LG up in arms as Sony stands firm on cricket ad rates

NEW DELHI/MUMBAI: Consumer electronics major LG is threatening to serve notice on Sony Entertainment Television and World Sport Nimbus (WSN), the marketing company for ICC-organised cricket, for breach of contractual obligations. LG, along with Pepsi, is one of the global partners at the moment for ICC cricket.

"Our legal department is examining the various issues and we are almost ready to serve a notice on Sony and WSN for breach of contractual obligations relating to sponsors and partners," Ganesh Mahalingam, marketing head of LG India told indiantelevison.com today.

Though Mahalingam was not ready to come forth with further details, he admitted, "The offer from Sony is preposterous and unrealistic and it does not reflect the true value of the sport or the channel."

Industry sources pointed out that Sony had earlier made an offer of Rs 350 million, but subsequently hiked it to Rs 600 million and had offered 20 spots of 30 seconds each per match to LG for the cricket matches, which included the upcoming Champions Trophy in Sri Lanka and the next cricket World Cup to be played in South Africa.

This works out to 1420 spots of 30 seconds for 71 matches to be played over the two tournaments. If one takes into consideration this air time, the rate per 30 seconds on the new Sony offer works out to Rs 422,000. According to Mahalingam, just 30 of these matches are of any significance to Indian audiences and hence the rate works out to Rs 1 million per 30-second spot. "This rate is preposterous," says Mahalingam.

According to industry sources, Sony's unofficial card rate that is doing the rounds places the rate per 30 seconds at $7,500 (Rs 360,000) for the ICC tournament next month.

Industry sources also indicate that as per the global advertising partnership contract the same offer should be made to all global partners which at present includes Pepsi also, but the number may go up to four. They point out that the contractual terms also indicate that any advertiser who is a sponsor partner like LG will be given exclusivity as far as in-stadia advertising is concerned. As far as television air time is concerned, sponsors get first right of refusal on any rates that are being offered to rivals. Additionally, the sponsors have the right to match any price that a direct competitor may agree to pay for the property.

It is learnt that Pepsi has been offered spots at a much lower rate than that offered to LG which, according to sources, has today sent a letter to Sony saying the offer does not make any sense and the company's legal department is preparing a detailed note on the offer.

PepsiCo India was not available for comments.

SET which bagged the cricket rights for about $ 255 million spanning six years of ICC cricket, including two World Cups, is slated to air the matches on SET Max.

SET's view is that it is establishing a new rate for the World Cup. If one factors in issues such as how much the property has cost it, higher C&S penetration and viewership, the rate it is contemplating is not unreasonable is its argument, though it admits it has pitched itself very high. The message that SET is giving to the market is that it will not back down on its price.

The last World Cup, according to industry estimates, was priced at about $6,000 for 30 seconds, which works out Rs 270,000 (at the dollar rate of Rs 45 per dollar then).

Advertising industry sources said that SET is yet to finalise its full and final rate card for the cricket matches and the rates offered to some big advertisers seem to be on the higher side.

They also opined that if global partners of ICC organised cricket come together to "protest" against Sony's rates, they may be able to get a better bargain.

According to Mahalingam, Doordarshan, which has the terrestrial telecast rights of most of the matches, including all those where India is participating, "is a better bet than Sony at the moment as it's reach is far higher than SET Max."

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