The suspense over Board of Cricket Control for India’s tender for media and digital rights is set to end soon. Both television and digital rights are up for grabs for the Indian sub-continent and media rights for Rest of the World. BCCI’s CEO, Rahul Johri, has gone on record estimating the rights will fetch in excess of Rs 18,000 crore. Going by the past BCCI estimates, this represents a 400 per cent increase! That is indeed a very very steep rise.
This is naturally going to impact both advertising rates for clients and the cost of access for viewers. To put things in perspective, in the past 10 years advertising rates on television have inched up, but ever so slowly. That too, it is only for the IPL that ad-spot rates have increased about 100 per cent over the period. Rates for the rest of India cricket, including for Tests, ODIs and T-20s have largely remained flaccid, perking up only on special occasions. The moot question today is whether the advertising market is ready to support a 400 per cent escalation and if the cricket fan is willing to pay that much more for his IPL?
Prima facie, there is bound to be a lot of resistance from advertisers. So BCCI may rake in the moolah, but the winner may actually end up bleeding hundreds of crores. An increase in ad rates, that too starting immediately, is both improbable and impractical. The same applies to distribution revenues. For the rights holder, therefore, costs are fixed, pre-committed and front-loaded during the tenure of the rights period, and gains (if any) are at best in serious lag mode. To industry watchers, that is a most-likely scenario.
Television advertising rates per se have remained in doldrums for years. Big advertisers in the FMCG space have managed to beat down the rates to their advantage. In cricket, while there may not be one single big advertiser, networks will have to contend with about 20 top advertisers accounting for 50 per cent of the pie. Moving the needle on rates in this small group is going to be really tough.
On the flip side, the total available inventory on every live-match of the IPL is only 2,000 seconds. Out of this 1,200 seconds get divided amongst six broadcast sponsors, leaving a meagre 800 seconds as inventory for ad spots in every match. Since cricketing fever is at its peak during IPL, none of the brands with men and youth as primary audience can afford to be left out. The rights winner will have to leverage this scarcity to fullest advantage. Yet, the gap between bid price and accruals could be a large negative.
It is in on-ground distribution that the IPL rights will have the most impact. Whichever broadcaster wins, it will have exponential clout. Zee’s Jawahar Goel has already petitioned the likes of the Competition Commission on the dangers of a monopoly if Star India wins the IPL rights. But this still may not prompt the cricket fan watching the match on DTH to pay more.
Also, the inability of past rights holders to prevent near-live cricket score updates on mobile has kept the fear of a blank-out at bay for ordinary fans. Only a vast increase in ‘declarations’ on the ground (read paying customers) can swell the coffers.
While there is a bonanza in store for the BCCI, the question we should be asking today is whether it is time for cricket’s ‘Moneyball’ moment. (Moneyball is an American movie that challenged old-school selection methods for baseball.)
The author is former group CEO, Zee Telefilms and former chairman of Dentsu India