Indian Cricket Rights Auction Nears $6 Billion With Viacom18 in Lead

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The live auction of the linear TV and streaming rights to India’s cricket colossus is underway, with the top bids in Sunday’s round coming in just shy of $6 billion—well above the $4.2 billion base price set by organizers.

Through the first day of the online sale, the new five-year Indian Premier League package is on pace to triple the $2.6 billion fee forked over by Star India (now Star Disney) in September 2017. Monday marks what should be the final round of bidding, with the results expected to be announced later in the day.

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All told, the new IPL package is primed to fetch a value of around $12 million per match, which would elevate the cricket league to the No. 2 spot among global sports properties. By comparison, the NFL’s media package is valued at $17 million per game, while the English Premier League and Major League Baseball each carry an estimated value of $11 million per outing.

Rights have been split into four separate dockets, with Lot A including the Indian linear TV package (370 matches over five seasons) and Lot B consisting of the 370-match digital segment. Lot C is a non-exclusive suite of 90 matches and Lot D is a blended overseas package.

The online bidding started Sunday morning with Lot A. Each of the participating corporations was said to have placed increasingly higher bids for the TV package as the day wore on, but the clock ran out before a victor could emerge. Because the first package didn’t close, bidding for Lot B wasn’t expected to begin until Monday.

The Walt Disney Co., which assumed control of Star in 2019 as part of its $71.3 billion acquisition of 21st Century Fox, is among the handful of international media conglomerates bidding on the annual 74-match cricket showcase. If the Mouse House is to re-up with the IPL, it will have to outmaneuver Viacom18, a joint venture between Mukesh Ambani’s Reliance Industries and Paramount Global, and Sony Group Corp., which was blown out of the water by Star India’s composite bid the last time around.

A disruptor in India’s telecom space, the Reliance mobile subsidiary Jio now stands as the country’s largest mobile network operator, with a 35% market share. Just six years after the service launched, Jio boasts some 410 million domestic subscribers.

Reliance is widely seen as the favorite to prevail in the IPL auction, and its path to victory was broadened considerably thanks to Amazon’s zero-hour decision to pull out of the bidding. Amazon, which to date has pumped $6.5 billion into the Indian market, withdrew from the rights race on Friday.

As the current IPL rights holder—Star carries the TV package, while Disney+ Hotstar controls streaming—Disney must decide if cricket is worth the massive outlay in funds. As of April 2, Disney+ had signed on 50.1 million subs in India, a cohort that accounts for 36% of the service’s global base. By comparison, ESPN+ has landed 44.4 million customers in the U.S. and Canada.

During the company’s first quarter earnings call, Disney CEO Bob Chapek assured investors that it wouldn’t be the end of the world if the IPL rights were lost to a rival.

“While the IPL obviously, is an important part of the Disney+ Hotstar content offering, it’s really one component of a broader portfolio of entertainment and sports,” Chapek said, before name-checking the Marvel, Star Wars and Pixar brands and Disney’s massive local-content offering. “[The IPL] is an important component, but it’s not like we see that business evaporating if we don’t get it.”

Agency execs who cover the India market have disputed Chapek’s assessment, noting that Disney+ Hotstar’s whiplash growth spurt—the service picked up 14.9 million new subs between April 2021 and April 2022, marking a 42% year-over-year gain—has been driven almost exclusively by the live sports segment. “Though it has made in-roads into entertainment, its growth has been possible only on the back of the cricket rights,” said GroupM’s Parveen Sheik of Disney+ Hotstar, during a recent podcast appearance.

Although India is home to more than one-third of all Disney+ subs, those customers generate relatively low returns for the company. As Disney reported in its second quarter filing with the Securities and Exchange Commission, it realized $0.76 in average monthly revenue per user from its Disney+ Hotstar subs, or just 12% of the $6.32 ARPU the direct-to-consumer service unlocks by way of its North American base.

This year’s IPL led off with a draw of 229 million TV viewers over the course of the first week, which marked a 14% decline from the year-ago reach of 267 million, per India’s BARC. As is the case in the U.S., where linear TV ratings are steadily eroding in conjunction with a steep drop in pay-TV subs, India’s broadcasters are struggling to keep their advertisers fulfilled. Disney Star is in the process of issuing make-goods to marketers that bought time in IPL 2022, as overall deliveries fell as much as 30% while the average unit cost jumped nearly 15% compared to last year’s ad rates.

While India’s TV audience is shrinking, the country’s mammoth mobile base puts it well ahead of the U.S. on the streaming front. About 20% of IPL fans watch the matches via over-the-top platforms, while fewer than 5% of all Super Bowl LVI viewers streamed the Rams-Bengals game. According to a recent report by the Mumbai-based consulting firm Ormax Media, only 44% of Indian fans watch live sports exclusively on TV, while 20% take in all of the action via digital platforms. The remaining 36% go back and forth between linear TV and streaming.

The Ormax report pegs India’s sports fan universe at 136.3 million people, or 10% of the country’s overall population. Of these, 91%, or 124.2 million, are cricket enthusiasts, making it by far the most popular sport on the subcontinent. And it’s not even close; runner-up kabaddi, a wrestling/rugby hybrid which has no analogue here in the U.S., boasts 28.5 million fans.

According to GroupM estimates, cricket gobbles up 94% of India’s total sports advertising spend.

The IPL format features 10 teams battling it out over the course of a nine-week tournament. Each match runs for about three-and-a-half hours, which is a far more user-friendly running time than fans are asked to endure during the grueling “test cricket” format. Those traditional cricket matches can last up to five days.

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