Thread by @KShriniwasRao

#Thread #IPL Media Rights

‘LIGHTS, CAMERA… AUCTION’

We’re fast approaching the Sunday, June 12, when action (actually, auction) begins. 12 parties have bought the Invitation To Tender (ITT). 11 are expected to come to the bidding table.

(1/25)

‘THE BIG-5’

While there are close to a dozen contenders in play, the big piece of action is more likely to revolve around what I’m now calling: ‘The Big-5’ – Viacom-led JV, Disney-Hotstar, Sony, Amazon & Zee.

Today’s about these ‘big’ names.

(2/25)

‘NOT JUST ABOUT CRICKET’

Why are these ‘Big 5’ likely to rule the auctions more than the others? Because, while it’s the cricket rights that are at sale, the bigger picture is not JUST about cricket.

I’ve mentioned this earlier too. Cricket is also the catalyst.

(3/25)

WHAT DOES ‘CATALYST’ MEAN IN THIS CASE?

It means, cricket is also the medium/vehicle to reach the consumer & ‘engage’. Cricket is part product / part strategy-tool. What I’ve said before -- I buy cricket rights & get guaranteed eyeballs. Then I sell you everything else.

(4/25)

HORSES FOR COURSES

So, now that we’ve identified why cricket could be the ‘catalyst’, let’s take a look at how and why this ‘catalyst’ could entice bidders, in different ways, to pay top dollar.
While we move further, check this 10-year data on the industry too.

(5/25)

THE ‘PLAYERS’

1) Walt Disney Co.: The present rights holders. This quarter, the company recorded a market cap of US$196b. At the start of this week, Disney was trading at US$107.8 on Wall Street.

Underestimate this giant at your own peril.

(6/25)

SUBSCRIBER IMPACT

In the previous quarter, Disney+Hotstar’s overall subscriber base grew from 118.1 million to 129.8m and has ended this quarter 145m-plus.
In an earnings call last week, Disney officially said it benefitted due to the #IPL.

(7/25)
livemint.com/industry/media…

HOTSTAR CONTRIBUTION

Hotstar alone makes for close to 50 million of that total subscription base for Disney+.

Google it.

Now, remove cricket / sports from Hotstar, what do you think will happen? Well, here’s what Christine McCarthy, Sr Exec VP & CFO at Disney said:

(8/25)

“We ended the quarter with nearly 138 million global paid Disney+ subscribers, reflecting close to 8 million net additions from Q1. A little over half of those net adds were from Disney+ Hotstar, which benefited from the start of the new IPL season”: McCarthy.

Get it?

(9/25)

What’s the ‘Big Picture’ in what she says?

Personal view: Hotstar has run its race, if not for cricket. Else, it brings nothing to the table that sets it apart from what the Disney+ bouquet already offers.

So, Hotstar potentially goes off the radar without cricket.

(10/25)

Technically, going by the numbers, if Disney-Hotstar fails to retail IPL or all other cricket that it has on its platform right now, it faces the threat of losing close to 40 million subscribers – potentially.
That can hurt business, ego, eyeballs, numbers – everything.

(11/25)

And that is why, the world’s oldest, hugely respected & biggest entertainment conglomerate will come all guns blazing.

Cricket is the catalyst. Retaining subscriber base & keeping Hotstar relevant the strategy tool.

I wrote this piece in Feb: timesofindia.indiatimes.com/sports/cricket…

(12/25)

2) Sony Pictures (now renamed Culver Max Entertainment)

Look at it this way: Sony hasn’t won anything in the last so many years in rights market. Lost ICC (2014), BCCI (2014), IPL (2017), BCCI bilateral (2018).

Technically, they have that much money saved. : )

(13/25)

But let’s stick to IPL. Sony made an unsuccessful bid of Rs 11,500 cr in 2017 for IPL TV rights alone. That was around 60% of Star’s overall bid – quite a big number.

For 5 years, just imagine that money sitting in the bank, collecting interest.😀

(14/25)

Erik Moreno, Exec VP & M&A head at Sony Pictures, has flown into Mumbai as we speak. Their global TV studios chairman Ravi Ahuja was here a couple of weeks ago.

Why? What’s at play for them? The need for content.

Cricket gives Sony an effective bargaining chip.

(15/25)

The biggest leverage a broadcaster has in negotiating ad deals with clients is the bouquet of channels at disposal.

It not only allows deeper penetration & last-mile connectivity, it allows the broadcaster to ‘hedge bets’ across various content. The more the merrier.

(16/25)

This is what Star accomplished in 2017-18. Their going regional with IPL worked wonders. It allowed exceptional leveraging of content / ad/ pay-TV numbers, etc. This stands true once more for Star Sports too & that is why, the traditional rivals will slug it out for TV.

(17/25)

So, again, cricket is the catalyst, but keeping their TV business relevant is the strategy-tool.

Sony's merger with Zee is not over yet. They're only engaged, not married.

So, Sony & Zee will come separately. Sony is coming for TV, Zee will make an attempt at Digital.

(18/25)

3) Zee

Think Zee5, subscriptions, OTT competition, even a future IPO. : )

Zee & Sony will marry soon. But how can the marriage consummate? (pardon the pun : )) Well, both partners have to bring something along, right?

Zee's play going forward is going to be digital.

(19/25)

Zee have written to BCCI saying they want a closure on all past legal battles. New beginnings, you see!

Want to read some good Raj & Simran stories? check these -- Love has been in the air. 😍

timesofindia.indiatimes.com/sports/cricket…
timesofindia.indiatimes.com/sports/cricket…

(20/25)

And that brings us to the remaining two names in the ‘Big 5’ –
4) Viacom-led JV.
5) Amazon.

You want my honest view on this? These two names alone will require a separate thread (of course, I’ll be doing one).

They’re the newcomers, they’re the gamechangers.

(21/25)

I’ll wrap this up with just two talking points for now (& detail them in next thread).

a) Why is Viacom-led JV (backed by Reliance, of course) entering this space?

b) Why is Amazon – primarily with two verticals, Prime & e-retail – itching for cricket in India?

(22/25)

If the current market, changing trends, evolving business models, fast-growing tech, e-businesses – these subjects interest you, then give this a deeper thought. It’s extremely invigorating.

Traditional rivals Sony & Star vs the new entrants. Has a lot of sub-text.

(23/25)

When the e-auction begins, three kinds of bidding will happen simultaneously.

a) Bidding to win.
b) Knowing when to exit the bidding process.
c) Bidding to scale it up for the rival.

All three will be at work.

Remember, not everybody is coming here only to win. :)

(24/25)

As I said, I’ll do a separate thread on Viacom & Amazon. Until then, here’s how the game is building up.

Do you share your feedback; and do bear this in mind: Like on the field, off it too, this will be a game of glorious uncertainties. : )

(Ends)