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Sony retains IPL rights, at a higher price

Sony retains IPL rights, at a higher price
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First Published: Thu, Mar 26 2009. 07 05 AM IST
Updated: Fri, Apr 17 2009. 04 12 PM IST
New Delhi: A day after it announced that its Twenty20 cricket league, the Indian Premier League (IPL) would be hosted in South Africa this year, the Board of Control for Cricket in India (BCCI) ended uncertainty over whether broadcast network Multi Screen Media Pvt. Ltd (MSMPL), which had the telecast rights, would air the league’s matches in India this year by announcing that it would—for a lot more money.
After a two-week-long legal battle, BCCI announced late Wednesday night that it has signed a new deal with MSMPL and World Sport Group (WSG) for Rs8,200 crore—80%of this is expected to come from MSMPL (formerly known as Sony Entertainment Television).
“The media broadcast rights deal is now worth Rs8,200 crore and is valid for the next nine years through to 2017,” a statement issued by BCCI said.
BCCI had sold the global media rights to WSG in 2008 for 10 years for $1.03 billion (Rs5,232 crore now). WSG had, in turn, sold the broadcast rights for the Indian subcontinent to MSMPL for $300 million for the first five years.
However, relations between BCCI and MSMPL soured after the board held the broadcaster responsible for a lost in-stadium sponsorship deal worth Rs137 crore with the Reliance- Anil Dhirubhai Ambani Group. According to several people familiar with the development, the board wanted MSMPL to compensate it for the loss. Fearing that BCCI could cancel its broadcast deal, MSMPL filed on 15 March an injunction in the Bombay high court that sought to protect its interests. The broadcaster later tried to settle the matter out-of-court by offering BCCI a higher sum. In return, however, it sought a deal that couldn’t be terminated.
The new deal does not have such an interminable clause, which means it can be called off during the course of the next nine years on grounds that the three partners agree upon.
The new contract requires MSMPL to dish out around 80% of the Rs8,200 crore committed to BCCI, a senior executive of WSG said on condition of anonymity. “With this deal, BCCI has recouped any potential losses it may incur because of the shifting of the venue to South Africa, the travel, board and lodging of players, the vacant on-ground sponsorship slots or the new taxes it may have to pay,” said a person familiar with the development, who declined to be identified.
Meanwhile, MSMPL will have to explore new advertising deals to balance the equation. Last year, the broadcaster raised around Rs300 crore from such deals and this year, going by the deals signed so far and the advertising rates sought, it was expected to generate Rs350 crore.
The deal would work for MSMPL, which has to pay around one-third of the deal value to BCCI over five years, said a media buyer, who is involved in some ad deals with the broadcaster. However, MSMPL and WSG would have to diversify their revenue and take advantage of other platforms such as cinema, mobile and 3G services, added this person, who did not want to be identified.
Another media buyer, who too declined to be identified, said that while MSMPL could look to increase advertising rates from the current Rs3.5-4 lakh for 10 seconds, this might not be possible under current market conditions.
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First Published: Thu, Mar 26 2009. 07 05 AM IST
More Topics: IPL news | IPL | Sony | BCCI | MSMPL |