Nimbus recently completed twenty five years of its existence. Back then, when maverick entrepreneur Harish Thawani founded the company, it’s bread and butter was advertising. His only claim to fame was Superhit Muqabla, a countdown show. Now, it seems that Thawani is reinventing Nimbus.
This time, the reason to do so may be more out of necessity rather than anything else. Last year, the Board of Control for Cricket in India abruptly decided to call off its broadcasting contract with Neo Sports, a subsidiary of Nimbus, for international cricketing matches in India after the latter defaulted on payments to the tune of Rs 50 -100 crore. Nimbus had been BCCI's local broadcasting partner since it first signed a four-year deal in 2005-06 and renewed the contract in 2009-10 by paying an additional Rs 2,000 crore after being offered the first right of refusal. The main source of revenue was under a cloud.
The plan seems straightforward and enough to summarise in three words — anything but cricket. “We have identified football, hockey, badminton and tennis as the key areas to invest in. The industry has seen secular trend among advertisers and sports agencies. So the process is paying off now ,” says Thawani , whose father worked as development manager at the Life Insurance Corporation.
- Over $2 billion to date in cumulative sports rights transactions & licensing. Largest integrated sports company in India; Among largest in Asia
- Produced over 8000 hours of television content including eight No. 1 shows and 15 top ten rated shows
- Largest footprint for a sports management company in cricket. Extensive partnership for rights management and/or television production with the cricket boards of 9 out of 10 Test cricket playing nations
- Major shift in focus to sports other than cricket after BCCI cancelled contract last year after non-payment of dues
The World Series Hockey managed by Nimbus itself, and the Uefa Euro Cup, has been decent wins for them. According to the data provided by the channel, the football tournament had a 28 per cent increase in viewership compared to 2008. The highest rated match this year had a rating of 2.07 during the Portugal and Spain match. In 2008 the highest rated match was 1.44 between Italy and Croatia. “The Euro in terms of revenues is similar to the Asia Cup for us,” explains Thawani, whose revenues for each of these tournaments has been around Rs 50-55 crore while the acquisition cost for the Euro, for instance was around 40 crore. “The Asia Cup in cricket is comparable to the Euro in terms of broadcasting hours, which is around 60. In addition, it is the championship of the most popular sport in this continent. People would say cricket revenues would be ten times more, but high profile football events have started paying off due to the lower cost of acquisition,” he adds.
In 2006, Thawani set a new benchmark for valuations after an initial bid of Rs 2,700 crore for the BCCI contract. After this, ESPN-Star paid Rs 4,600 crore for all International Cricket Council matches from 2007-2015. MSM paid Rs 8,200 crore for IPL rights for nine years in 2009 and in April Star India paid Rs 3851 crore for BCCI rights.
Although cricket is the money spinner, industry officials and media planners say there has been huge shift in advertiser interest amongst other sports due to high return on investments. The ratio of cricket to other sports two years ago, was 90 :10, and it has shifted to 80:20 in 2012. Most of them predict that in the next two years it will be 60:40.
“Nimbus has capitalised at the right time,” says an executive from a rival broadcasting company. The sports channel also underwent a brand change from Neo Cricket to Neo Prime,”.
In Tennis, the channel has secured rights to the French Open, the Davis Cup and the WTA tour, while in Golf it has the PGA tour. It also grabbed rights for the BWF series in Badminton.
What lies ahead for the company? According to several media reports, it is trying to sell some part of itself. Even though Nimbus is the principal shareholder in the entity, it has some other financial institutions and investors like PE giant 3i as well. “Our private equity players may look for an exit when the valuations are right,” says Thawani, who says that his current strategy is to acquire good and key sports properties in the business.
According to sources, the sale exercise was flagged off after several failed attempts to raise money through an IPO. In December, right after the sell-off process was initiated, the BCCI terminated the contract and valuations tanked.
However, a positive development for Nimbus has been the emergence of DTH platforms as well as Digital cable which could provide a robust new stream of licensing revenues and lesser dependence on advertising. Thawani says the reason why he has banked so heavily on other sports is simple: There is passion involved in other sports. People stay awake till 2 am to watch a game of football, he says.
This is a big shift for somebody who rewrote the rules of business in cricket, until just a few years ago.