Rs 76K crore & counting: Will cricket media rights value reach Rs 100,000 crore this year?

2022 has turned out to be a financially record-breaking year for the gentleman’s game in India with media companies like Disney Star, Viacom18, and Sony Pictures Networks India (SPNI) going all-out to acquire media rights to properties like the Indian Premier League (IPL), International Cricket Council (ICC), Cricket Australia, and England Cricket Board (ECB).

Between these four properties, the media companies have committed investments worth Rs 76,000 crore. With the Board of Control for Cricket in India (BCCI) and Asian Cricket Council (ACC) media rights expected to come up for bidding in the next few months, media experts believe that a Rs 90,000 crore to Rs 100,000 crore consolidated figure for all the key cricketing properties is not far-fetched.

It is pertinent to note that each property has been awarded for different durations. IPL is a five-year deal that will be valid from 2023-27. ICC media rights deal has a four-year cycle from 2024-27. Cricket Australia media rights deal, which commences in 2023, will conclude in 2030. The ECB media rights deal will come up for renewal in 2028.

The Walt Disney Company-owned Disney Star leads the investment chart with close to Rs 50,000 crore in content investments for IPL TV rights (Rs 23,575 crore) and ICC media rights for India (Rs 24,000 crore). The broadcaster was the incumbent rights holder for both ICC and IPL. It also holds the BCCI media rights till 2023.

Disney Star also snatched the Cricket Australia media rights from Sony while the latter managed to retain the England Cricket Board (ECB) rights. Both these properties are believed to have fetched Rs 4000 crore.

Reliance Industries-backed Viacom18, the new entrant in the sports media business, set a new benchmark in the industry by acquiring IPL digital rights for Rs 23,758 crore. The media company’s digital rights bid is slightly higher than Disney Star’s TV rights bid for the IPL.

Media Partners Asia VP Mihir Shah said that the cricket investments are all set to reach Rs 100,000 crore for all the major properties that came up or will come up for renewal this year.

“We could see roughly Rs 100,000 crore going into sports. Given the kind of escalation that we have seen for IPL and ICC, even BCCI wouldn’t be a surprise. By the end of this year, everyone will have visibility on their content investments. Next year, companies will accordingly recalibrate their content spends on entertainment,” Shah said.

He expects the bidding for BCCI media rights to be as aggressive as the IPL and ICC rights. He also believes that Viacom18 and Sony-Zee will make a strong bid for the BCCI rights. “Jio-Viacom18-Bodhi Tree has got a play on IPL. Disney is secured with IPL TV rights and ICC media rights. Sony and Zee might go for BCCI rights since they have already created a war chest,” he added.

Triplecom Media iTap Founder & CEO Kunal Dasgupta is least surprised with the content investments being made by the broadcasters for acquiring cricket rights. He believes that the cricket rights value was always high and will continue to remain so in the near future. “Cricket has just begun to realise its true potential. The value of cricket rights will continue to rise further due to its strategic importance for media companies,” he asserted.

According to Dasgupta, the company that has the maximum amount of cricket content will have better bargaining power when it comes to ad and subscription monetisation. He also said that the cricket investments being made by broadcasters should not be viewed from the lens of profitability.

A senior official with a leading media company said that the rationale behind making investments in cricket is different for different companies. Disney Star, he said, has taken an aggressive approach since it is the incumbent rights holder for most of the big cricket properties. Likewise, Viacom18’s acquisition strategy is to build enough muscle for its newly launched sports business, he added. Sony-Zee’s approach was to bid within acceptable limits since their dependence on these properties was always low, the official said.

He also said that the ad rates will have to double or treble in certain cases in order to recover the humongous investments that are being made in cricket. “In TV, there is a challenge in subscription revenue due to the pricing embargo. Further, the ad rates will have to be increased significantly considering the fact that the annual pay-outs will be in the region of Rs 15,000 crore for the two properties. On digital, the challenge will be to grow the viewer base rather than the pricing,” the official said.

Elara Capital SVP Karan Taurani said that the escalation in cricket rights is driven by two key factors – inflation-linked increase and the competitive intensity in the market. He also feels that content investments in entertainment will not take a backseat despite the huge bets made by the broadcasters on cricket rights.

“I don’t think investments on cricket rights will impact investments on entertainment content. The content costs are going up by 30-35% annually. That is very much factored into the broadcaster estimates. Inflationary pressure on content cost is there across the board,” he stated.

A sports broadcasting expert said that the media companies will have to take risks since there is a threat of getting marginalised in a market that is seeing consolidation. He also noted that the sports broadcasting market is once again becoming a single broadcaster market.

“In this market, it is very important to maintain a leadership position. If a single player keeps most of the properties then monetisation will become an advantage. Cricket cuts across genres, geographical boundaries, and demographics in India. Viewership is guaranteed when a cricket match is happening. Given all of that, the prices will go up, especially if a single player holds all the ad inventory,” the expert said.