Thread by @KShriniwasRao

#Thread #IPL MEDIA RIGHTS TENDER

The Invitation-To-Tender is out & the collective base price has been set at Rs 32,890 cr – which means, that’s where bidding will start from.

There are four packages.

Everybody’s surprised at this ‘humungous’ figure. You shouldn’t be.

(1/25)

BCCI has planned its next 5-yr IPL calendar as follows: 74 matches in 2023, 24 & 25; 84 matches in 2026; & 94 matches in 2027.

But in the ITT, BCCI has only listed 74 matches for all 5 years. Why? For easier calculation.

If matches increase, broadcaster pays pro-rata.

(2/25)

Like, for instance, Star bought IPL rights (2018-22) for Rs 16,347cr.

How was the figure arrived at? Star put a winning bid of Rs 54.5 cr/game for 300 matches (60 matches / yr for 5 yrs).

This year matches went up from 60 to 74. Star will pay extra for those 14 games.

(3/25)

So, at 74 matches / year for five years, it’s a total of 370 matches.

Before I explain the break-up in base prices, this is imp to note:

In 2017, BCCI allowed one single party to bid for all packages together (sum of all parts). This time, they're doing it differently.

(4/25)

Unlike last time, all four packages have to be bid for separately. One single party can bid for all packages, but not a consolidated sum (like Star could).

Get the point?

If this was applicable in 2017, Facebook would’ve won digital rights with their Rs 3,900 cr bid.

(5/25)

Why has BCCI done this? To give all participants a fair chance.

Also, BCCI has also categorically said it will not allow consortiums. What does that mean? No two or more parties can do a pre-bid tie-up and bid together. Bid separately.

That’s why different packages.

(6/25)

Now, let’s look at the 4 different packages & their base prices:

Pkg1: India sub-continent TV (Rs 18,130 cr)
Pkg2: Digital (Rs 12,210 cr)
Pkg3: Non-exclusive rights for 18 games (Rs 1,440 cr)
Pkg4: Rest of the world (Rs 1,110 cr)

Add all of this, you get Rs 32,890cr.

(7/25)

How have base prices been arrived at?
Pkg1 – India TV: Rs 49 cr/game.
Pkg2 – Digital: Rs 33 cr/game.
Pkg3 – cluster of 18 non-exclusive matches: Rs 16 cr/game.
Pkg4 – Rest of the world: Rs 3 cr/game.

Multiply all per-game costs x 370 (total games), you get Rs 32,890cr.

(8/25)

Base is set. So far, so good?

Before we move further, read this previous thread on media rights, if you haven’t already. This is supposed to be a continuation.

Here’s the link:

https://twitter.com/KShriniwasRao/status/1506611935516966916?s=20&t=Qo8ytLUn-2xM6huDRl78rQ

At any point, if there’s a query, quote-Tweet with #(tweetnumber).

(9/25)

We’ll also try and understand how individual base prices have been arrived at. Why Rs 49 cr per game for India TV rights?

Answer: The last five years balance sheet. In 2017, the highest bid for India TV rights (from Sony) saw a per-match value of Rs 38 cr (approx).

(10/25)

Going forward, number of games will increase, there’s an influx of new-age advertisers, documented inflation.

Likewise, in digital, OTT subscriptions are up, pandemic has made us more internet-dependent, etc.

So, base prices merely reflect increase in pro-rata value.

(11/25)

TV is still king. Despite internet taking over our, linear traditional broadcast is not disappearing in a hurry.

So, while TV will still dictate this rights cycle, OTT will consolidate. OTT players who can't sustain price-wars will sell to bigger players, merge or exit.

(12/25)

Before we move to figuring the potential value, let’s first understand Pkg-3 – non-exclusive rights of 18 matches.

These 18 matches are: Opening game of season, 4 playoffs (including final), & 13 evening games during double-headers (all weekends)

What are these rights?

(13/25)

These are non-exclusive – means, one single party cannot necessarily own them.

More than one party can bid & host these games on their platforms. This pkg is only for digital.

Bidding starts at Rs 16cr/game. It's 50% of digital pkg base price.

There’s a catch though.

(14/25)

Catch is, even after these rights are sold, winners of Pkg 1 & 2 will get the ‘Right To Match’ (rebid) option. That will come with a heavy delta.

For instance, if the TV or digital bidder says “I’m willing to pay the delta and make it exclusive for myself”, they can.

(15/25)

Potential bidders are studying this carefully. I'm happy to explain this separately (quote-tweet your Q).

A lot of clarifications will be sought on this package. BCCI has answers ready.

Why has BCCI done this? To allow more participation.

I'll do a separate thread.

(16/25)

Which brings us to the ‘Million Dollar Question’ – who will bid, why, & to what extent.

I’ll break this into parts; Will do more threads in coming days. Today, I’ll keep it to who's likely to bid.

Primary players: a) TV18-Viacom JV; b) Disney; c) Zee / Sony; d) Amazon.

(17/25)

Secondary players: That’s where Pkg-3 becomes relevant. It’s for this pkg that ‘other parties’ will also try to get in.

Like, who?

Could be Netflix, could be any media player with a website / OTT player, enough subscriptions, and enough money.

Pkg 4 is least relevant.

(18/25)

Packages 1 & 2 are for primary players. Here’s where big elephants will fight (and then have option of re-bidding – Right To Match – for Pkg3)

Also, here’s some news: I expect TV18-Viacom JV to launch new 24x7 sports channels very soon. It’s just round the corner.

(19/25)

While I’ve explained why TV is imp, digital will see huge numbers in the rights acquisition space.

a) There’s a 5G rollout next year; b) e-commerce is big; c) OTT platforms will consolidate; d) Tech is advancing; e) data is cheap.

More telecom players will step in.

(20/25)

We’re only looking at Jio. Why are we ignoring Airtel, Vodafone, Tatas – they’ll also do post-bid tie-ups with existing primary players.

Ex: Airtel & Disney could have a back-end tie-up to compete with Jio; Vodafone could do the same with Sony.

All are 5G aspirants.

(21/25)

I’ve said this before, will say this again:

Until now, what was broadcast business all about? I’ll buy the rights, charge x amount per month to sell cricket. Right?

Going forward, that’s not going to be the case. That business model is set to undergo a change.

(22/25)

I’ll buy rights & charge ‘X’ amount to sell cricket but why? Because while I sell cricket, I want to build my OTT subscription, sell 5G, want consumers to buy my e-retail products, invest in my e-commerce biz.

Cricket is merely a catalyst to invite you into my world.

(23/25)

All these elements are the reason why the base price of IPL rights – collectively pegged at Rs 32,890 cr – will go up by another 2 billion dollars (approx. Rs 15,000 cr) when bidding begins.

After that, ego, exclusivity, future businesses, etc will come into play.

(24/25)

I’ll do multiple threads. In the next one, I’ll go into more details of which bidder will spend looking at what business and go to what extent.

Remember, beauty lies in the eye of the beholder.

(Ends)