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BW Businessworld

Editor's Letter: The Coming Star Wars

The bad news for Sony is that it has the rights for only one more year. After the curtains fall on this season’s matches, the bidding process for the next IPL term will begin

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In 1994, the purveyors of cricket in India — the BCCI — sold the broadcasting rights of games played in India for four years for $20 million, about Rs 80 crore then, to sports marketer TWI. As cricket grew as a sport and entertainment, broadcasters realised companies were willing to pay big money to advertise their goods and services, and the price of broadcasting rights shot through the roof.

A decade and a half later, Nimbus Sports betted big and bought the BCCI rights for five years in 2009 for Rs 2,000 crore; it worked out to a whopping Rs 32.5 crore a match. Nimbus could not make it a viable business and had to throw in the towel. Enter Star India which paid Rs 3,851 crore for Nimbus’ rights and an additional four years. Forget Nimbus’ experience! Star upped the ante, agreeing to pay close to Rs 42 crore per match!

Meanwhile, Star, which had announced a divorce with ESPN, began buying up every cricketing right on the horizon. It retained the ICC World Cricket rights by paying out Rs 11,880 crore ($1.98 billion) — 80 per cent more than the $1.1 billion it paid out in 2006. The broadcaster also went to town saying it had put aside a war chest of Rs 25,000 crore for cricket and sports.

A parallel, side script was happening too. Lalit Modi and company launched the Indian Premier League (IPL) in 2008 on the lines of football’s city and club-based league encounters. Amidst a whole lot of scepticism, Sony Entertainment Television (SET) saw an opportunity and bagged the rights for a humongous $1.03 billion for 10 years. SET, now called Sony Pictures Network, which got most of its entertainment strategy wrong over the last two decades, found this one cricket thing was working. Today, it draws 40 per cent of its revenue from the IPL property, and has been steadily making a profit from the third or fourth year of IPL’s launch.

The bad news for Sony is that it has the rights for only one more year. After the curtains fall on this season’s matches, the bidding process for the next IPL term will begin. And it’s going to be the media war of the decade. Sony will try its damnedest to retain the rights. Star, on the other hand, will try and wrest the property to give itself a near-total monopoly over cricket broadcasting in India. A lot is at stake.

It’s not just the big advertising bucks that cricket and sports brings with it. It is the larger prize of control over eyeballs and the entire broadcasting ecosystem. Live sports, and particularly live cricket, has a religion-like following that is growing leaps and bounds. As other entertainment programming becomes more fragmented and difficult, live sports keeps viewers spellbound and ensures the money continues to flow. Initially it involves huge investments, but there are returns. IPL itself has advanced from a reach of just 200 million viewers to 325 million this season.

A discussion on IPL cannot be complete without dwelling on its seamy side — the spot fixing scandals, the conflict of interests BCCI officials like N. Srinivasan created by trying to be team owners, BCCI officials and game arbitrators all at once. But IPL will only grow bigger with or without Lalit Modi. Businessworld’s Editor — Marketing & Advertising Noor Fathima Warsia will give you a ringside view of why IPL is so important and the brewing war for its rights.

On another front, governments at the centre and in the states have launched an all-out war banning beef, alcohol, cigarettes, diesel cars, books and other things they think are likely to cause damage to the people. The only problem is the people they are trying to save are not amused as jobs and businesses disappear. Read all about the new era of ban-o-nomics and what it means for our struggling economy.