What does Viacom18's BCCI win mean?

Viacom18, backed by Reliance Industries, has acquired the bilateral media rights, both digital and television (TV), for the Board of Control for Cricket in India (BCCI) in the auction held on Thursday. All domestic matches of India as well as all the domestic tournaments hosted by BCCI for the next five years (2023-28) will be broadcast by the media conglomerate. In one shot, this weakens Disney Star's position as the market leader in terms of digital content.

BCCI Secretary Jay Shah took to Twitter to congratulate Viacom18 for winning the BCCI Media Rights, saying, "India Cricket will continue to grow in both spaces as after IPL, and Women IPL, we extend the partnership for BCCI Media Rights as well. Together we will continue to capture the imagination of cricket fans."

Three of India's biggest broadcasters, Sony, Disney Star, and Viacom18, had engaged in a battle to win the rights for the lucrative industry of sports. 

This feat makes the Indian board richer by ₹5,963 crore and gives Viacom18 the right for 88 matches. With its winning bid, this translates into Viacom18 paying nearly ₹7.76 crore more than the previous cycle's ₹60 crore per match paid by Disney Star. This is 13% higher on a per-match basis vs the earlier cycle (43% lower vs IPL on a per-match basis). 

However, the fact that Disney Star paid ₹78.9 crore for bilateral cricket in 2023 (the final year of the deal), which was a back-heavy five-year arrangement, should be noted as more evidence that the market isn't expanding.

Indian board officials should prefer to see the developments with a positive viewpoint, despite the fact that the value increase may be modest BCCI received a premium of 40% in the last cycle).

"One platform acquiring both (TV and digital) media rights of marquee content augurs well from a bundling and monetisation perspective," says Karan Taurani, senior vice president -research analyst, Elara Capital.

In comparison, premiums and base price for TV and digital in IPL per match were at 17% and 72% respectively on an already high base price, whereas in the case of bilateral matches, premiums and base price for TV and digital per match basis is 63% and 41%. (Base price was set much lower than earlier cycle’s final price per match).

"TV premium compared to base price could have been higher than digital, given Viacom18’s aggressive bidding as one platform having both (TV and digital rights) leads to better bundling and higher negotiating leverage with advertisers," Taurani adds.

Elara is of the opinion that a single entity securing both TV and digital rights is mutually advantageous, as it possibly enhances the negotiating leverage of the platform. This allows them to offer bundled options to advertisers. In contrast, when two separate players acquire TV and digital rights, it fuels competitive rivalry between platforms, resulting in a dampening effect on overall revenues (IPL revenues were down YoY in CY23). "Bundling prevents advertisers holding a stronger bargaining position as compared to the platforms," notes Taurani.

Furthermore, acquisition of BCCI bilateral rights will cement Viacom18’s position as the top competitor in the OTT space and in consequence this will further intensify competition in the OTT segment and work negatively for other broadcast-based OTT players like Sony, Zee, Disney+ Hotstar.

Disney's apathy towards retaining media rights for marquee cricket content reaffirms its global stance of phasing out its OTT business from India.