ITV

Category: Sports

  • ‘We are not in talks with anybody to sell stake’ : Rajasthan Royals CEO Raghu Iyer

    ‘We are not in talks with anybody to sell stake’ : Rajasthan Royals CEO Raghu Iyer

    Indian Premier League (IPL) franchise Rajasthan Royals has had a topsy-turvy journey in the last five years. It had a dream start when it won the inaugural IPL trophy under Shane Warne. Another high point in its five-year journey was when British-born businessman and actress Shilpa Shetty‘s husband Raj Kundra bought 11.7 per cent stake for $16.8 million, valuing the franchise at $140 million.

     

    Just when everything was going hunky dory, the BCCI threw a bombshell by terminating its franchise contract with Rajasthan Royals for breach of agreement. That was followed by a prolonged legal battle that ended in the courts reinstating the franchise in the IPL. That‘s not the end of it. The company‘s Foreign Direct Investment (FDI) was rejected by FIPB several times. Besides, it was under the scanner of government agencies for alleged Fema violations.

     

    However, Rajasthan Royals has put all that behind it and is now focused on building a strong sporting franchisee. Rajasthan Royals CEO Raghu Iyer believes that the best way to do this is by playing its own brand of cricket so that a fan loyalty is built over the years.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, Iyer talks about the challenges that IPL franchises face and how Rajasthan Royals can grow to the next level.

     

    Excerpts:

    Q. The Rajasthan Royals franchise was bought for $67 million in 2008. What would be its estimated worth today?

    A. I don’t know what it would be valued at. But there are figures varying from $150-200 million.

    Q. Are the promoters considering selling stake?

    A. There are no talks with anybody at this stage. We are focused on delivering a very good product.

    Q. There have been allegations about lack of adequate corporate governance and transparency. Do you feel there is scope for improvement?

    A. If you are asking whether we lack in corporate governance, I would completely disagree. I would say that we were probably the only guys who went out and voluntarily made disclosures, including when we applied to the FIPB. Corporate governance is top priority for us and we would like to believe that we have ticked that in the box.

     

    There might have been some procedural misses here and there, which happens in any business. This is something that we want to address. When income tax and other government authorities ask questions, then you realise that you might have missed a couple of things here and there. We are being advised by top professionals.

    Q. Is it fair to say that the BCCI would not have terminated the franchise had there been more transparency?

    A. I would like to believe that we were transparent and so were the BCCI. The reason that the whole thing came up was something I don’t want to comment on as it is subjudice.
    ‘There will be some revenue growth this year but not exponential. Though more brands are coming in for sponsorship opportunities, their outlay is not as high as expected‘

    Q. The enforcement directorate has slapped a Rs 1 billion fine on the franchise. Have you appealed against this decision?

    A. Yes! We have appealed to a tribunal in Delhi.

    Q. What is the gameplan to grow the franchise’s brand value going forward?

    A. You have to focus on the product to grow the brand value. The quality of cricket the team plays is your product. We have won only three or four less games than the Chennai SuperKings.

     

    As long as you keep playing cricket well, the brand value will take care of itself. Obviously you add to that different things like licensing and merchandising.

    Q. What sort of revenue growth you expect this year?

    A. There will be some growth but not exponential. This will be impacted by the slowdown. The key is to go out and look for far more opportunities and not wait for them to knock on your door. You also need to be astute in terms of how you spend. That is what the franchises are trying to do.

    Q. What impact is the economic slowdown going to have in terms of revenue generation for the IPL?

    A. I would be lying if I said that it has not had an impact. There are more brands coming in for sponsorship opportunities. We have 15 sponsors and partners, including local brands like the State Bank of Jaipur and Bikaner. But the outlay the sponsors are putting in is not as high as expected. Earlier if a deal with a sponsor was worth say Rs 150 million, will he renew it for Rs 200 million? Probably not! But then you will get five smaller local guys who are each willing to pay Rs 10 million. So you will have to look at playing the volume game.

    Q. Is the situation as bad as 2009 when revenue fell by over 10 per cent for franchises?

    A. No! 2009 was a different situation. There was a complete global crisis going on. Currently that is not the case.

    Q. Who are the sponsors that are on board?

    A. We have prided ourselves on having a team that delivers value to sponsors. The only way that you can judge whether that is true or not is to see if sponsors keep coming back. The top notch brands have kept coming back like Ultratech (which remains the lead sponsor), Supertek, Garnier, Valvoline and Tata Consultancy Services.

     

    We ensure that what sponsors and partners want out of the IPL are met. We play our part in that whole thing. We have a fantastic client servicing team that ensures that this happens. We offer innovative products like investing in digital content. You have to give sponsors more value.

    Q. Could you talk about the YouTube initiative?

    A. The YouTube channel of ours has clips and behind the scenes stuff that cricketers do. Fans find this exciting. Is there a way in which sponsors can tap into that and do something innovative? Yes! Everybody acknowledges that digital will grow and be the medium of the future. Digital allows you to do different things in a cost effective manner.

