5G. With no consolidated bid, standalone digital giants like Amazon Prime, Facebook and Google could help maximise value in the category. Facebook and Google being minority stakeholders in Reliance Jio add intrigue to what the post-auction picture could be. The bidding strategy of Disney Star’s Hotstar and Sony Liv will be decided as a collective with their TV approach.

An additional non-exclusive bundle of 18 select IPL matches, on the lines of Premier League football, is also being sold. BCCI insiders say this is for smaller parties (read FanCode) who want to join the race. Amazon, Facebook, Google and others could also use this route to enter the Indian cricket market.

Such a move could devalue digital rights as exclusivity will be hit. But unlike Premier League where live matches are shared by Sky Sports, BT and Amazon Prime—they have a separate non-live highlights package (BBC)—the IPL tender has room for a media company to bid for this 18-match bundle too should it be keen to retain exclusivity. The fourth bundle on offer is the ‘rest of the world’ category.

With no consortiums allowed, Sony and Zee can’t bid together, but they can use their collective resources post-auction once their merger goes through.

It is learnt the tender document says the present offer of 74 matches could go up to 94 if an appropriate playing window in the cricket calendar is made available.

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