Home / Opinion / Online-views /  Will Star India recover its investments in cricket?

That is the million dollar question that really irks Star India chief executive Uday Shankar when journalists ask him. President, Asia, at Twenty-First Century Fox, Shankar says that he is part of a professionally managed media company which prides itself on its financial discipline. “We have a plan," he says, referring to the recovery of the investments that the company has made in cricket in India.

But first a quick look at the big bet that Star has placed on cricket. Star India has agreed to spend more than Rs34,000 crore on cricket over the next five years. Basically it has ploughed in Rs16,000 crore plus for the Indian Premier League (IPL), a little more than Rs6,000 crore for all BCCI media rights and approximately Rs12,000 crore for ICC cricket.

This means that Star India needs to recover more than Rs6,500 crore from the market every year for the next five years. Executives at rival channels say that sounds implausible. Their arguments are based on the annual growth rates in advertising and subscription revenue. Television advertising, for instance, is growing at 10-12% a year, says a senior executive at a channel that competes with Star. So if the total TV ad market of Rs25,000 crore is growing at that rate, then it will generate Rs2,200-2,500 crore of additional revenue every year.

The Rs12,000 crore TV subscription industry, meanwhile, is growing at 8-10% a year, he says. That means another Rs1,000 crore in revenue. That totals Rs3,500 crore a year. And to recover its investment, Star needs to earn nearly double that every year. “That is assuming that no one else gets anything," he says.

He further argues that among the BCCI matches (102), only ODIs and T20s are watched. “Test matches (there will be 22) generally report a low viewership," he adds.

Although media experts accept that the task ahead for Star is challenging, they do not agree with the arguments made by its rivals. According to Shashi Sinha, chief executive officer of IPG Media Brands, the recovery will be a combination of three streams: advertising on TV, pay television and digital subscription. “Pay TV is very big globally. In the UK, football is all pay," he says.

The broadcaster could win if both television distribution and digital subscription money start flowing in. “Even in terms of television advertising, Star will get a disproportionate share of growth since it has launched the property in different languages. It has sold almost all its inventory on all the feeds," says Sinha.

Gopinath Menon, an independent media buying expert agrees. He says cricket is sought after especially by cut-throat product categories like consumer electronics, e-commerce, soft drinks, mobile phones etc. “On cricket, pricing becomes inelastic unlike, say, on entertainment. That is not all. If you have cricket on your channel, it enhances the stature of the network," he adds.

His contention is that with 180 days of cricket, one can make money, especially with a prestigious property like the World Cup thrown in. Additional revenue comes from the steeply priced inventory for the IPL semi-finals and finals where it could sell spots for as high as Rs8 lakh for 10 seconds.

Menon doesn’t see Star struggling too much on the advertising front. “Cricket defies media logic. Nobody looks at return on investment. You buy and sell on impact," he says, explaining how brands and marketers place their bets on cricket.

Digital media experts also see Star’s digital platform Hotstar gaining momentum. Although digital media is growing at 30% a year and is likely to touch Rs10,000 crore in 2018, a chunk – nearly 70%—of this revenue accrues to Facebook and Google. So where does that leave Hotstar?

Shamsuddin Jasani, managing director at the digital marketing agency Isobar, says that while it’s true that 70% advertising goes to Google and Facebook, that is changing. “Lots of advertisers are asking questions whether to associate with curated or created content. Advertisers want to go with safe environment. So while Google and FB may not crash, advertisers will move to over-the-top video streaming platforms and that may work in favour of Hotstar," he says. He further believes that Hotstar’s growth will accelerate with data becoming cheap.

But the fact remains that Star has paid a huge premium for cricket. “The challenge will be monetizing it. But on the other hand, it has all the content, it can charge appropriately," Jasani says. Agrees Sinha: “Cricket is a big punt for Star which may not see results in the first couple of years. But things may turn eventually."

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff. Respond to this column at

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