    Q. What are the licensing and merchandising efforts made this year?

    A. Besides flags, T-shirts and bells and whistles, we are looking at an innovative merchandising option. This is about grassroots Rajasthan. Licensing and merchandising is a long term play. It takes four to five years and will depend on making sure that there is year round visibility for the franchise. Once that happens, licensing and merchandising will take off.

    Q. In terms of marketing, there doesn‘t seem to be much activity till two weeks before the IPL starts. Is two weeks enough of a time frame to generate fan interest?

    A. As a call to action, two to three weeks is enough. People know about the IPL already.

     

    We also look at innovative opportunities that come our way. Earlier this year we associated with the Jaipur Literary Festival and organised matches there. When important events happen in your city, you need to find a way to participate in them. But for focused marketing, two to three weeks of activity is enough.

    Q. Reports indicate that the IPL franchises are increasing ticket prices. Isn‘t this tricky given the economic slowdown?

    A. We haven’t increased the basic ticket prices. The hospitality prices have gone up. But we have enhanced the hospitality product offering so that the viewing experience is much better. We are negotiating with a five-star hotel for different kinds of food.

    Q. Are the Rajasthan Royals being remembered as a brand having famous faces like Shane Watson?

    A. The loyalty factor from our perspective is to ensure that fans remember the brand of cricket that we play. We have achieved this. We remain the underdog team but we have wooed fans by the quality of cricket we play. Hopefully, retention of a few players will be allowed.

    Q. Is it a good idea to keep having auctions every few years?

    A. There may be some confusion about who plays for whom, but it will even out over time. The key is that the brand of cricket that the different IPL franchises play has to be distinct. So the teams that are selected will reflect the brand of cricket played by that franchise.

     

    You need auctions so that the league remains competitive. Team composition strategies have to be built to reflect the team personality. There are also transfer windows which ensure that gaps can be filled.

    Q. The IPL will have a new team owned by a television media company. What impact will this have?

    A. It is a major development. When they (Sun TV) go out and sell sponsorships, there will be cross synergies that they can offer.

     

    From the league’s perspective, it is cool that franchises like this will use their platform to advertise their team. It means more visibility for the IPL. The challenge, though, is that the Hyderabad team is still associated with ‘Deccan‘. So a complete re-branding exercise will have to be done by Sun TV.

     

  • ‘Our goal is to make UFC the No. 2 property for Six after IPL’: UFC Chairman and CEO Lorenzo Fertitta

    ‘Our goal is to make UFC the No. 2 property for Six after IPL’: UFC Chairman and CEO Lorenzo Fertitta

    Founded in 1993, the Ultimate Fighting Championship (UFC) has gone on to become the largest Mixed Martial Arts brand in the world. Having established itself in markets like US, Canada, and Brazil, the UFC has made its first big push in India through a broadcast deal with Sony Six.

     

    Apart from having a television presence in the country, UFC also plans to build the sport with on-ground activities and talent hunt initiatives. Its ultimate aim: to make UFC the second biggest property for Sony Six after the cash-rich Indian Premier League (IPL).

     

    Indiantelevision.com‘s Ashwin Pinto caught up with UFC Chairman and CEO Lorenzo Fertitta to find out the organisation‘s plans for India and the strategy it will be following to grow the sport in the country.

     

    Excerpts:

     

    Q. When you bought UFC in 2001 what was the aim and to what extent has this been achieved?
    A. At that time what we wanted to do was create a combat sport organisation that had some structure and brand around it. We looked at boxing as we have always been boxing fans. Big fights occur in Las Vegas.

     

    But what we found is that boxing was very fragmented. There was no brand and structure which a lot of times prevented the sport from putting on the fights that fans wanted to see. So we saw an opportunity in the UFC to take combat sport to a new level because there would be an organisation, structure and a brand.

     

    Our vision was to take the UFC from a niche sport to a global brand. We wanted to create a great entertainment product for the fans. We have accomplished our aim. We are the largest combat sport organisation. We are broadcast in 150 countries to a billion homes in 22 languages.

     

    Q. You once said that when you bought UFC it was the worst brand in the US because of all the negativity. Could you talk about the strategy followed that helped the company turn things around?
    A. Firstly we developed rules and regulations that we now call Unified Rules of Mixed Martial Arts. We worked with various state governments to have them recognise those rules and UFC as a sport. The third thing was really promoting the athletes and presenting them as being world class. The previous owners really focussed on the violence and spectacle of the sport.

     

    We focussed on the athleticism of the fighters and the competition. The aim is to have athletes compete in a safe way. The sport is a combination of martial arts like Judo, Jujitsu, Boxing and Taekwondo.

     

    Q. As per research how is the UFC brand perceived in India and globally today?
    A. Globally we are looked at as the market leader in mixed martial arts. We are seen as the premier organisation. In India it is too early to tell. I don’t think that there is a lot of awareness in India about mixed martial arts. I think that people are intrigued about the success that we have had around the world. The question is can we replicate that success here?

