Is it a win or loss for IPL media rights winners?

Although we compare the IPL media broadcast rates to the NFL, there is a point of caution and this comparison is by the rate achieved in this auction and not by sheer market size.

Published: 21st June 2022 12:30 AM  |   Last Updated: 21st June 2022 12:12 AM   |  A+A-

IPL media rights, IPL

Image used for representational purpose only (Express illustration by Soumyadip Sinha)

We have just about emerged from the sound, action and fury of the IPL media rights auction that has delivered the BCCI and its stakeholders a whopping Rs 48,390 crore in committed revenue over a period that spans 2023-27.

Champagne has been popped, and the lights, action and drama is now done with. Reality time is here, and as at the end of every mega auction (as this has been), there are happy points, just as there are points that must worry the winners more than the losers.

As the dust settles, the key question doing the rounds is whether this mega auction round has been a lot of bluster and bravado and sports optics, as opposed to really good and solid economic activity that creates EVA (economic value add) in a category that has hitherto represented a minuscule portion of value in the enterprise of progressive commerce in India. Let me start by putting into perspective what just happened.

The Indian Premier League (IPL) is today a mega success as a sporting property. It has just completed 15 seasons. Every one of it has seen eyeballs grow. Cricket played in whites over five long and laborious days has been replaced today by that played in colours, which challenge the eye and literally every other sense.

From a purists' perspective, it's not cricket anymore. It's instant cricket curated for a humongous set of viewers who want everything quick and fast. There is a whole lot of glamour and glitz. The skimpily clad cheerleaders are gone, as are the much publicised and maligned IPL after-parties, but everything else remains.

The title sponsor is India's most respected corporate, the Tata group. Teams are owned by the biggest and best in the industry. This ropes in the best corporate names from Mukesh and Nita Ambani at one end to Kalanidhi Maran at the other. There is interest from Bollywood and most importantly, there is interest in every home where television sets and digital devices are constantly streaming cricket content during, before and after the season of fixtures.

Bollywood and cricket (not necessarily in that order) remain the two religions that dominate every diverse group in the country, never mind which religion or region they belong to. As many as 920 million eyeballs (multiplied by two of course) are glued to content on television and exactly half of that - 460 million, comes from digital formats and devices of every kind. The former is on static mode and the latter is on fast-gallop mode of course.

The IPL auction that just concluded is all about these two mediums and their reach in terms of width and the involvement of a nation of viewers with cricket content that seems to deepen with every passing year. Thanks to the IPL and the league format, that is a distinctive success for sure.

When assessing the IPL and the recently closed auction for its broadcast rights on physical and digital formats, it is important to look at the last broadcast bid that was won by the now Disney-owned Star TV network. The last broadcast bid period that covered 2017–22 went for what was then considered a whopping Rs 16,347.50 crore.

It is important to note that this bid was for the combined physical and digital media broadcast rights. We are told the channel has made a small but not significant profit on that bid after all expenses. To an extent, that win, after all the effort, has been more of image and optics rather than a pure economic win. Both do indeed contribute, as all of us know.

The current bid then showcases the IPL and the right to broadcast its content differently from the last period. This time round, the bid has had four packages: While one covered television rights for the Indian subcontinent (base price Rs 49 crore per match), digital rights for India (Rs 33 crore per match), digital rights for a special bouquet of selected matches for India (base price Rs 11 crore per match) and finally the rest of the world television and digital rights (base price Rs 3 crore per match).

The auction and its bids just closed - this has thrown up whopping numbers to digest. Some do find it hard to digest as well. Comparatively speaking, if Season 1 of the IPL in 2008 saw an actual broadcast price of Rs 13.6 crore, in 10 years of the league by 2018, the number had grown to Rs 55 crore per match. And five years hence in 2023, as per the current win, it will be Rs 107.5 crore.

What grew by four times in 10 years has grown by two times in the last five years. The promise ahead seems to have everyone in the industry of cricket and its broadcast gushing. There is brave talk of challenging the National Football League, which boasts a broadcast value of Rs 133 crore per match.

The BCCI is gung-ho and Disney Star (winner of the TV rights) looks happy. Viacom18 from the house of Reliance (winner of the digital rights) looks happier still. Every IPL team needs to be happy as there are spoils to be shared from this auction over the years ahead. The players are always happy as well, I guess.

What then is the issue amidst all this happiness? The whopping numbers for sure. Inflation has bitten IPL broadcast rates. This means that brands, with their limited media budgets, will be able to buy less than ever before. This also means that sports media broadcast rates will see inflationary pressure.

As the IPL threatens to dominate as much as 72 per cent of all sports media broadcast revenues in the country, expect everything in the realm of the ability to use advertising to get more expensive than ever before.

What's however interesting is the fact that physical advertising will fight the digital separately - with two different sales teams from two different media enterprises fighting one another. The rate-card wars will of course continue as before. Add to it the domino effect. What happens to sports broadcasting rates will affect every other genre of broadcast.

The nation does not only eat sports content. There is entertainment, news, and a lot more. The ability to compete with all these other genres will grow. Each of them has the ability to raise their prices now. If, however, they hold on to their old rates, they have the ability to compete for the mega bucks of the cricket-rates stressed advertiser looking to boost viewership from everything else that is available at more affordable prices.

Money will flow out of cricket for sure. I do believe this inflation in IPL broadcast rates is good for the rest of the genres of the Indian broadcast industry. In fact, they must be popping champagne, if not desi wine.

Although we compare and celebrate the IPL media broadcast rates to the NFL, there is a point of caution. We must remember that the comparison is by the rate achieved in this IPL auction and not by sheer market size and the opportunity to monetise wide and deep.

The Indian broadcast media value by itself is certainly no comparison to that of the US, both in terms of the value size of the industry and that of the per capita consumer market spend spread. And there is one other issue: Cricket content in India reaches literally every potential eyeball there is to reach. Cricket is a saturation and not a greenfield opportunity. At least in terms of width of reach.

And finally, are the winners really the winners or are they really the potential losers of tomorrow? Only time will tell. At the end of this broadcast auction period's tenure in 2027, two media houses will sit and review their bottomline. The truth will be told then. Till then, there is plenty to celebrate. Optics wins for now. Economics will have to wait - for the moment. 

(The writer is a brand guru and founder of Harish Bijoor Consults Inc and can be reached at harishbijoor@hotmail.com)



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