Specials

Testing time for sports broadcasters

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2010 was a year for sports where there was as much action off the field as on it. The two mega events, the Indian Premier League and the Commonwealth Games, were marred with controversies. And yet, like strong teams that recover fast, the genre raked in around Rs 15 billion of advertising income.

The IPL, battered by allegations of financial irregularities, match-fixing and the infamous exit of Lalit Modi, seems to have survived the storm. Starting on a promising note as Sahara and Rendezvous Group entered the IPL ring with winning bids of over $300 million, the valuations got progressively mauled amidst the controversies. Though the dust has still to settle, the encouraging fact is that the spectator interest is riding high.

 

Multi Screen Media, the official broadcaster of cricket‘s hottest property, is looking at an ad revenue of Rs 10 billion upwards from the fourth edition of the IPL that kicks off on 12 March 2011.

The franchises, on the other hand, will have to take the rough road. While revenue growth is under pressure, the break even period is getting stretched. Worse, equity deals will be hard to consummate.

That leads us to the second controversy of the year. The Commonwealth Games, assaulted by scams, disappointed terribly on the revenue front. Prasar Bharati, which had set itself a target of Rs 1 billion, ended up with a meagre Rs 581 million.

Apart from the Asian Games and the Commonwealth Games, the third event that did not do well on the ad revenue front was the Champions Twenty20 League. ESPN Star Sports (ESS) marketed the event and did improve on the past performance but the acquisition price still stays imbalanced with the revenue generation.

ESS did better for some of the other properties including the soccer World Cup. According to industry estimates, ESS collected Rs 1.2 billion from the World Cup.

Sports broadcasters are creating a family of channels that would help up their revenues. The most obvious formula is to have a dedicated cricket channel, the most popular sporting content in the country. Zee Entertainment Enterprises Ltd (Zeel) launched Ten Cricket and rebranded Zee Sports as a soccer-focussed channel. Ten Sports is positioned as a multi-sports channel while a golf channel is on the anvil.

On the sports marketing front, IMG and Reliance Industries floated a joint venture to build alternate sports. The first to grab their attention is basketball as they entered into a 30-year deal with the Basketball Federation of India (BFI). It is looking at creating a basketball league three to five years down the line.

The joint entity is also looking at developing football. The company bagged a 15-year sponsorship deal with the All India Football Federation (AIFF) for Rs 7 billion.

The challenge for sports broadcasters in 2011 is to build profitable business models amid high acquisition costs.

 

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