rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » The IPL jackpot: What will Sony do after Star's win?

The IPL jackpot: What will Sony do after Star's win?

September 21, 2017 09:40 IST

Sony's estimated profit on IPL over 10 years is ₹2,500 crore. Why didn't it fight tooth and nail to keep the rights?

Vanita Kohli-Khandekar asks some difficult questions after Star's wins IPL rights across TV and digital.

IPL

Photograph: Courtesy BCCI 

What will Sony do without the Indian Premier League or IPL?

And why didn't it make a composite bid instead of bidding only for the TV rights?

Will Star's ownership of the IPL finally give online the revenue heft it has been missing in India?

Those are the questions that remain unanswered long after all the number crunching on Star India's IPL win is over.

Last week, the India arm of the Rupert Murdoch controlled $28.5-billion 21st Century Fox won all global and India rights across TV and digital to the IPL for ₹16,347.50 crore. Its composite bid for five years was higher than all the individual bids for different categories. For instance, Facebook bid ₹3,900 crore for only the India digital rights. Sony bid ₹11,050 crore for just the India broadcast rights.

Therein lie the first two questions this column asks.

The estimated ₹4,500-crore Sony Pictures Network gets roughly one-third of its revenues from the IPL.

It bought the rights in 2008 for a billion dollars (₹5,000 crore then). Over a 10-year period it has made an estimated ₹10,000 crore or more on the event, say analysts.

Take away marketing and distribution expenses and Sony's estimated profit on the IPL over 10 years is about ₹2,500 crore.

Why on earth did it not fight tooth and nail to keep the rights?

What stopped it from allying with say Facebook or with Amazon (a potential bidder) to make a composite bid?

The Facebook plus Sony figure adds up to ₹14,950 crore. One more partner for global rights and Sony could have had the IPL in the bag.

N P Singh, CEO, Sony Pictures Network, was not available for a conversation. But earlier this year I had asked him what Sony would do if it loses the IPL.

"We still have cricket rights to five boards and are invested in 10 different sports of which football is the fastest growing. In that we have FIFA 2018, Champions League, La Liga. Basically, outside of English Premier League and Bundesliga we have every major football tournament," he had said.

Sony has been building non-cricket sports. It paid ₹2,600 crore to buy Ten Sports from Zee earlier this year. Ten Sports will add ₹600 crore to Sony's topline, but the loss of IPL takes away about ₹1,500 crore. So, the company could end up shrinking to ₹3,800 crore or so.

 

That brings us to the third question this column raises -- can online finally become a seriously big medium in revenues too?

Kunal Dasgupta, the former CEO of Sony and now a media consultant, analysed Star's bid.

He says, "The ability to have no delay on the OTT (over-the-top or online video) feed in the sub-continent makes the TV broadcast and digital feed seamless. Remember the likes of Facebook bid nearly ₹4,000 crore for a five-minute delay on digital live broadcast. With the ability to do this I see viewers on Hotstar (Star's digital brand) being more than on TV within a year. This will boost the smartphone universe along with low-cost bandwidth.

"I see the ad rates of IPL on Hotstar shooting up to equal or beat TV in the next five years due to this. So if TV generates ₹35 crore a match in advertising so will Hotstar making a total of ₹70 crore a match, which is already profitable even without (monetising the rights to) rest of the world."

There are several ifs and buts.

A really big match gets 50 million impressions or more on TV alone. To simultaneously live stream online to that many people is a challenge given the varying quality of bandwidth and devices in India.

Then there is the question of the poor ad rates that online usually gets compared to TV.

If the ability to show the IPL on the phone or a device at the same time as on TV attracts the same ad rates, then Star's IPL win would have done something important; it would have given digital the heft that all the bombastic audience numbers around it never get.

Vanita Kohli-Khandekar
Source: