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Home»Broadcast»Reliance, Hotstar, and the second wave of cricket broadcasting
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Reliance, Hotstar, and the second wave of cricket broadcasting

By mulegeek-March 19, 2022No Comments12 Mins Read
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A paid 🔒 weekly emailer that explains fundamental shifts in business, technology and finance that happened over the last seven days in India. In a way you’ll never forget. Someone sent you this? Sign up here

Good Morning Dear Reader,

 

First off, thanks for all the lovely messages you sent me when I was unwell last week. My sinuses are finally liberated, and my eyes and nose no longer drip-irrigate my face when I look at a laptop screen. Once again, I appreciate your understanding. And without further ado, let’s jump into today’s edition, which is about something that’s close to my heart—cricket. 

 

For a generation of cricket fans, their earlier memories of the game can be traced back to a seminal event which transformed the sport in Asia. 

 

This very week, 26 years ago, the 1996 Wills World Cup finally came to an end. 

 

And cricket in India was never the same again. 

 

The 1996 World Cup was special for many reasons. It was the first one hosted between India, Pakistan, and Sri Lanka. India’s liberalisation had just happened and cricket’s power centre was starting to shift towards Asia, away from England and Australia. And for the first time ever, this was the moment when cricket ceased to become a sport, and became a spectacle. 

 

A lot has been written about this event, but the one that captures this shift comes from the most unlikeliest of sources—an American Marxist named Mike Marqusee and his book called War Minus the Shooting. It’s one of my favourite cricket books and I can’t recommend it highly enough. 

 

The reason why you must read it is because it’s not just a book about cricket. Marquesee uses the backdrop of the 1996 world cup to talk about several things that were happening in India at the time. Globalisation. Nationalism. Commercialism. Politics. It’s written as a travelogue as he goes from city to city watching games, all while making sharp observations about the people who run cricket, those who watch it, and advertisers who promote themselves during the matches. And he does it with humour, detachment, but also a great deal of respect. It’s really unlike any cricket book ever written. 

 

But mostly, the book is about money and cricket. 

 

And one of the stories Marqusee talks about is cricket broadcasting rights. 

 

In the mid-1990s, the people who ran the sport realised that they could make a lot of money by selling broadcasting rights. Until then, all cricket matches were broadcast in India by Doordarshan, the state-run broadcaster, which didn’t pay for it. In fact, in 1992, Doordarshan wanted money from the BCCI (Board for Control of Cricket in India) to telecast matches on their channels. This is because for all practical purposes, broadcasting in India was a monopoly run by the state. 

 

All that had changed by 1996. 

 

For the first time, cricket broadcast rights were sold to a company called WorldTel, which in turn had sold India rights to Doordarshan for US$4.7 million. At the time, this was the highest amount that Doordarshan had paid for any event. However, Doordarshan defaulted in its payments to WorldTel. So, in December 1995, WorldTel cancelled the contract and sold the Indian rights to a younger, private company called Star TV, setup by Rupert Murdoch. 

 

Doordarshan was furious. The idea that cricket could be telecast in India by anyone other than the state-run broadcaster was ludicrous. It threatened to cut off access to the satellite uplink facility in India from Star TV, which at the time was also exclusively state-owned. And so WorldTel, StarTV, and Doordarshan ended up in court. The argument made by Doordarshan was that Star TV was a small, minor entity in India, which was watched by just 10% of Indians, who were mostly affluent. On the other hand, Doordarshan claimed to reach over 60% of India. 

 

Star TV may have the rights, but Doordarshan had the market. 

 

This also put politicians in a difficult position. On one hand, Star TV had paid for the rights fair and square, and to take it away from them wouldn’t do much to bolster investor confidence as a place to do business. However, on the other hand, if the biggest sporting event in the country was watched by just the elites, then they’d have voters to answer to later. 

 

With just days to go for the World Cup, the situation was tense. 

 

Many believed that it was possible that the 1996 World Cup may not be screened in India at all. 

 

In the end, a solution was found, and it marked the first wave in cricket broadcasting history. That was when Star TV exploded into our homes. 

 

Twenty six years later, next week may mark the beginning of the second wave as the BCCI looks set to start inviting bids for the Indian Premier League (IPL)—now one of the biggest sporting events in the world. 

 

Except this time, the ones who may lose will likely be Disney+ Hotstar, the current owner of the broadcast rights that were earlier owned by Star TV. 

 

Let’s dive in. 

Reliance has a plan to usurp Disney+ Hotstar

 

It sounds a bit crazy, but back in 2017, there was a perception that the IPL, the world’s biggest cricket event, had hit its limit. While its brand-value had grown since its inception in 2008, it hadn’t exactly skyrocketed. 

 

But something changed post-2017. 

 

And part of the credit for it has to go to Disney+ Hotstar (at the time Hotstar), which started live streaming the game on their mobile app. Overnight, millions of Indians could watch it on their mobile phones, subsidised by ads and cheap data prices.
 

Hotstar took a fairly big risk to get this done. Back in 2017, when the BCCI invited bids for broadcast rights for the next IPL cycle (2017-2022), Star India made a consolidated TV + digital bid of US$2.55 billion—a record for cricket rights globally. Several players like Facebook, Airtel, Sony, and even Reliance Jio had bid only for digital rights or broadcast rights, but Star Indian outbid them all and made the sole consolidated bid, eventually winning the auction. 

 

At the time, the CEO of Star India, Uday Shankar, explained the rationale behind the monstrous bid. 