     

    Q. What would you say is your USP vis-a-vis other events like Bellator and boxing?
    A. Relative to other sports, what we do is put on fights that fans want to see. All fighters are contracted by us. It is easy to put matches together. Our aim is to never have a mismatch. So we put fighters in an event who are evenly matched. Most fights don’t go to a decision. Matches are fast paced and you have outcomes that are very definite and defined.

     

    Boxing is one dimensional. In the UFC, on the other hand, you can grapple, kick, punch and put the opponent in a submission hold. It is interesting from a strategic standpoint and more fast paced. That is why younger people like it. In 2006 UFC overtook boxing as the biggest provider of pay per view events. Last year in November over nine million Americans watched a heavyweight fight on Fox. Bellator would be lucky to get 90,000.

    ‘We liked the approach that Sony was going to take. We also liked being affiliated
    with the IPL. And we wanted to be on a sports channel‘

    Q. So is MMA more mainstream compared to a decade ago?
    A. Without question! In the markets where we have a presence in, it is a mainstream sport. We produce more than 30 live events in a year.

     

    Before we acquired the UFC mixed martial arts was a fringe attraction, largely unregulated and unable to appear even on pay per view platforms. All that has changed.

     

    Q. MMA like soccer is a sport that works everywhere, unlike cricket which works in some markets, NFL which is only present in the US and baseball which is only present in the US and Japan. Is that because viewers can identify with the aggression and competitive nature of the fighters?
    A. I think the reason is that it is simple and easy to understand. A lot of other sports have rules. If you have not grown up watching cricket or the NFL, you will never understand how the game is played.

     

    When you put two athletes in the Octagon and make them compete everybody gets it. It is not hard to explain.

     

    Q. Is there an entertainment quotient in the UFC or is the focus just on the sport?
    A. The way we present the product is very important. We spend a lot of money putting on a big show. At the end of the day it is the fighters, the action and the quality of the fights that sells. We broadcast all our events in HD. We have aired some events in 3D. We look at emerging technologies to make the viewer experience better.

     

    Q. What revenue growth does UFC expect this year and how much comes from television fees?
    A. Sixty per cent comes from television fees. Then you have live ticket sales. Beyond that you have sponsorship.

     

    The US accounts for over half our revenue. Canada would be second, Brazil third and Europe next.

     

    Q. Which are the top three markets for UFC?
    A. The US is number one. Canada is number two and Brazil is number three. We see a lot of similarities between Brazil and India. Both are emerging economies. There is a growing educated class of younger people who are looking for a new and exciting sport. We think that is what the UFC represents.

     

    Q. How big is Europe?
    A. Europe is big, particularly the UK as well as the Baltic states like Sweden and Denmark where the UFC is very popular. We are just starting in Italy, France, Spain and Germany and we plan to bring events to
    Central Europe sometime next year.

     

    Q. Where does Asia fit in the scheme of things?
    A. 2013 and 2014 are important years for us in Asia. We did our first event in February in Tokyo and it was a success. Our second event was in Macau in November. Then we want to do events in the Asian capitals like Shanghai, Singapore, Taipei, Hong Kong and Kuala Lumpur.

     

    Q. How did the deal with Six come about and what are the terms of the deal?
    A. This is a four-year deal. Hopefully we will be able to extend it and make it a long term relationship. Our goal is make UFC the number two property for Six after the IPL.

     

    We came to India two years ago. We started looking here and have worked for a long time. We have had interest expressed from every major media company here. We have had discussions with companies like Zee, NDTV and Star.

     

    We liked the approach that Sony was going to take. We also liked being affiliated with the IPL. And we wanted to be on a sports channel.

     

    Q. What is the gameplan to grow the UFC brand in a country where WWE is hugely popular?
    A. When we started the UFC, WWE was popular in the US. But people figured out quickly that while we were real, the WWE was fake. We were, thus, able to migrate a lot of fans over to the UFC.

     

    In India, we see the same thing happening, particularly with the younger demographic base. Once they see how exciting the UFC is and that it is real, they will migrate from WWE.

     

    The gameplan is firstly using the distribution of Six and airing live events. They also use our library to educate fans on what is going on in the UFC. Then there is the reality show ‘The Ultimate Fighter’.

     

    This will develop Indian fighters and is the most important thing for us. In order to be successful, we have to have Indian fighters that can compete at an international level. We appreciate Sony‘s dedication in producing ‘The Ultimate Fighter: India’ with us.

     

    Q. Could you talk more about Ultimate Fighter?
    A. This is a reality show which is in its 17th season. We have done versions in the US, Australia, Brazil and the UK. It is about 16 young fighters who live in a house together. They train together. At the end of each episode there is a fight and the winner progresses. The event takes place over 13 weeks.

     

    The Indian edition takes place next year. The two semi finalists fight together to determine who gets the UFC contract.

     

    Q. When does the first season kick off?
    A. We are looking at a time frame of September next year. We will spend the next six months looking at different fighters around the country and do casting calls. In terms of venues, Mumbai and Delhi will be important. We will be looking at facilities that a city can provide.

     

    Q. How did the idea of doing reality television come about?
    A. When we bought the brand, it was tarnished. People associated it with violence. We knew that we needed to do something that was different that explained why it was not about violence and why these athletes were so special.

     

    We created the reality show so that people were not just watching a fight. They were watching how these guys lived, interacted, what their background was, their family life, and how they train. It helped change the perception of the sport. This show has changed the face of mixed martial arts.

    ‘When we started the UFC, WWE was popular in the US. But people figured
    out quickly that while we were real, the WWE was fake. We were, thus, able to migrate a lot of fans over to the UFC. In India, we see the same thing happening, particularly with the younger demographic base‘

    Q. Is there cross viewership happening between UFC and WWE as athletes like Brock Lesnar and Ken Shamrock have competed in both?
    A. There is some cross viewership. Our TG is males 18-34. WWE skews a little bit younger – teenagers. I see UFC’s appeal spreading across India including in the wrestling belts in the rural areas.

     

    Q. Has UFC considered launching its own TV channel?
    A. Not yet! We felt that we needed to make an investment and grow the brand before making this move.

     

    Q. What growth has there been in the amount of content UFC offers in the past three years?
    A. We have increased it significantly. A lot of this is driven by our television deal in the US with Fox. We went from being on a one cable channel which was Spike TV to being on the Fox platform which includes programming for four networks that they own. Our programming has tripled year on year.

     

    We felt that there was a demand that people wanted to see more fights. We wanted our product on multiple platforms in the US. We are on a free to air channel Fox, on a cable channel FX and on a smaller sports cable channel which is called Fuel TV. Hitting every tier within the US media market was important to help us continue to build our brand.

     

    Q. What challenges does the economic slowdown pose for UFC?
    A. We have been fortunate that we have not been affected very much by the economy. The reason for that is that no matter how bad things are, people still want to consume entertainment. All sports whether it is
    the UFC, NFL, NBA are doing well.

     

    Q. Sports entertainment outfits like Super Fight League have come in. How do you think it will push the sport in the country?
    A. It will boost popularity. Competition is a good thing. We come in as a premier organisation which if we succeed will help other leagues.

     

    Q. There is a view that UFC has followed NBA’s approach to grow which lies in buying rival promotions. Is that a fair assessment?
    A. I don’t know that we are following anybody’s strategy. We have over time acquired a number of leagues to get their athletes over to the UFC. We also got their library. Strategically it made a lot of sense. The biggest acquisition was Pride Fighting Championship which was based out of Japan.

     

    We also bought Strikeforce which was based in the US. Female fighters take part here. We could license these rights to Six as well. There is potential for that. As all these athletes are under one company it allows us to put on fights that fans want to see.

     

    Q. How do you view new media platforms like Internet and mobile?
    A. Our core customer base is very proficient online. They consume a lot of their entertainment on YouTube. They are on Facebook and Twitter; it is important to our strategy. We have a large portion of our library online. You can subscribe and go back and watch fights, interviews, updates etc. We try to use Facebook, Twitter to market UFC and spread the word about the upcoming fights.

     

    Q. Has China been a difficult market to crack due to government regulation?
    A. We are taking it very slow. We have not had any issues or any problems. China is the birthplace of martial arts. There is a huge appetite for this sport there.

     

    Q. Where do you see the UFC in India five years down the line?
    A. I think that we could be the number two sport after cricket. In Brazil we are not just the number two sport but are also getting close to the popularity of soccer. Many times we get more viewership than the Brazilian national soccer team does.

  • ‘Sun will breake ven from the first year of IPL operations’ : Sun TV Network CFO V.C. Unnikrishnan

    ‘Sun will breake ven from the first year of IPL operations’ : Sun TV Network CFO V.C. Unnikrishnan

    Kalanithi Maran-owned media conglomerate Sun TV Network has won the Hyderabad Indian Premier League (IPL) franchise putting in the highest bid that was 23 per cent more than the second bid for the same team.

     

    Sun bid Rs 850.5 million a year while the next bid was for Rs 690.3 million from PVP Ventures.

     

    Sun will get to own the franchise for a period of five years till 2017 paying Rs 4.25 billion as franchise fee to the Board of Control for Cricket in India (BCCI).

     

    Sun plans to invest in the region of Rs 1.3-1.4 billion in a year and bets on leveraging its popular television and FM radio stations to make a success of the newly acquired IPL property.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, Sun TV Network chief financial officer V. C. Unnikrishnan talks about what led the company to bid for the IPL team and how it plans to profitably run this new line of business.

     

    Excerpts:

     

    Q. Sun TV Network‘s bid at Rs 850.5 million was 23 per cent higher than the other bidder PVP Ventures. In hindsight, do you think you bid a bit higher?
    We are comfortable with the price that we bid. Our strength is in the south market. Our ability to leverage the property on TV and radio is much higher. We are confident that we will be able to make money.

     

    Q. How much does Sun plan to invest annually in the IPL property?
    A. We know our franchisee fee amount but other expenses like the IPL players are not frozen yet. Our early estimate is that our spends would be in the region of Rs 1.3-1.4 billion a year. Even given that broad number, I don‘t think that making ends meet would be an issue for us at all.

     

    Q. Does that mean that you will breakeven right from the start?
    We expect to breakeven from the first year itself. The profits may be small but will grow as we go along. We have proven our track record when we have entered into other lines of business like movie production. The major difference between us and the other players is that we have stepped into different domains quite successfully. We have strength in other areas of entertainment. IPL is just another major area of entertainment that we have stepped into.

     

    Q. For an IPL team franchise, there isn‘t much scope to drastically up the turnover. Will Sun stand to gain in valuation rise of this property say within the next three years?
    Sun has a market cap of Rs 140 billion and ended on a consolidated revenue of Rs 18.47 billion for the fiscal ended 31 March 2012. We won‘t depend on the IPL to add sizeably to our top line growth. The big growth driver will be digitisation. For every broadcaster, digitisation will trigger big growth.

    ‘We won‘t depend on the IPL to add sizeably to our top line growth. The big growth driver for us will be digitisation‘

    Q. The IPL franchisee purchase will also lead to a confidence among the investment community that Sun is going to be aggressive in its media business despite all the recent controversies. Do you see the share prices getting corrected because of the new IPL team purchase?
    The stock price getting affected is something of a market sentiment and perception. We were always very focused about our business. The IPL is a new line of business and we will draw in a lot of synergies. We are in the entertainment and media business. And cricket is entertainment.

     

    Q. Why didn‘t Sun bid for the Deccan Chargers when it came up for auction under the aegis of the BCCI? Was Sun waiting for a clean IPL francise?
    The BCCI came out with a tender. And we decided to participate in a direct offer.

     

    Q. Will Sun‘s team consist of players from the Deccan Chargers?
    We will take some players from that team. There are also some players that were not sold during the earlier auction but who have potential. We will look at them as well.

     

    Q. How will this process of getting players work?
    The BCCI has to decide on the modalities for the process and we will follow it. After the next season, the players go back for an auction.

     

    Q. In terms of revenue many franchises still heavily depend on the central pool. How do you plan to grow the local revenue pool?
    We have a clear business plan. It is too early to reveal details. But the business lines have been drawn.

     

    Q. Only two parties including you bid. Was this a surprise?
    It was a surprise. In the market the names of Videocon, Jaypee Group and Adani were floating.

     

    Q. Is Sun TV looking at making a play in the sports broadcasting business?
    We have no interest in entering the sports broadcasting genre. Sports channels are not profitable. That is why while we are present in a variety of genres, sports is an area that we have stayed away from. We are not interested in getting the telecast rights for any sports property. In any business decision, the aim is to make money.

  • ‘BCCI rights great opportunity to build Star’s sports biz’ : Star India CEO Uday Shankar

    ‘BCCI rights great opportunity to build Star’s sports biz’ : Star India CEO Uday Shankar

    Star India CEO Uday Shankar, conqueror of TV news and entertainment business, is ready to wage a new battle in sports broadcasting.

    When the BCCI rights came up for grabs after the abrupt termination of contract with Nimbus, Shankar quickly pounced upon it. He tiptoed in, surprising hot contender Sony to pocket the prized rights to telecast international cricket in India from 2012 through 2018. His winning bid: a whopping Rs 38.5 billion.

    “We believe in the power and value of cricket as content in India. By acquiring the BCCI rights for telecast, we think it is a great opportunity to create a new business,” he says.

    Shankar‘s timing couldn‘t have been better. A couple of months later, joint venture partner Disney agreed to sell its 50 per cent stake in ESPN Star Sports, allowing Star to aggressively build and expand the sports broadcasting business in India.

    “Drama and cricket are the two big pools of content that the masses love to watch in India. We are already a key player in entertainment. Now we can have independent charge over the sports broadcasting business,” he says.

    Shankar has placed huge bets on digitisation that would plug leakages in subscription revenue and dramatically increase the paying subscribers to broadcasters. “In the current construct, those rights are not profitable. The market is primarily so unattractive because of the theft and leakage in subscription revenues. Digitisation would enable content owners to get a better share of the subscription revenue,” he avers.

    In the first part of the interview with Indiantelevision.com‘s Sibabrata Das, Shankar talks about Star‘s game plan in sports broadcasting, the rise in acquisition costs, the huge opportunity that digitisation would throw open and the need to build a robust subscription income.

    Excerpts:

    Q. Why did News Corp. and Disney end their 16-year-old joint venture partnership in ESPN Star Sports (ESS) when it allowed them to lead the sports broadcasting business in Asia?
    When the discussions started two years back, it was not on a buyout proposal but on how to take ESS forward in a changed market environment. The sports business was under financial pressure and both partners were worried. The Champions League T20 rights (for $975 million) did not bring much value. Acquisition prices were rising and competition was not helping stem it. This later turned into the need to go separate ways but the possession of the rights over sporting events made a split in the properties complex and impossible.

    The obvious course was to acquire the entire 50 per cent stake of the joint venture partner and be the sole owner. The deal took time because Disney had to take the final call on whether it wanted ESPN to exit from Asia.

    Q. When Star bid for the BCCI rights on its own, had Disney agreed to sell or it was an act of defiance to build a sports broadcasting business outside the JV?
    We were still discussing the future of ESS when the BCCI rights came up for renewal. And because there was no clarity on the future of ESS, we could not come to an understanding on what its position would be on BCCI. We at Star knew the strategic value this property would add to our thriving entertainment business. We expressed an interest that in case ESS was not clear and since the bid had a final deadline which was approaching fast, Star would go ahead and bid for the rights as a one-off.

    Even in the JV agreement, this kind of provision was there that either party (ESPN or Star) could go and bid for the rights. However, they could not use the rights on their own without the approval of the other party. So we agreed that instead of letting BCCI go away to a competitor, Star would bid for it as a one-off and then assign the rights to ESS in case they wanted it. If ESS didn‘t want, Star could go ahead and broadcast it. So that‘s how it happened.

    Q. Did the BCCI rights tilt the deal in your favour as we understand that even Disney had expressed an intent to acquire News Corp‘s stake in ESS (though they had made heavy investments in UTV and were looking at consolidating that business)?
    The two are not linked. We were very clear that it would be a one-off bid (for rights). Now let‘s assume that Disney had bought out ESS. Then they would have definitely insisted on a non-compete agreement and we would have had to find a way of handing over BCCI. I don‘t know what would have happened; that‘s a conversation one can only speculate on. But if Disney had chosen to play in the sports market here, then they would have definitely tried to also get a piece of the BCCI.

    Q. When you realised the strategic value of the BCCI rights, did the fear of Sony haunt you as it had the lucrative IPL (Indian Premier League) rights and its entertainment business was on the upswing?
    Of course, it was an important consideration. It would have made Sony a very formidable player in the sports space. And we were then not present in that space; we were only an entertainment company.

    We also knew that there were a few others like Ten Sports and BCCL (Benett Coleman and Company Ltd) who had bought the tender documents. All of them were key competitors. And anybody who had the cricket rights would have a serious strategic weapon.

    But that wasn‘t why we decided to go for the BCCI rights. We definitely believe in the power and value of cricket as content. It gets the largest number of viewers across all target groups. We also genuinely believe that there is an opportunity to improve the quality of cricket on TV. And we thought the best place to start that would be the BCCI rights.

    ‘In the current construct, those rights are not profitable. Our big punt is in digitisation‘ 

    Q. Was the bid of Rs 38.51 billion on the higher side?
    You would bid only what is the rational value of the tournament and not beyond reasonable limits. In fact, Sony and our bids were pretty close; it clearly tells you that there was a consistent logic that both of us were applying.

    You must appreciate that nobody had the time to plan for it because it happened suddenly. BCCI (rights) wasn‘t on Sony‘s or anybody‘s horizon. It was comfortably settled with Nimbus; they were holding the rights for almost six years and they were going to have it for several years more. If anybody says it was part of their serious strategic consideration, that wouldn‘t be correct. How can you plan for something that is not available in the market? But when it came up for grabs, everybody thought it was a great opportunity. And we definitely thought of it is as a great opportunity to create a new business.

    Q. But since it was unplanned, you could have overestimated the value of the property? Or how did you arrive at a right value?
    There was a reserve price that BCCI had indicated and based on that we did the mathematical calculations. The ad rates for India cricket matches per 10 seconds and the kind of distribution revenues that can be earned are available in the market. So based on that we did our calculations.

    Q. Media analysts say those numbers wouldn‘t make up for the bid amount unless digitisation happens. Did you bet too heavily on digitisation when you did the calculations?
    In the current construct, those rights are not profitable. The market is primarily so unattractive because of the theft and leakage in subscription revenues. More than Rs 150 billion gets collected from the ground in form of subscription income. But the net off carriage fees that comes to the broadcasters and content owners is a small fraction of that.

    Our big punt is that in the next couple of years when digitisation moves significantly forward, a lot of that would change. The leakages would have been plugged, there would be more fair and transparent business processes. And that would enable content owners to get a better share of the subscription revenue.

    Sports nowhere in the world has sustained on advertising revenue; that is a small part of it. Wherever it makes money, it makes it on the back of subscription income. And that is what we are hoping would happen in India as well.

    Q. Since Star has a very strong entertainment broadcasting business, will the network power not enable you to push up advertising rates for your sports properties?
    You can‘t move that synergy to up the ad rates much just because you have more properties under your belt. The target audiences and the set of advertisers are different. The big advertisers on sports, for instance, are telecom and auto companies. General entertainment channels primarily address a female TG.

    So you can‘t play much on network strength. We have not factored in any dramatic upside in advertising revenues. Let‘s face it; ad rates can‘t go beyond a certain level of elasticity.

    Q. Are you expecting ARPUs (average revenue per subscriber) to climb with digitisation of cable networks?
    No, I am not factoring in a tremendous increase in ARPUs. India is always a value conscious market and cricket is a mass market product. There would, of course, be some people who have the ability to pay higher value. But most people won‘t pay that kind of money.

    There is also enough competition in the market which would ensure that the ARPUs don‘t go beyond a certain limit. What we are looking at is the big shift in cable that should happen. In case of transparency, we clearly see a visible link between the subscriber base and the payouts. 

    Q. What sort of paying subscribers would sports broadcasters attract?
    If the whole country goes digital, you are talking about 120-130 million C&S homes in the next few years. Even if you say 60 per cent of the entire universe goes cable, you are talking about 70-75 million C&S homes.

    The 8-9 million paying subscribers for sports currently under analogue cable would go up significantly. Sports is driven by events. But at any time, the genre would be attracting 60-70 per cent of the total subscriber base. I think that is the ratio that DTH (direct-to-home) gets.

    ‘Sports had been relatively less competitive in India because the two big players were together. Now since ESPN and Star have parted ways, the next 5-10 years, will see a new round of competitiveness and aggression in the sports market‘

    Q. After having acquired the BCCI rights for such an aggressive price, will Star match that aggression for the upcoming cricket boards that will be up for grabs within a year?
    We neither choose to nor can afford to be over aggressive. If we are also aggressive, then rights prices would shoot up. Now it is Sony‘s and Ten Sports‘ turn to be aggressive.

    Q. Do you see acquisition prices climbing further?
    If the competitive norm stays, then there will definitely be a tendency for the acquisition prices to go up. A lot, however, depends on how the distribution market pans out. If the distribution market continues to be so leaky and porous and cable stays largely analogue, then even the current prices will be unsustainable. However, if the digital transformation happens and if there is a matured digital distribution market that comes up, then definitely the prices will go up.

    Q. Even if Disney decides to come back after the two-year non-compete period is over and India continues to have analogue cable?
    I am not too sure if it continues to be analogue, how many players would be interest. That is the biggest stumbling block. But on the other hand, I also think analogue cable will not survive even if the current digital initiatives fail to go through; analogue will dies on its own. This is a funny market. The analogue experience is poor and the number of channels that the consumers can watch is very few. The cable operator doesn‘t pay taxes; nor does he pay fair value to the content owner. How long will the society tolerate this kind of a distorted model?

    Q. Consumers are probably tolerating analogue cable because the ARPUs are low?
    The ARPUs are not that low. How much does DTH charge? You can‘t charge beyond a certain reasonable price. What you can charge consumers also depends on affordability and the kind of value that they attach to it. Price doesn‘t escalate in isolation; there has to be a realistic basis.

    In certain areas of Mumbai, cable subscription is Rs 300-350 per month. In low income areas, people are paying less. ARPUs are not uniformly low. That will happen in a digital environment also.

    Q. Can‘t acquisition prices for cricket rights go up because of strategic value that the property brings?
    No mature media company will pay irrationally high for strategic reasons unless this can translate into business value. If they do that, they will go bankrupt. There are a couple of media companies who are prime examples of that. There is a company that launched an entertainment channel and decided to go completely crazy for what they thought was the strategic value. The strategic value worked so well for them that they had to sell out. The news companies have gone ahead and spent so much money on all kinds of distribution, etc. We know the financial mess they are all in.

    You think anybody would pay obscenely high just because it has strategic value. Star would not do that; nor would Sony and Zee. If BCCI prices were double this and tomorrow if IPL is available for three times more, would I go and buy those rights? No way. I don‘t want to go and acquire rights and be sacked or drive my company bankrupt.

    Q. With the current distribution of cricket properties across sports broadcasters, what sort of dominance will Star have?
    It is very difficult for anyone to have any kind of very big position in market share, let alone dominance. In this market, every sector of broadcasting and media is so competitive. Whether it is entertainment, news or regional, one thing that we have seen is that there is new competition coming in every day.

    If anything, sports all these years has seen less and less of competition in India primarily because there was a JV between ESPN and Star. Until IPL came, it was just ESPN-Star. Sony had a game only because it got the IPL; without it, it would have been a marginal player. Ten Sports continues to be a marginal player except for a few rights they have like the South Africa and the Sri Lanka boards.

