ICC Men's TV rights: With license in its pocket, deal a big break for Zee in cricket broadcasting

The decision of Disney Star to license the television broadcasting rights for the International Cricket Council  (ICC) tournaments was a surprise but also a clear affirmation on the intention of the broadcaster to go all out on digital, as a part of its global strategy. In June, the entertainment behemoth lost the digital rights of the Indian Premier League (IPL) tournaments to Viacom18 and had to settle for the television piece. All the IPL rights cumulatively went for over $6 billion.  In the case of the just-concluded bids for ICC, while Disney Star clinched the complete package for $3 billion over a four-year period and a few days later, the licensing deal with Zee Entertainment was struck. As a part of the agreement, Zee will air the men’s T20 World Cup, the Champions Trophy and the 50-over World Cup.

Now, the licensing deal entails a fixed fee (estimated to be at least $1.5 billion or half of what Disney Star paid), with Zee needing to recover that amount through a combination of advertising and subscription. Those in the industry maintain it will be a tall order for Zee given how much will be paid. At the same time, Zee is currently in the middle of a merger with Sony Pictures Network India.

“Obviously, this transaction has the full backing of Sony,” says a veteran broadcaster. Disney Star’s OTT platform, Hotstar’s subscriber base and revenue are expected to be affected with the loss of the IPL rights and the decision to pay, what is viewed as a steep amount for the ICC rights, is with the intention to minimise the extent of that hit.

For Zee, it is a big break in cricket broadcasting, a genre that brings in the viewership and consequently, the revenue as well. In September 2016, Zee sold its sports network business (the Ten Sports portfolio) to Sony for $385 million at a handsome return—this was originally bought from Dubai’s Taj Group for $107 million. The decision was in line with the Zee management’s conservative approach to the high acquisition costs in cricket that did not sit well with its own model of content on which money was rationally spent, without compromising on the high margins. More recently, Zee returned to sports broadcasting by acquiring the global media rights for the upcoming UAE T20 league for a 10-year period (the amount paid out was about $100-120 million).

The next part of the cricket story will now shift to the BCCI rights (matches played in India) scheduled to come up over the next 5-6 months. Given the kind of money that has been spent on the IPL and ICC, there is a good chance that it will be sold for nothing less than $1 billion. Sports broadcasting officials are clear that BCCI is strategic since it is played through the important parts of the year and “one can put together a good sports calendar around it.”

Also read: Not just SEBI, need Income Tax dept nod as well on warrants' conversion: NDTV founders

Also read: ‘Short kid with a backpack and girl in high heels’: Rishi Sunak and Akshata Murthy's love story