piinku1
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Vadirocks said:
Read the following article(very old).Then tell bcci rights are costly or not-
Glorious or uncertain, ESS to check out on cricket rights
MUMBAI: If the Indian television industry were the Sensex, cricket would clearly be its most volatile stock - a great gamble that could either be a multi bagger or end up as a dud penny stock for those who choose to invest in it. And so the question that everyone in the television industry is debating is whether the Rs 7,000 crore that ESPN-Star (ESS) has paid to stay, worth it?
ESS has paid Rs 5,000 crore as the acqusition cost for the ICC global cricket rights. However, most industry observers believe that it will have to spend an additional Rs 2,000 crore on production and marketing costs as well. Here's a look at how ESS will have to try and recover its costs.
It has two World Cups amounting to 102 days of cricket, three Champion's Trophies which account for a futher 45 days of matches, and three 20:20 championships, which can be approximated to 22 days of cricket (each 20:20 match is roughly equivalent to 40% of the total inventory of a normal ODI match).
Other events which it has rights to such as the under 19's, the Women's World Cup are unlikely to contribute any significant revenue.
All in all, ESS has a grand total of 169 days over the next 8 years to try and recover its investment of Rs 7,000 crore. Do the math and it means that on an average it has to make Rs 42 crore per day just to break even.
The math seems even more daunting when one looks at how the company will try and recover its money. Assuming that about 50% of the revenues will be recovered from advertising revenue, it would mean that the company has to get advertising worth Rs 22 crore on each of these 169 days.
So on an average an advertiser who wants to buy 300 seconds would have to fork out almost Rs 68 crore which will mean a steep mark up from the upcoming World Cup in 2007 where the going rate for 300 seconds is roughly Rs 25 crore.
While rates for the World Cup have doubled from the 2003 World Cup to the one in 2007, it seems unlikely that even with media inflation that the rates will triple.
Says Rohit Gupta, exective vice president, Sony Entertainment Television, “Considering we have sold the advertising for the last two World Cups, the current possible outlays undoubtedly places a tough task on ESS shoulder. Also, the second World Cup which is taking place in Australia is traditionally not advertiser-friendly due to the matches beginning in the wee hours.”
The balance 50% will have to be recovered by the international rights as well as distribution revenue. ESS is likely to benefit by the onset of pay TV regime, wherein subscription revenue is likely to increase significantly from the current 20%.
While it is not possible to definitively say that it will reach a 50:50 model, the revenues are likely to grow significantly given that internationally, 70% is contributed by subscription and 30% by advertising.
Advertisers whom ET contacted were wary about commenting on the issue, but nevertheless stated that cricket is a huge engagement platform for them and one would have to gauge at that point of time to see if it made sense to pay a premium for these matches.
But perhaps the biggest risk is India's performace, which can never be predicted 24 hours from their last match and most defintely not four or eight years down the line. That apart, four years down the line, many of the big draws on the Indian cricket team like the Tendulkars, Ganguly, Laxman and Dravids, Sehwag will be gone.
Source: The Economic Times
