IPL Media Rights: How the math adds up for Viacom18-RIL-Mumbai Indians

The Board of Control for Cricket in India (BCCI) announced the winners of the IPL media rights bidding on Tuesday evening. And there is a particular cause for celebration in the Mukesh Ambani camp.

Ambani-backed Viacom18 won the digital media rights for Rs 23,758 crore, overtaking traditional TV media rights, which went to Star India for Rs 23,575 crore. Now, for many, the difference of a few crores might not seem to be a big deal, but in actuality, it is. This is the first-time digital media rights have sold for more than TV, reflecting the growing interest in digital viewing in the country.

It must be mentioned here that the Ambanis, who now hold the digital media rights, are also the owners of the championship-winning team, Mumbai Indians. The team has so far won five times since the inception of the tournament in 2008, making it a fan favourite.

Now back up to April this year when Bodhi Tree Systems – a platform of James Murdoch's Lupa Systems and Uday Shankar – inked a strategic partnership with Reliance and Viacom18 to form the largest TV and digital streaming companies in the country. Bodhi Tree Systems led the fundraising with a consortium to invest Rs 13,500 crore.

The investment was reportedly done with an eye on IPL media rights, according to media reports. In addition, the popular JioCinema OTT app will be transferred to Viacom18, as per agency reports.

“We believe, the hefty premium paid by Viacom 18 is more a strategic manoeuvre, to benefit: 1) Jio subs retention (possibility of a bundling plan) and 2) improve valuation for the OTT platforms. Digital media revenues may grow at a faster clip of 30 per cent (SVOD and AVOD), versus TV revenue’s narrow growth band of 6-8 per cent in the next five years. The cost of rights per match for digital is now at par with TV, with overall cost of rights massively breaching global leagues such as EPL, reaffirming the compelling nature of IPL content,” said Elara Capital in a statement.

Elara Capital further stated that the breakeven for digital might come in the fourth year due to hefty content costs, propelled by sharp premiums on packages B and C. “However, digital has the potential to generate a gross margin of 24 per cent in the fifth year, helped by strong growth prospects and future monetisation models (Web 3.0), as compared with TV with its gross margin peaking at 13 per cent,” it added. 

Moreover, around 50 per cent of the total revenue that is generated from the media rights auction is divided between the teams, which is currently 10 in number. Overall, the media rights were sold for Rs 48,390 crore for the 2023-27 cycle. Half of it, along with taxes and other deductions, would also amount to a substantial hike in revenue gain for the teams.  

Elara Capital said that Voot or Jio platform might instantly benefit in terms of the number of users and subscribers, “propped by the IPL property”. But monetisation of the digital segment might not be as easy as user experience is a key monitorable for customer retention and ARPUs.

“Voot or the Jio platform may enjoy a huge edge on distribution, which may propel ARPU growth for Jio as it may be sold as bundled deal,” said Elara Capital.

All factors included, the Ambanis’ IPL ecosystem is flourishing. Not only does Mumbai Indians stand to gain from the record-breaking IPL media rights amount, Viacom18 bagging the digital streaming rights will too now boost their cause and as Elara Capital adds, add to Jio's revenues too.

BCCI Secretary Jay Shah, in a series of tweets, announced on Tuesday that Star India had won the TV rights and Viacom18 bagged the digital rights. Viacom18 also won the rights for Australia, South Africa, and the UK, while Times got MENA & the US, and Rest of the World rights.

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