If there was one person who brought about the biggest change in sports broadcasting in India in 2006, it was Nimbus chairman Harish Thawani. He took the big gamble by acquiring India cricket rights for a whopping $612.8 million and became a broadcaster.
Thawani holds forth on sports broadcasting in terms of the changing landscape, Asia emerging as a major player and the importance of multiplicity of platforms and technologies.
Traditionally the sports media industry has had 3 major segments: full service sports management/marketing agencies (such as IMG, Sport Five, Nimbus Sport) that manage/market rights, sponsorship sales, stage/manage events, provide sponsor services, advise on and/or manage L & M programs, represent athletes etc (many agencies specialize in a sub-set of these); sports television companies that focus on host broadcast production and/or sports program production and syndication (such as Sunset + Vine, TWI, HBS, Nimbus Sport) and sports broadcasters (such as ESPN, Fox Sports, Sky Sports, NEO Sports).
Two trends seem to be emerging in the sports media sector. On one hand there appears to consolidation taking place in both the agency and broadcast sector (more of that later) and on the other hand the lines are getting blurred between the roles with agencies or their parent companies such as Nimbus entering the broadcast sector (with its recently launched NEO Sports) and broadcasters such as ESS pitching for rights on a global basis and consequently winding up acting as rights agencies in countries where they don't broadcast.
Consequently the future may see new role definitions, new competitive stances and strange alliances emerging; and quite possibly competitors in one region being partners in another.
Trends close to home
The importance of Asia is growing. In football it is now the world's second most valuable rights territory. In cricket it is by far the most valuable. Japan, Korea, China and the ASEAN are fuelling unprecedented growth in rights values for basketball, golf, motor sport, tennis, even baseball.
Pan Asian broadcast services are under threat and I think in 3 years will become unviable, as the regional broadcasters gain ground. The rise of the regional broadcasters and/or platform owned sports channels (from Al Jazeera in the Middle East to NEO Sports in South Asia to Astro's Super Sports in Malaysia, to PCCW in Hong Kong and Starhub's Super Sports in Singapore) have encouraged rights holders to stop doing pan Asian deals and opt for country wise deals. The success of the recent EPL auctions on a country wise basis was an example, where ESS lost a substantial portion of the valuable territories to regional broadcasters including China, Singapore, Hong Kong, Thailand and several others.
Multiplicity of platforms and technologies will fetch sports broadcasters in Asia higher share of subscriber revenues. Sports and movies drive pay TV! In the Middle East we have three DTH platforms and three cable companies vying for premium sports channels. In India we have two DTH platforms with two more to come and a very large cable industry, Malaysia's long standing monopoly of Astro will diminish with Telecom Malaysia's massive IPTV foray. Hong Kong has two cable systems. Every major country is developing multiple platforms.
Perhaps in 2-3 years time, we might see a consortium of regional broadcasters emerge, forming a pan Asian footprint but retaining regional autonomy, using the benefits of consortium buying of rights, collective platform negotiation ability, exchange of best practices and technology; and who knows perhaps even cross holdings into an Asian superstructure.
Global management is now happy to work in Asia thereby giving Asian sports broadcasters the ability to merge local skills into global best practices, and compete with the global broadcasters such as ESPN and Newscorp (Fox, Sky, Star)…for e.g. NEO Sports has a Scottish COO, an Australian head of acquisitions, a Polish technology consultant and an Indian CEO!
Cricket : The challenges and opportunities
Cricket needs to evolve. The economic dominance of Asia powered largely by India represents both an opportunity and a threat to the globalization of the sport. Opportunity because the funds now at the disposal of cricket allow it to invest in development across the world. Threat because if the Indian economy slows down or the sports broadcast industry further consolidates, the revenues of the sport will decline. Cricket must reduce its excessive dependency on India. But that is easier said than done.
The sport is essentially a 10 country sport with only 4-5 countries providing revenues worth the mention. The structure of the sport needs to emulate football and we need to dismantle the class system wherein only 10 countries get to play Tests and regular ODIs. In football even India plays internationals despite being ranked below 125! Cricket needs to allow all ICC member countries to play internationals. With the emergence of shorter formats (which itself are the way to the future of the game), like 20/20, it is easier for weaker teams to win against stronger teams occasionally because all that it takes is for 1-2 batsmen to fire for an hour or so!! Such results fuel fan following and the sports grows in new countries.
Lastly cricket needs to understand that its obsessive focus only on revenues (read highest bidder wins!) is perhaps an expensive trade off as the interests of the highest bidder are not necessarily aligned to that of the sport. E.g. broadcasters that win global rights are not necessarily equipped or even wanting to encourage free TV broadcasts or multiple platform broadcasts for their interests lie in exclusivity and the subscription revenues that come with it. Fortunately many cricket boards have begun to understand that and now prefer to engage sports agencies (albeit with a revenue MG) to manage their rights with the mandate to increase revenues but also increase reach, improve branding, procure better sponsorships, develop new markets and assist in development programs through coaching videos etc.
India : Road ahead is clear
With economic growth beating the 8 per cent per annum mark and the next 10 years (if not much more) quite clearly a boom phase, there's seldom been a better time to invest in India. Broadcast industry revenues are growing at 17-19 per cent per annum, spending on leisure including sport by Indians is on the rise, and the advent of addressable systems particularly DTH bodes well for premium pay TV services such as sports and movies.
