What will Viacom18's BCCI auction victory mean to the media landscape?

Viacom18 won both the television and digital rights of the Board of Control for Cricket in India's (BCCI) matches for the next five years (2023-28) on Thursday. With this, it has created a near monopoly in the Indian cricket broadcasting sphere as it also has the TV and digital rights for the WPL and the digital rights for the IPL.  

The BCCI had invited e-bids for two packages- Package A (TV) at the base price of Rs. 20 crore per match and Package B (digital) at the base price of Rs. 25 crore for one match. Viacom18 bid the highest in both categories. It bid Rs 3,101 crore for digital and Rs 2,862 crore for television rights, a total amount of Rs 5,963 crore.

The other bidders in the fray were Disney Star and Sony. However, some media reports suggest that Disney Star did not participate in the bidding process.

This is Viacom18's first large-scale sports acquisition for its television channel Sports18. Sports media networks need to have live content throughout the year to make sure the viewers are hooked on their channels.

Santosh N, managing partner, D and P Advisory, says Viacom18's aggression to pitch for these properties is understandable as it is new to sports and has very little sports content.

"This is a decent addition to the sports content portfolio that the network is building. With IPL and WPL being just a two to three-month affair, it was important for the network to add good sports content to cover for the rest of the year," he says.

The network now has the rights to all the high-profile cricket events except television rights for the IPL and the ICC events. The latest deal is expected to further establish JioCinema as a strong player in the OTT space.

Karan Taurani, senior vice president, Elara Capital, says, "As of CY23, after factoring IPL revenue and other content, the platform has an AVOD market share of ~22-24%. Acquiring the BCCI rights can further scale up revenues and in turn, intensify competition in the OTT segment. It can work negatively for other broadcast-based OTT players like Sony, Zee and Disney+Hotstar. It will also continue to negatively impact SVOD revenue growth for Indian OTT, as JioCinema may continue to offer content free."

Media experts suggest that one platform acquiring both media rights augurs well from a bundling/ monetisation perspective.

"We believe that a single entity securing both TV and digital rights is mutually advantageous, as it enhances the negotiating leverage of the platform. This allows them to offer bundled options to advertisers. In contrast, when two separate players acquire TV and digital rights, it fuels competitive rivalry between platforms, resulting in a dampening effect on overall revenues (IPL revenues were down YoY in CY23). Bundling prevents advertisers from holding a stronger bargaining position as compared to the platforms," says Taurani.

Mihir Shah, vice president, Media Partners Asia, also believes that this is a good deal as it allows it to monetise the matches better.

“Winning TV and digital rights for BCCI allows Viacom18 to offer the best of both mediums in terms of reach and targeting," he says.

The rights to the major cricket properties are spread between the three large players (Disney Star, Viacom18 and Sony+Zee) today. "Addition of these rights adds a lot of value to Viacom18, but losing these rights might not be a big dampener to Disney Star which boasts of some very good sports content in its portfolio," says Santosh.

According to media reports, the Reliance-owned company bagged the rights for a total amount of Rs 5963 crore. This translates to an average per-match value of Rs 67.75 crore, which is 12.92% higher than the Rs 60 crore Disney Star paid in the previous cycle. In 2018, Disney Star had bagged the rights at Rs 6,138 crore for 102 international matches.

However, this broadcast cycle, extending from September 2023 to March 2028, has 88 bilateral matches (could go up to 102 matches) involving India. It can be broken down into 25 Tests, 27 ODIs and 36 T20Is.

Taurani highlights that the 12.92% premium is much lower when compared to the IPL. The IPL had attracted a premium of 117% on a per match basis compared to it’s last cycle price.

"A few factors have led to the overall premiums for these matches being lower. Firstly, there are lower numbers of T20 matches. Then there is less interest in bilateral matches with a large tournament like IPL garnering interest on home grounds already. Further, there were fewer platforms bidding and finally, a poor ad environment over the last one year," he says.

Santosh also believes that the interest in bilateral cricket tournaments are waning, "as was seen in India’s West Indies tour, except for very good quality cricket (as was seen in the Ashes). Cricket is following football where leagues have become more important. So the broadcaster’s lack of interest in bidding for these rights was expected."

Shah says this year's BCCI bids have displayed a more rational pricing approach. “The value of media rights, as evidenced by the IPL and ICC, has multiplied significantly. Just last year, the combined value of these two tournaments reached approximately $9 billion. However, since then, the macroeconomic landscape has dampened. The sharp credit rate hikes, aimed at curbing inflation, have led to a weakening of domestic demand in 2023. Media rights owners remain more attuned to striking a balance between revenue and cost management.”