The IPL media rights open on Sunday

In terms of sporting property being expensive, cricket has always surprised itself. The ICC Cricket World Cup starting in 1999 began the story in a small way, though the acquisition of the ICC rights by Sony for 2003-07 for $255 million set the ball rolling. The tipping point has been the Indian Premier League (IPL), with the first edition rolling out in 2008. The rights for ten years were picked up by Sony for Rs 8,200 crore and in 2017, it went to then Star India for Rs 16,348 but for five years or a hike of 4x.

The game is now set for Sunday, 12 June when the rights for 2023-27 get kickstarted, through an e-auction. A lot has changed since the 2017 win for Star. The continued interest in this marque tournament will ensure there is no dearth of big money being spent. Besides, the bidders don’t quite look the same. Star has a new owner in Disney, while Sony and Zee are in the midst of a merger. Then, there is Viacom18, a part of the Reliance Group, which is looking to complement the IPL with its overall broadband and convergence story. Ex-Star India boss, Uday Shankar and James Murdoch, his boss from that time, through Bodhi Tree Systems acquired a 40 per cent stake in Viacom18 for Rs 13,500 crore less than two months ago. That was quickly followed by Viacom18 launching Sports18, a sports channel.

The Board of Control for Cricket in India (BCCI) has divided the process into four packages – domestic broadcast rights (base price is Rs 18,130 crore), digital rights for which the price is Rs 12,210 crore, followed by international broadcasting rights at Rs 1,110 crore and finally non-exclusive rights at Rs 1,440 crore. That takes the total base price to Rs 32,890 crore. While the broadcasters will bid for all of them, is expected that the likes of Times Internet may look at only digital. Amazon too was interested but the inability to rope in a broadcasting partner saw the company backing out.

Balu Nayar, former MD of IMG and a key architect of the IPL, thinks the bidding process will come up with a number that will surprise most people. “This is no longer about making money from advertising, but about building strategic digital assets in a key market,” he says. He elaborates on this point by explaining how the rise of Hotstar, through the acquisition of IPL rights, has had global ramifications for Disney. “It was a key part of their India acquisition, and today accounts for more than 35% of the paid subscriber base for Disney+ globally. That’s of great value to shareholders and investors and they, therefore, will be aggressive in their bidding.”

The valuation of Disney on Wall Street today, or Netflix, is based on the OTT (over-the-top) subscribers and not necessarily only about profitability. Against that backdrop, Disney would obviously like to clinch the rights – the question is how much they believe it is worth. Already, the broadcast fee per match in the IPL is higher than the NBA or MLB, with both having more matches per season. The higher prices may see the broadcast fees per match overtaking the EPL.

According to Madan Mohapatra, an independent marketing and media consultant, there have been two large disruptions in the broadcasting content business in a little over two decades. “One was Kaun Banega Crorepati in 2000 and then the IPL in 2008. While KBC was a fight for viewership, IPL goes well beyond that. It’s about stature, dominance and leverage,” he says. To him, the IPL bidding moves ahead of the conventional business rationale. “It needs a large ambition, audacity and deep pockets with an ability to absorb real cash losses.”

Speaking for the other players in the fray, Zee and Sony are expected to be a lot cautious, only going by their track record. “Jio seems best placed, with the synergistic value to its mobile subscriber base, OTT and the television network,” thinks Nayar. The battle ahead looks most intriguing in a format that works well for the cricket fan – 20 overs a side under the sun and lights. Mohapatra feels this will be a show of strength in terms of money power and just who has the greater willingness to loosen the purse strings. “My estimation is that BCCI will walk away with anything between Rs 45,000-50,000 crore for the rights making the property expensive by three times for the advertisers.” He is quick to point out that a total of 40 overs means less inventory to be sold compared to the normal one-day international. “Given how the unicorns have been splurging, the next two years would not be very stressful for the winners.”