How will the Reliance-Star merger impact the sports advertising universe?

The merger of Reliance’s Viacom18 and Walt Disney’s Star India, which happened earlier this month is set to create India’s largest media entity valued at Rs 70,352 crore (US $ 8.5 billion). Until last year, Viacom18’s JioCinema and Disney Stars’ Disney+Hotstar were at loggerheads during IPL and spent a great deal of money convincing advertisers as well as viewers about streaming the biggest sports IP on their respective platforms.

However, the joint venture now amalgamates their respective media assets spanning entertainment and films. This also creates a monopoly over India’s sports broadcasting industry, especially cricket, with the IPL, WPL, ICC as well as BCCI media rights falling under the same umbrella.

Let’s have a look at how this joint venture impacts the Indian sports advertising universe.

According to Santosh N., managing partner, D and P Advisory, almost 70-80% of the cricket content lies with the merged entity. “Any advertiser will have to negotiate as there is no other option. There is a possibility that this results in ad rates for cricket reaching a point where only the biggest advertisers could afford it.”

Impact on emerging sports

There is no doubt that cricket is the biggest sport in India. However, in recent years, the country has also found a great deal of space for emerging sports like Football and Kabaddi.

According to the Ormax Sports Audience report, India's sports audience is estimated at 678 million, with cricket, football, and Kabaddi being the top three with 612, 305, and 208 million audiences. The emergence of IPs like ISL (Indian Super League) and PSL (Pro Kabaddi League) have helped popularise these sports.

GroupM's 2024 Sporting Building Nation report further mentions that the sports industry’s overall spends including sponsorship, endorsements and media spends in 2023 stood at Rs 15,766 cr in 2023 out of which, cricket enjoyed an 87% share meanwhile, emerging sports stood at 13%.

However, the report also  mentions that the commercialisation of cricket has seen a certain level of process maturity since the launch of the IPL in 2008. This will continue to introduce the nation to more nuances in the management processes of the business of sports. This will enable emerging sports to draw best practices from cricket, leading to a faster learning curve for the industry in India.

Santosh N emphasises that the growing popularity of non-cricket sports and the sky-high spot prices for IPL could positively impact the ad revenue of these emerging sports.

 “It is very clear that cricket is the big daddy when it comes to sports, from that perspective any advertiser who can afford to spend will always want cricket. However, smaller advertisers who may not have the budget for IPL and World Cup would want to advertise with emerging sports and target the sports audience. If the rates do go up significantly higher due to the monopolistic environment, obviously the other sports will benefit.”

“While Cricket will continue to dominate revenues for the immediate future, non-cricket sports businesses are likely to build value over time. Building sports affinity at grassroots levels such as the Khelo India Program will help yield notable athletes across other sports. Our standout performances at the Olympics and Asian Games are a result of such concerted efforts, and such wins help to add to the buzz for non-cricket sports, which in turn will increase their viewership base over time,” says Keerat Grewal, head of business development (Streaming, TV & Brands), Ormax Media.

“Currently the non-cricket sports garner only 21% of the sponsorship revenue, amounting to Rs 1528 cr. While viewership continues to be heavily dominated by Cricket, efforts by franchise leagues along with grassroots development programmes and upgradation of infrastructure facilities, have had a cumulative effect in widening their audience base, with Football having a sizeable viewership of 304.8Mn, followed by Kabaddi at 280.5 Mn,” adds Grewal.