The battle for IPL media rights: Reliance vs Disney-Star, no Amazon

Why has Amazon pulled out?

Amazon, which livestreams the English Premier League, initially showed keen interest for the IPL digital media rights too. Gaining an edge over its rival Netflix Inc was an incentive. Amazon hasn’t officially commented on the pullout, but it is learnt that following internal deliberations it decided not to pay over the odds for just online streaming rights. “Amazon has a great balance sheet but as a standalone, digital-only bidder, it would’ve had a challenge recouping such a big investment on streaming,” Mihir Shah, vice-president and India head at Media Partners Asia, was quoted as saying by Bloomberg.

What is the base price?

For the 2023-2027 cycle, the BCCI has set the base price at Rs 32,890 crore. According to a top BCCI official, expectations are that the highest bid would go past Rs 45,000 crore. A BCCI insider said auction dynamics don’t follow the simple profit-and-loss logic. It’s about market share dominance and how much the companies are willing to fork out.

It is learnt that 11 companies had purchased the invitation to tender (ITT) documents but only seven, including Disney-Star, Viacom18/Reliance, Sony and Zee have submitted the technical bids. The deadline for technical evaluation was 6 pm on Friday.
Some of the bidders, however, have expressed their displeasure over a sharp increase in the base price.

What explains the BCCI’s confidence?

According to a BCCI official, the IPL as a product is “unrivalled”: No other content attracts as many eyeballs. Chennai Super Kings chief executive Kasi Viswanathan agreed. “This year, maybe, was an aberration in the sense that you still didn’t have home and away games. This was a reason for a dip in viewership. But if you look at the competitive cricket that is played in the IPL, everybody knows that this is the best T20 league in the world. And that probably is the reason why its media rights are so much in demand,” Viswanathan told The Indian Express.

What’s at stake in bagging digital rights?

Unlike last term, composite bids have been done away with. A company can separately put in bids for all three buckets. These include one for linear rights and two separate ones of digital rights, divided this way for the first time. The two digital rights buckets include one for all matches, and one for non-exclusive rights for 18 games every season, including the tournament opener and playoffs. This can attract companies that are willing to get a small share of the pie, fetching the Board big money in the process.

The addition of two new teams has raised the number of matches to 74, and contributed to the base price reaching almost twice the winning bid of 2017. The new teams have brought in new fans. For example, Gujarat Titans, the defending champions, can play in front of 100,000 fans. This is expected to rapidly increase TV/online viewership also. Two years ago, Forbes listed the IPL as the world’s sixth biggest sports league. The global Indian diaspora following cricket adds to its appeal.

Has it drawn foreign investors earlier?

Last year, Manchester United’s American owners, the Glazers, took part in the IPL franchise auction, as two new teams were brought to the fold. Not that the Glazers are big cricket fans, but they found the IPL’s model attractive, and akin to the NBA and Major League Baseball – a closed-shop league without promotion and relegation and revenue guaranteed from certain quarters. NFL legend Larry Fitzgerald and double Olympic gold medalist basketball star Chris Paul have invested in Rajasthan Royals.

How intense is the competition between Reliance-Viacom 18 and Disney Star?

In 2017, as Star’s chairman-cum-CEO, Shankar had secured the media rights for IPL 2018-22 for his erstwhile company for Rs 16,347 crore. Five years down the line, he is in the opposition camp, planning strategies for Viacom18/Reliance, which has launched a sports channel, Sports18.

Reliance and Viacom18 have entered into a strategic partnership with Bodhi Tree, with the latter investing $1.78 billion. This is an investment platform, run by media tycoon James Murdoch’s Lupa Systems and Shankar. “James and Uday’s track record is unmatched,” Mukesh Ambani, chairman and managing director of Reliance Industries, had said following the tie-up. With 400 million-plus customers, Reliance’s Jio is the country’s largest telecommunications company.

At the same time, there’s a feeling that Disney-Star could go for aggressive bidding to retain the media rights. Hotstar, the company’s digital platform, reportedly gets 30% of its global revenue from India, with the IPL being the determining factor. For Amazon and Netflix, on the other hand, only 5-10% of their global revenue comes from India.

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