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When Star India in September 2017 won the global broadcast and digital rights for the Indian Premier League (IPL) with a whopping $2.55 billion bid, the company assumed it had hit a cricket century.
However, while gaining the world’s richest domestic Twenty20 competition, the Rupert Murdoch-owned company has been under fire from various quarters, including billionaire Subhash Chandra and India’s broadcast ministry. They either want a piece of Star’s pie or for it to lose the rights altogether. At stake is a key chunk of India’s $20 billion media and entertainment business.
Star’s potentially biggest threat comes from the country’s broadcast minister Smriti Irani, a popular TV actor-turned-politician who became a household name through several shows on Star before the company pulled the plug on them.
Irani’s ministry proposed late last year that the IPL, whose viewership has been rising, be declared a “sport of national importance”. Under the law, that would require Star to share the uninterrupted live feed of the IPL with the national TV service Doordarshan or DD. (DD, unlike the channels of private companies like Star that viewers have to pay for, is free.) The idea is that if there’s a sport of national relevance then it should reach as many viewers as possible, and the national broadcaster has the widest reach.
The ministry’s must-share list currently includes the Olympics, Asian Games, all official one-day cricket where India is playing and the men’s and women’s singles Grand Slam finals. The list is reviewed sporadically, and the last time, in January 2017, the IPL was not on it. Live feed apart, the law stipulates that the broadcaster will also have to hand over at least 25 percent of the ad revenue to the government. For cash- and content-starved DD, this would be a quick fix.
The proposed move has rattled business sentiment. Critics say it clashes with Prime Minister Narendra Modi’s stance since coming to power in 2014—that he wants to make India an easier country to do business in. “This proposal is almost like a private business turning public [state-owned],” says Girish Menon, partner at consultancy KPMG. “The ability to plan your business gets affected because of government intervention—and how do you compensate an investor for that? It’s inconsistent and unfair to existing rights owners.”
Adds another global-consulting analyst who declined to be named, “This is a private league. It’s people playing cricket against each other in a stadium. How does that become of national importance? And how has it not been of national importance for the past ten years of its existence? You can’t judge national importance just because the viewership has increased.” (Ministry officials did not respond to several requests for comment.)
Last year, Sony Pictures Networks India (which had the broadcast rights for IPL’s initial decade until it lost them to Star in September) raked in a reported $200 million in ad revenue for the 59 matches that were played between April 5 and May 21, roughly $9,000 for a ten-second spot buy (title sponsors paid close to that per second).
Sony beamed the matches across six channels to 411 million people, according to data by the Broadcast Audience Research Council, up by 10 percent from the previous year. KPMG’s Menon says: “Cricket rights are extremely valuable. They ensure subscription revenues as sports channels are priced pretty high and every cable operator will have to offer them, and they bring in massive revenues from advertisers.”
It’s not clear the ministry’s proposal will go through, but if it does, Star could lose out on at least $500 million in subscriptions, a person familiar with the company’s concerns told Forbes Asia. That’s assuming a leakage of just 10 percent of viewers to DD. “Everyone is talking about the loss of ad revenue, but the bigger hit will be to subscription,” this person said. “Because if you can watch it for free on DD, why will anyone pay for a Star Sports channel? The damage this can cause is huge.” Star itself did not offer comment. (Unrelatedly, the company is to be part of an announced sale of Murdoch’s 20th Century Fox assets to Walt Disney Co.)
The pressure is high as the IPL season is around the corner.
Even before the government bazooka, Star was trying to put out fires ignited by one of its fiercest competitors, Zee Entertainment Enterprises, whose owner Chandra is also a member of India’s upper house of Parliament.
(This story appears in the 30 March, 2018 issue of Forbes India. To visit our Archives, click here.)