IPL Media Rights: Disney Star needs to push a hard case with advertisers

The total outgo for Disney Star at the just-concluded IPL media rights for five years is Rs 23,575 crore. That brings to the table television broadcasting rights for the Indian sub-continent. Just how does the math work in terms of recovering that investment?

Each IPL match has around 3,000 seconds of commercial time and Disney Star’s revenue will be through a blend of advertising and subscription.

For the season that just concluded, the average rate for a 10-second spot was Rs 14-15 lakh (this is a combination of bulk and spot deals cutting across matches before coming to an average number), which means at the higher end a match garnered Rs 45 crore. That multiplied by the total number of matches (74 in the case of IPL 2022) translates to Rs 3,000-3,300 crore. Adding another Rs 800 crore coming from Hotstar, the network’s OTT platform and the total stands at approximately Rs 3,800-4,000 crore.

Cut to the five-year bid for 2023-2027 that has just been clinched. At the cost that Disney Star has bought the rights for 410 matches (that number fluctuates in a few years but the average is 82), the total revenue to be made per match for recovering the cost is Rs 57 crore. Again, at 3,000 seconds per match, each 10-second spot needs to be sold at Rs 19 lakh or a hike of 27 per cent over the Rs 15 lakh that this year’s edition commanded.

On a per ball cost (taken as 20 overs per side or 240 balls bowled in all) for each match, that translates to Rs 23.75 lakh. By any stretch, IPL remains the most expensive advertising proposition on television – the cost for the finals does go past Rs 20 lakh for a 10-second spot bested only by the big-ticket world cup matches such as India against Pakistan or India against Australia.    

The challenge for Disney Star in the new scenario with only television broadcasting rights means it will find it difficult to sell a bundled package/bouquet since digital has gone to Viacom18. Karan Taurani, Sr VP, Elara Capital, points to the advertising verticals where key segments such as e-commerce, automobiles and banking dominate the overall pie across television and digital at 60 per cent of the total pie. “However, in the case of IPL rights being sold separately, we expect stiff competition within the TV and digital platforms for advertising budgets. We see some verticals like fintech, commerce, edtech and EVs to see a rapid shift towards digital, whereas FMCG and automobiles will continue to rely heavily on TV for their mass campaigns,” he says.

For Disney Star or any other network, the subscription revenue moves with the kind of programming they have, with IPL always seeing a surge in numbers. That said, it is advertising that will most often drive a network’s revenue.  

Madan Mahapatra, an independent marketing and media consultant, says the quantum of premium for digital rights (Viacom18 paid Rs 20,500 crore for the basic digital rights and Rs 23,758 in all adding non-exclusive and some overseas markets) is 5x more than 2017, where Facebook was the highest bidder at Rs 3,900 crore. “Television is two times more. However, the argument also goes in favour of digital which is yet to find its high in sports and it may, therefore, may be easier to sell it compared to television, which in all likelihood has hit the ceiling,” he thinks. To that extent, how much leeway Disney Star can increase rates to a somewhat unwilling advertiser will be interesting. “Ultimately, a lot will be driven by the unicorns and a few cricket-crazy brands who want to fight for 40 overs of inventory.” Digital today is driven by impressions garnered and that is the story that will sustain for a while at least.

In the 2022 edition of IPL, television advertising revenue made around 3.5x more than digital for Disney Star. However, in terms of acquisition costs for digital, the difference is remarkably narrow. Whether that is the story of the hidden potential in digital or Viacom18 having overpaid, is something that is waiting to be told.

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