The rights include television, internet and mobile coverage for six years, starting July 2012. The deal would cover 96 matches at an average price of Rs 40.4 crore a match. STAR’s offer was higher than MSM’s (Rs 3,700 crore). STAR has paid 35 per cent more than Nimbus, which had won the rights earlier but had them cancelled due to a payment dispute. Nimbus had paid Rs 31.5 crore per match.
The cricket board had terminated its four-year contract with Nimbus in December, after the latter defaulted on payments.
Speaking to reporters in Chennai on Monday, BCCI president N Srinivasan said, “Following a transparent process of verifying the eligibility of each bidder, the winner was chosen.”
The five parties that picked up the tenders were STAR India, ESPN Software, MSM, Zee Entertainment and Times Internet. According to sources, STAR India and MSM were the only two companies to make bids.
The bidding amount has come as a big surprise when the national cricket team’s poor performance has plunged and viewership has declined.
“Rs 40 crore per match is steep, especially given the recent poor form of the Indian team. At Rs 31.5 crore per match, Nimbus found it difficult to make the economics work. But, having said that, most sports broadcasters will take a long-term view of the game,” said Indranil Das Blah, chief operating officer of KWAN Entertainment and Marketing Solutions.
Most sports management executives expected BCCI would have to settle for less, with the board fixing a higher floor price of Rs 32.25-34 crore per match.
Nimbus, which signed a four-year deal with BCCI in October 2009, couldn’t make the economics of the business work on account of the high amount it had promised to pay per match, falling TV ratings and the consequent decline in ad rates.
Media buyers say advertisers spent around Rs 3,000 crore on advertising during and sponsorship of cricket broadcasts last year. Typically, a one-day international match has nearly 5,000 seconds of advertising airtime.
Now, most broadcasters are banking on the government’s move to digitise cable networks, which would increase addressability. That would increase subscription revenue for each match to Rs 10 crore, said an official from STAR’s rival network. “That will mean raising Rs 30 crore from advertising to break even, which isn't easy unless it's a high-profile series between India and Pakistan or Australia,” said the official.
Also, with STAR India winning the bid, the split between Disney (through ESPN Inc) and News Corporation (through STAR TV) becomes certain as sports industry experts expect a formal announcement by June-end.
“STAR might have over-bid in this case as they needed a big property on their sports channels as ESPN is likely to retain the ICC rights,” said an industry executive.
However, Uday Shankar, CEO of STAR India, maintained the rights would be shared with ESPN, its partner in the ESPN-STAR Sports joint venture. “STAR India will collaborate with ESPN-STAR Sports to exploit the rights. Right now, we have three sports channels under the JV: STAR Sports, ESPN and STAR Cricket to broadcast sports and cricket. However, if required, we could explore the launch of new channels,” said Shankar.
If STAR works jointly with ESPN, the combine will have a virtual stranglehold on marquee cricket events both in India and abroad, with the sole exception of the Indian Premier League owned by MSM. ESPN-STAR Sports already owns the rights to ICC tournaments (for which it paid a massive $1.1 billion), including the World Cup, cricket in Australia and England and the Champions League Twenty20 (for which it paid $975 million).