Quote

“Our strategy was very simple. We felt we are the only bidders, who have a presence in TV broadcasting and also a robust presence on digital platforms (via HotStar). We have a good distribution of Star Channels internationally and we want to roll out HotStar globally. We thought IPL could be a device for that.

 

So we felt that instead of putting money on one or two segments disproportionately, individually, if we got only one right, the value that we put would have been a reflection of our reluctance to own one piece. So, we were prepared to either get everything or lose everything whereas others focused on specific areas of interest. We wanted to get India as well as global rights so that we can unlock a better value for our business. Even if we have been marginally off in any of the segments we would have lost it”

Uday Shankar, CEO, Star India, 2017, Livemint


While Shankar’s bold winner-take-all strategy might have helped him take everything, it’s unclear if it helped Star actually win. The first problem was that the IPL was just a six-week long event every year—even after combining television and streaming revenue from ads and subscriptions, Star was struggling to break even. According to a story written by my colleague Munsif last year, the total annual revenue collected was somewhere around Rs 3,000 crore (~US$395 million), which was way below what Star had paid to secure the media rights. 

 

Primarily, the people who started asking the hard questions were Disney, which had acquired Hotstar just after the IPL deal was completed. 

 

By 2020, something had to give. 

And it did.


As Disney started to push its weight around, there were a number of high-profile exits at Star India. One of the most discussed has been that of Uday Shankar in 2020. The former CEO of Star India was the driving force behind all its ambitious bets in sports. Not just in cricket, but also other sports like kabaddi, football, hockey, and badminton. For instance, in 2015, Star India bought a 74% stake in Mashal Sports, which owned the Pro Kabaddi League, for an undisclosed sum. It now effectively owns one of the most-watched sports leagues in India.

 

However, Shankar decided to retire a year earlier than originally planned after it became clear that Disney wasn’t happy with his style of going all out in acquiring licensing rights without worrying much about the costs involved, according to the former executive.

IPL cricket or not, Disney+ Hotstar has a plan B, The Ken


At some level, one can understand why Disney was getting nervous. It had just launched Disney+ with the intention of making it into a streaming giant powered by subscription revenue. Hotstar, meanwhile, was a streaming service monetising via advertising, with little focus on the subscription business side. 

 

But there was another reason why Disney was nervous. The deal had an expiry date. Hotstar had rights to broadcast the IPL for five years. After that, there would be fresh bidding for them all over again. Disney didn’t want to be stuck in a position where it was over-reliant on the IPL, and began the process of diversifying itself by adding other kinds of content to its platform. Don’t forget, Disney prides itself on being a content powerhouse—primarily by owning the content, not by temporarily leasing it. So, as the date of expiry approached, it wanted to build towards a future where it may not own the rights for the IPL. 

 

Next week, as the BCCI invites bids for the broadcast and digital rights for the IPL for the next five years (2023-2027), Disney+ Hotstar’s exclusivity may finally come to an end. 

 

Several contenders are keeping an eye out. Amazon. Facebook… 

 

But one, above all, which has been quietly building a platform for a sports broadcast empire. 

 

I’ll let you take one guess who it is.


The Ken has learnt that Reliance has already started putting together a sports broadcast team across its various subsidiaries. It has hired a couple of senior executives from Star India in the last couple of months—Anil Jayaraj, former executive vice president and head of sales for Star Sports, and Gulshan Verma, former senior vice president and head of advertising, Disney+ Hotstar. “I heard they’re also actively recruiting people in marketing, sales, and legal,” said a sports broadcast professional. All sources The Ken spoke to for this story requested anonymity as they either work for Reliance or hope to do so.

 

Of course, winning any of the three cricket rights is hardly a given, even for Reliance. Disney is unlikely to give up a cash cow so easily. It also has multiple sports channels and the most-subscribed video streaming platform in India in Disney+ Hotstar, which has streamed the IPL since 2015.

 

Viacom18, meanwhile, doesn’t have a single sports channel in its network of over 50. The company has dabbled in sports broadcasting, including buying the rights for a tri-nation cricket tournament called the Nidahas Trophy in 2018, but the matches appear on its music and entertainment channels like MTV, VH1, and Colors. Reliance could also come up against legal barriers if it bids for the IPL, since it owns Mumbai Indians.

 

Reliance, though, has one big weapon in its arsenal, which it hopes will help it get across the line: India’s largest telecom network, Jio.

No sports channel, no problem: How Reliance is building a sports broadcast empire, The Ken


Think about how it makes sense for Reliance. The largest telecom network in the country, combined with the largest sporting event, combined with a powerful television network. If anybody looks set to win this rights cycle, it’s them. 

 

Oh, and there’s one more thing. 

 

A few weeks ago, reports emerged that a company called Lupa India was in talks to make a significant investment in Viacom18, Reliance’s television network. 

 

Do you know who owns Lupa India? 

 

Two people. 

 

One of them is James Murdoch, the son of Rupert Murdoch, the person who owned Star India when it wrestled the rights to broadcast cricket into our homes away from Doordarshan. 

 

The second owner is the architect of the streaming revolution himself—Uday Shankar, the former head of Star India. 

 

Now twenty six years later, both of them, along with Reliance, may be the ones set to usher in the new era.

Take care.

 

Regards,
Praveen Gopal Krishnan

The Nutgraf by The Ken

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The Nutgraf is a paid weekly emailer that explains fundamental shifts in business, technology and finance that happened over the last seven days in India. In a way you’ll never forget.

 

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