India : Cricket domination continues
Having said that even the world's largest markets don't support more than 2-3 pay TV sports companies, which meant that my prediction of some months back that from a 6 player market we will see a 3 player market by 2007 has come true even before 2006 is out. DD and Sony are at least for the moment quite clearly out of the cricket rights acquisition market. Zee has taken control of Ten, so its essentially 3 companies now in sports broadcasting each with 2 channels (Neo Sports and Neo Sports Plus, ESPN and Star Sports, Zee Sports and Ten Sports); which should allow all three to operate profitably and given the amazing range of sports product available would give all three enough options to program their channels, except for one catch. The cricket catch.
In a single sport country, this means that Neo Sports with its powerful cricket assets over the next five years, the depth of sports expertise of Nimbus behind it and powered by Star India's distribution leadership will have a smooth side. As will ESS with its long standing experience, market franchise and reasonable cricket assets now strengthened by the ICC package. The challenge for ESS will be that in 2007 some if not all of their previous cricket assets start expiring and that means an uncertain path ahead. If renewals are hard to come by, they will have to wait for 2011 when the next World Cup is staged to make a strong come back.
India: Domestic sport
I had said in early 2006 that this would be the year of domestic sport in India. Hopefully the numbers bear me out. BCCI commenced 72 days a year of domestic cricket coverage and extensive re-branding and re-formatting. Even with the start-up phase distribution of NEO Sports it rocketed to the No 1 sports channel position in the TAM data in its first week itself with the broadcast of the domestic Challenger Series, with peak TVRs of 9.2 in one match! The Duleep Trophy final achieved peak TVRs of 2.7 on a weekday despite it being a 5 day match format! Zee Sports broadcast of Indian domestic football has also shown consistent results. I think by mid 2007 the ratings of domestic cricket will start rivaling Test match TVRs consistently and weekend One Day matches in the domestic Super League could be the killer app for NEO Sports!
India: Other Sports
Hockey is dead. It's now official. It received a quiet and indecent burial at the recent Asian Games where India did not make it to the semis and no one shed tears.Tennis, golf and motor sport plough on their elitist path into Indian homes that would scarcely know the difference between a birdie and a break-point. I can hear howls of protest from the same elitist benches and to them I would say walk down (as I have) the streets of Jalgaon, Coimbatore, Ajmer or even Hyderabad and ask what a birdie is. The range of cute or crass answers might surprise you.
That leaves football and to me the dark horse badminton as the 2 sports that India can and I think will develop a TV loyalty to. Football because it has a 3-4 state base, and the western and southern metros are beginning to take up to it (on TV I mean) and also quite simply because it is the true world game. Which is why at NEO Sports it already broadcasts live the Bundesliga and the Italian Serie A.
And Badminton because it is India's largest participation sport after cricket. It is extensively played in India and easily understood. It has never been adequately programmed on sports channels and not enough has been done to market it. NEO Sports plans to change both of that starting early 2007.
India: Sports entertainment
When Nimbus Sport did the Extraaa Innings production for Sony during the 2003 Cricket World Cup, only Nimbus Sport and Sony believed that merging sport with entertainment will lead to a serious opportunity to build a viewer franchise. It made the purists cringe (and rightfully so) but it raked in the TRPs and the revenues.
Some months back I had announced that we see sports entertainment as the big hole in the market and NEO Sports Plus will launch a slew of sports entertainment shows by 1st quarter 2007. ESS was quick to follow with its own announcement and the good news is that they've already started 2 shows, both of which are showing very promising ratings.
I think NEO Sports Plus will do 70+ GRPs a week by mid 2007 off the back of sports entertainment and its focus on football and badminton.
Regulatory
So now TV is in the PDS, controlled prices et al (sorry administered prices). Is it constitutional? Are world class premium channels to be sacrificed at the altar of populism? These and many other questions will get answered in the coming months. Personally I believe that price caps will not go for at least 6 months, but in the interim a multi tier price cap regime may emerge, with Rs 5 as cap for most channels, Rs 10 as cap for GE and movie channels and Rs 20 for sports channels.
On anti-siphoning the Supreme Court of India has ruled in the Ten Sports case. Many believe that in India where cable is cheap and DTH is also cheap and covers all cable dark areas, there is no grounds for anti-siphoning regulations. Moreover cable reaches nearly 65 per cent of all TV homes now.
But if anti-siphoning laws do get enacted, they need to consider some rather serious issues:
1. Is DD a terrestrial broadcaster or cable/DTH? ODI matches can't be shared with DD under the guise of it being a public free TV terrestrial broadcaster, and then DD merrily supplies the signal to cable and DTH killing the pay TV business!
2. A use or lose policy with strict timelines and license fee rationale will need to be adhered to by DD as it is in many countries where antis-siphoning rules are in force.
3. DD must encrypt its signals to their transmission towers. No where in the world does a free TV broadcaster send unencrypted signals via satellite.
4. If the anti-siphoning rules are truly meant to for public service, DD must refrain from commercial exploitation of the feed and agree to carry the rights holders feed with commercials. And DD must not decline other sports the right to be broadcast on DD National, when events of global stature and/or Indian interest are being staged.
