With rights cost surging, no single firm can afford to buy all sports properties today: K Madhavan
You created quite a flutter here, first by picking up rights at $3 billion, more than double the next bidder, and then sub-licensing TV rights to ZEE. Was it because you bid too aggressively or was it pre-decided?
While I can’t talk about the financials due to our policy and confidentiality arrangements with the ICC… the industry is constantly adapting and evolving along with the competitive landscape. Sharing of rights is a part of evolution. A similar outcome ensued for IPL where the digital and television rights sit with different entities.
We are clear there is no question of overpaying. We preferred the bidding to end after round one itself basis the process laid out. Given the escalation in acquisition price for cricket rights, an individual broadcaster holding all properties — like we did five years ago — may not be realistic or practical in today’s world as the acquisition price for cricket rights has gone up by almost three times.
Despite having all three, your sports business continues to bleed. It is largely due to BCCI rights. Will you be eager to pursue them after securing TV rights for IPL and ICC tournaments?
We don’t just like to go and buy all the rights; we have a business model and we bid for the rights on a case-to-case basis. To answer your question, we are interested in all properties, small and big. But we will look at each of them individually to see if it makes a business case for us and then take a call. Ultimately, we must be cautious and focus on our business model. I am not in a fight with anybody else. The new mantra is growth with profitability.
How big is sports broadcasting as an opportunity?
Sports is almost $1 billion ad revenue, or 30% of overall adex, in India and can go up to $3 billion in another five years. But if you compare with other developed nations, our sports revenue is too small.
Will sub-licensing of the ICC events not allow ZEE to eat into your subscription revenues?
Today we hold all three — ICC, IPL and BCCI — rights but there is no incremental revenue from distribution. Also, for the last four years, the affiliate revenues of the entire industry are stagnant and under increasing pressure. Unlike the rest of the world, TV in India is heavily price regulated and the ability to meaningfully derive returns is limited. We have to operate within those confines.
Even if I have all the properties, I am not going to get an additional rupee. But we have well performing channels in virtually every entertainment genre, which secures us from a distribution standpoint.
