Thread by @KShriniwasRao

A #thread on Disney's #ICC Media Rights bid:

👉🏽 Disney bid value: US$3.04B (approx Rs 24,000 cr).

👉🏽 Second highest bid: Sony at US$1.35b (approx Rs 10,000 cr).

👉🏽 Bid was for the India sub continent markets, 95% of which revolves around consumption in India alone.

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👉🏽 A general ICC assumption is, the Indian subcontinent alone generates close to 70% of their broadcast revenues.

👉🏽 So does that mean Disney's winning bid of US$3.04b is potentially just around 70% of what ICC will make from sale of rights in other territories?

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👉🏽 Not really. Why? Because the delta between the winning bid and the second highest one is extremely huge and the narrative is highly skewed in favour of Disney massively overpaying for it already.

👉🏽 Let's stick to Indian subcontinent. US$3.04b for how many matches? 179.

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👉🏽 Disney's bid is for four ICC events -- 2024 T20 WC, 2025 Champions Trophy, 2026 T20 World Cup, 2027 50-over World Cup -- which will collectively see all 179 matches.

👉🏽 How many India matches?
9 in 50-over WC; 7 each in two T20 WCs; 3 in Champions Trophy. Total: 26 games.

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👉🏽 So $3.04B (Rs 24,000 cr) for 179 matches straight away works out to Rs 135 cr per match.

👉🏽 Do you see a broadcaster paying this kind of money for a non-India game? The figure of 135 cr is already as pricy as it gets.

👉🏽 But let's break this down with India perspective.

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👉🏽 In the 4 ICC events, there are 8 semifinals & 4 finals.

👉🏽 So, a total of 26 India games, 8 SFs & 4 finals make 38 marquee India clashes & big knockouts.

👉🏽 Now, remove 38 from the list of 179 matches and how many remain? 141.

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👉🏽 These 141 matches are between all other countries that will play in these four ICC events, outside of India games & knockout clashes.

👉🏽 Now let's assume Disney has committed to pay approx US$13m (Rs 104 cr) per game for the set of 141 matches.

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👉🏽 Now, I'm using US$13m (Rs 104 cr) as the value here simply because I have no other benchmark to pick. $13m is per match value in IPL.

👉🏽 So, just for the sake of mathematical simplification, if that is the value (13m) Disney committed to pay for the set of 141 matches...

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👉🏽 Then you can divide the rest of the amount to further assume what they're paying for the 38-match cluster.

👉🏽 That works out to around Rs 250 cr per game.

👉🏽 Remember, these are not actuals. Just figures I'm using to explain. The only actual is US$3.04b that Disney bid.

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👉🏽 Is that the kind of investment that can be retained from TV & digital broadcast in the India market? Well, let's take Disney's previous (existing) rights cycle as example to find out.

👉🏽 Disney (Star India back then) had paid US$1.9B in 2015 to buy ICC rights for 8 years.

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👉🏽 That cycle included 2 50-over World Cups, 3 T20 World Cups; 1 Champions Trophy.

👉🏽 Of these 6 events, 3 were scheduled in India (extremely imp point).

👉🏽 Of all these events, 50% of Disney's payment structure revolved around last 2 events in India.

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👉🏽 In the upcoming cycle, one T20 WC is in USA & Caribbean (not India friendly time zone), the Champions Trophy is in Pakistan (doubtful until things get there), one T20 WC is in India (tax issues unresolved yet) & one 50-over WC in South Africa.

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👉🏽 How exactly does Disney plan to retain this investment, I have no idea. But remember, there's another narrative doing the rounds too.

👉🏽 That Disney has stakes in all marquee cricket business (part-IPL, Full ICC) probably makes for a great headline in America maybe?

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👉🏽 From a shareholder POV, this kind of capital infusion is bound to raise questions nevertheless.

👉🏽 So, I'm still waiting to hear Disney's indepth version to this whole bid mystery.

👉🏽 Some more perspective: ICC itself set the 4-year benchmark price at US$1.4b.

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👉🏽 They set the 8-year benchmark price at US$4b.

👉🏽 ICC said 1st round of bidding will be "closed". If they don't get a bid based on their projections, they'll call for another round -- e-auction.

👉🏽 It's clear all bidders -- barring Disney -- wanted an e-auction.

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👉🏽 That's why all other bidders put bids slightly lower than 4-year benchmark.

👉🏽 One narrative says Disney outsmarted them all. But fact is they'd have outsmarted even if they paid US$1.5b.

👉🏽 But they paid double!!

👉🏽 I'll do another thread when they let me know why. : )

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