Comment: Does Star stand to gain or lose by sharing IPL with DD?

MUMBAI: On a balmy September afternoon, while some reps from bidding companies blew smoke in the air (and the tensions, too, probably) at a five-star hotel in South Mumbai’s Colaba, some senior executives of Star India were lounging in a room in the same hotel-not as anxious as some of the smokers outside, a person familiar with the settings chirped. Soon, the Indian cricket board, BCCI, announced that Star had won the broadcast rights to the money-spinning IPl cricket tournament for five years for Rs 16,3475 million (Rs 16347.5 crore) or approximately $ 2.55 billion.  

Cut to a fortnight or so earlier to New Delhi where the August summer was refusing to relent and the temperature fluctuated in a room in Supreme Court where the learned judges observed that India’s pubcaster Prasar Bharati cannot freely re-transmit TV signals of sports or cricketing events to other distribution platforms where the rights were held by a private broadcaster or a TV channel and was being shared with Doordarshan under a legislation of the country.

In both the cases cited above the common factor was Star India (a subsidiary of Rupert Murdoch-controlled News Corp/21st Century Fox), probably the biggest broadcasting company in India in terms of revenues.

Champagne should have been popped on both the occasions. Probably it was, but privately. And, the public reactions were cautious. Even in his interview to mid-September, Star India chairman and CEO Uday Shankar was cautiously optimistic about IPL win and India’s regulations relating to the media sector.

Almost 70 days after winning the IPL rights --- somewhere in between hectic consultations would have happened between Star India top leadership and company’s promoters --- reports surfaced in media that Star India probably would have to share the IPL telecasts with pubcaster DD that will air the cricket matches on its terrestrial network and FTA DTH platform, DD FreeDish.

What’s the gist of these reports in the media? IPL cricket matches would be telecast live on Star Sports channels and also a DD channel that would be available terrestrially and on DD FreeDish. This would be made possible --- as and when the government formally issues a directive as both the law  and information & broadcasting ministries were being consulted --- under a regulation called the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007. Some tweaks would have to be made and IPL categorized as a tournament of national importance at par with other sporting events like Olympics, Commonwealth Games and Wimbledon for the sharing to be mandated. must admit, though, till the time of writing this piece everything’s in the realm of conjectures and possibilities. While Star and BCCI did not comment on emails on the issue sent to them by us, even the government sources quoted in the media as having articulated on the possible development were unnamed.

It makes one thing clear: that nothing is clear as of now or set in stone. It’s also possible that as a trade-off for the Supreme Court directive barring  free re-transmission of shared TV signals of sporting events where rights were held by a private broadcaster, Star India could be mulling sharing IPL matches with DD --- and also part of the advertising revenue.

According to Financial Express newspaper, which quoted industry estimates, Sony Pictures Networks India (SPN), the official broadcaster (till 2017) of the T20 tournament since its inception, had crossed the Rs. 1,300 crore (Rs. 13,000 million)-mark in terms of ad revenue. The newspaper also stated that IPL’s season 10 garnered 1.25 billion impressions as per BARC data, gaining 24 per cent more viewership (compared to last year) on Sony channels.

Writing a guest column in after Star won the IPL bid in September, senior business journalist and author of two books on IPL, Alam Srinivas, observed: “In 2009, when the IPL rights were renegotiated, Sony agreed to pay Rs 82,000 million for a nine-year period or Rs 9,111 million a year. At a simple inflation rate of 10 per cent, the figure will escalate to Rs 17,311 million over nine seasons. At a compounded rate of 10 per cent, the figure will be Rs 21,483 million. Star agreed to pay Rs 32,695 million per year, or a sizeable over 50 per cent higher than the 10 per cent compounded figure. This indicates that the IPL’s valuation has shot up, or at least the stakeholders think so.”

Given this scenario, the following questions arise:

Question No. 1: Is IPL that crucial (versus Test cricket, for example) to be designated as a sports of national importance to be shared with the pubcaster?

Question No. 2: If that’s made possible, how will the technicalities of different TV feeds play out?

Question No. 3: Will Star gain or lose financially having dished out $ 2.5 billion for a five -year rights?

Question 4: Will sharing of the IPl matches with DD impede or affect Star’s usual high-octane marketing campaigns aimed at monetization of high-value events and will it set a precedent?

The answers are not easy to frame as possible explanations are not forthcoming in the absence of any formal and official confirmations or denials.

If we have to answer Q. 1, then prima facie, the answer would be ‘no’. IPL is a domestic cricket tournament having played out for 10 years with DD showing (officially) minimum interest. That IPL’s popularity has increased shouldn’t be reason for it to be shared with pubcaster, especially when the pubcaster has mostly shied away from airing Test cricket, which is a five-day affair over seven hours daily, and even when India featured in such matches.

But then in an age of social media, when many games are played on the basis of perceptions, giving a huge swathe of Indian population easy and practically free access to IPL matches on DD could also mean scoring points with a big voting bank. After all, TV services or even entertainment are not categorized under essential services (like some utility services) that need not be subsidized by the government or access made free. Still in India, politics and sports have had a history of an intricate and, at times, incestuous interplay.

Question 2 and 4 are easier to attempt. Simply because if Q1 and Q3 are sorted out --- amicably --- then these issues don’t matter much. TV feeds have been shared with DD and AIR by private broadcasters in the past on few occasions. What would be important is that DD adheres to the Supreme Court verdict and ensures that its free signals are not illegally carried by any unauthorized distribution platform(s) in the case of IPL matches.

 This brings us to Q.3 on which hinges Star’s fortunes despite being mandated by a regulation that can smack of strong-arm tactics by the government.

However, it has to be admitted, again, that DD’s reach is tantalizing --- at least theoretically. The FreeDish FTA DTH platform has an estimated 22 million subscribers, mostly in non-urban areas, while DD channels on the terrestrial network supposedly cover over 80 per cent of the approximate 1.26 billion Indian population.

Given these numbers --- clamour amongst private TV channels to be on the FTA DTH platform could be an indication --- sharing of IPL matches with the pubcaster may not be such a big loss for Star.

In an imagined world, Star could agree to share the IPl matches, forced under a regulation, but insist that it would retain the rights for marketing and ad sales of the matches  shown on DD channel too, sharing 25 per cent of the ad revenue--- again as per stated law.

This move could help Star not only increase the reach of IPL matches by at least 25 per cent, but also do some imaginative and aggressive ad sales with sponsors on digital and linear TV spaces. A marketing guru did admit in private that most FMCGs and big global spenders are now more looking at non-urban markets, which DD’s platform guarantees.

In conclusion, we might say there are too many straws in the wind presently. A word of caution: this can set a precedent that may not always be healthy for the rightful rights owners. But then, as the boss, the government is always right, as the folklore goes.


Guest Column: Star India's IPL deal raises three crucial questions

Star bids highest for BCCI's IPL media & digital rights and is the winner

IPL has come to the rightful home of cricket in India: Star's Uday Shankar

Star's Uday Shankar on distribution challenges, IPL, FTA vs. pay TV, innovations, Made in India content…and much more

With IPL rights, Uday Shankar gambles audaciously, must plan pragmatically

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