Windfall for BCCI from IPL media rights auction

The Board of Control for Cricket in India (BCCI), which owns IPL, sold four media-rights packages in the auction that began on Sunday. Disney Star, which holds global IPL media rights till 2023, won television rights for the Indian-sub continent in Package A, while Viacom18 won digital rights for the region in Package B. Viacom18 also won Package C comprising non-exclusive digital media rights to 18 matches. In Package D, which includes TV and digital rights for the rest of the world, Viacom18 got Australia, South Africa and the UK; and Times Internet won the Middle East and North Africa region and the US.

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The rights were on offer for the next five-year cycle of IPL from 2023 to 2027. At the last auction in 2017, Star won all the rights for a total of ₹16,347.50 crore.

“Since its inception, the IPL has been synonymous with growth, and today is a red-letter day for India cricket, with Brand IPL touching a new high with e-auction resulting in INR 48,390 crore value. IPL is now the second most valued sporting league in the world in terms of per match value,” BCCI secretary Jay Shah tweeted after the auction concluded.

Although both TV rights and digital media rights auctions closed on Monday, with Disney Star and Viacom18 winning them, respectively, for ₹23,575 crore and ₹20,500 crore each, BCCI’s formal announcement came after the auction ended on Tuesday.

“I am thrilled to announce that Star India wins India TV rights with their bid of ₹23,575 crore. The bid is a direct testimony to BCCI’s organizational capabilities despite two pandemic years,” Shah tweeted. On Viacom18 cornering all the digital rights for ₹23,758 crore, Shah said, “India has seen a digital revolution & the sector has endless potential. The digital landscape has changed the way cricket is watched.”

As a key stakeholder, BCCI will do everything possible to help rights-holders realize the full value of their investments, Shah said. “BCCI will utilize the revenue generated from IPL to strengthen our domestic cricket structure starting from grassroots, to boost infrastructure and spruce up facilities across India and enrich the overall cricket-watching experience,” he added. According to the rules, 50% of the total revenue generated from the media rights auction will be distributed equally among the 10 IPL franchises.

Interestingly, competition for Package C was more intense between Sony and Viacom18, even as Disney-Star pulled out earlier in the day. This package comprises non-exclusive rights to 18 IPL matches, including the opening match, playoffs and double-headers. Consequently, the price per match for the package escalated to ₹33.24 crore and was eventually bagged by Viacom18 for ₹3,273 crore for 98 matches over five years.

A person familiar with Viacom18’s bidding strategy said on condition of anonymity that the company was sharply focused on digital media rights. “It was very clear about not investing in legacy media. Streaming is the future, and it is determined to build that business up,” the person said. It was with an eye on IPL rights that, in April, Bodhi Tree Systems, an investment platform by Uday Shankar and James Murdoch’s Lupa Systems, agreed to invest ₹13,500 crore in Viacom18, giving it nearly 40% of the company.

Commenting on Disney Star securing an exclusive television rights package for IPL 2023-27, Rebecca Campbell, chairman, international content and operations, The Walt Disney Co., said: “We are pleased to extend our association with the IPL and look forward to offering the next five seasons across our portfolio of television channels. We made disciplined bids with a focus on long-term value. We chose not to proceed with the digital rights, given the price required to secure that package,” she said.

Campbell, who was in India to spearhead the bidding, added, “We will be exploring other multi-platform cricket rights, including future rights for International Cricket Council (ICC) and BCCI, which we currently hold through the 2023 and 2024 seasons, respectively. Additionally, we hold Pro Kabaddi League rights, Indian Super League football rights, as well as various international sports rights, including the Wimbledon Championships and the English Premier League.” She added that the company was focused on growing its robust slate of original entertainment content for Disney+ Hotstar and its regional television channels.

Karan Taurani, an analyst at Elara Capital, said, “In terms of break-even, we estimate the TV medium to attain profitability in the second year itself, as premiums were limited on the same over the base price.” However, he added that TV revenue is estimated to grow in a narrow band of 6-8% over the next five years.

For the digital segment, break-even is estimated to be in the fourth year due to a hefty content cost, propelled by sharp premiums on Package B and C of the media rights, Taurani said. However, he added that digital has the potential to generate a gross margin of 24% in the fifth year, helped by strong growth prospects, as compared to TV, where gross margins will peak at 13%.

Vinit Karnik, head of sports, e-sports and entertainment at GroupM (South Asia), said the auction was a big win for cricket and IPL as it re-establishes confidence in the league. “For the first time, digital rights (price) surpassed TV rights, which is also in line with the trends in the media and entertainment industry. We will see a lot of innovation and fresh thinking from the point of production, fan engagement and monetization strategy from Disney Star and Viacom18. Platform distribution, smart subscription packages, multi-layered engagement in social and digital, newer and increased monetization models will be keys to their success,” he said.