    Sports broadcasting requires heavy investments. And not everybody may have the appetite to take big risks unless you are a Zee or Sony, specially because the distribution deals are so uncertain.

    Since ESPN and Star have parted ways, it is only a matter of time that Disney and ESPN will come back to India. So I think over the next 5-10 years, you will see a new round of competitiveness and aggression in the sports market. Sony has launched a sports channel; they will have to really work hard to build that and will need more rights. I am sure they will surely bid aggressive for whatever rights come up. Ten Sports will also be forced to bid for a few more rights if they want to stay competitive in the game. You saw how expensive their bid was for the South Africa rights. The price they paid was pretty high and they got it.

    Sports had been relatively less competitive in this country because the two big players were together. That phenomena is set to change.

    Q. But in UK you have News Corp as a big player and ESPN as a much smaller player. Wouldn‘t India replicate that market?
    Those are very settled markets and even there that is not quite the case. In India tell me one sector of media where one single player sits with 50 per cent share. When it started, that may have been the case. About 20 years ago, Zee had a large share. Then Star came and build a large share in Hindi entertainment. See how competitive the market is today.

    Take regional. The only market where one player continues to build a very big share is Sun network in Tamil Nadu. And we all know the reasons behind that. But if it‘s a freee market, then it is difficult for anybody to take a 50 per cent or a 40 per cent share. Very, very difficult.

    India is an emerging market. So global attention is on this market. Media, despite all the softening, is still delivering the second largest growth rate in the world year-on-year. And that will continue to be the case for a long time. The most attractive growth rate market is not available so easily for media. China does not allow media that easily. So where can you dominate ? India has a huge consumer base; you are talking of 120-130 million C&S homes. Incomes are going up. I think there will be more and more people coming in.

    Western media companies are looking at India primarily because they are not getting growth in their own markets. More and more large Indian companies are stepping in. You have seen what has happened in the last 2-3 years. Big Indian corporates have made their foray into media. Reliance Industries Ltd (RIL) and Aditya Birla have come into media. I think media is going to get more and more competitive. And no matter how much money you might have, no matter how aggressive you might be, I don‘t see a situation where anybody will be able to build a 50 per cent share in any vertical.

    Q. Since Rupert Murdoch had said that IPL was a big miss, would Star‘s next big stretch be on acquiring its rights when it becomes available in future?
    Of course, it was a big miss. I don‘t even know what the contractual agreement between Sony and BCCI is. They may have a preferred access to renew it. But if it comes up and continues to be a strong property, then we will surely be interested. We have seen a little bit of softening in IPL and hopefully that‘s temporary. But the renewal is long away and it would depend on what BCCI‘s price expectation is at that stage.

    Q. Do you see cricket viewership plateauing?
    Cricket viewership depends on a variety of things. First and foremost is the nature of the tournament. Following immediately afterwards is the performance of India. I think there is a value to be obtained from that.

    The quality of TV broadcast can make a big difference to how much the viewership can grow. Sports broadcasters generally have done a very good job of providing a professional cricket experience to the viewers. But it seems to have plateaued.

    The only rule of content – and that applies to drama, sports, news, anything – is that the sameness brings in fatigue. And there is a certain amount of sameness that seems to have settled in sports. That is the reason why cricket viewership might be peaking. If we can disrupt that sameness, bring in innovation and fresh approach to connectivity, to visual and to graphics, I think given the passion that cricket generates in this country only sky is the limit for viewership. When cricket is played in every nook and corner literally, how can you say that the viewership has peaked. I think the viewership can grow a great deal more provided we continue to grow and build on the experience that we can provide. And there the broadcasters and the boards can do a lot more together.

    Q. Are you talking of introducing doses of entertainment?
    No, I am not suggesting that. You can‘t turn cricket into soaps; you have to stay true to the sport. But within that, you have to innovate. And there is so much of technology to be used – you see what has happened in the last 10-15 years! New graphic technology has come in and the kind of replays that we get to see only can enhance the viewing experience. You can further enhance that experience a great deal more.

  • ‘GEC programmers need to understand IPL viewing behaviour’ : Ormax Media co-founder and CEO Shailesh Kapoor

    ‘GEC programmers need to understand IPL viewing behaviour’ : Ormax Media co-founder and CEO Shailesh Kapoor

    Ormax Media, the consumer knowledge and consulting firm for the media and entertainment industry, has entered into its fourth year of operations with plans to expand its product offerings and business. 

    Launched jointly by research specialist Vispy Doctor and former Filmy business head Shailesh Kapoor in July 2008, the company boasts of growth across sectors, including television, radio and media agencies.
     

    In an interview with Indiatelevision.com‘s Gaurav Laghate, Kapoor talks about the trends in entertainment television across genres – GEC, Sports, English entertainment and infotainment.

    Excerpts:

    What are the significant changes you are witnessing in the Hindi GEC space, both in terms of programming and marketing?
    There has been a definite movement towards light-hearted treatment of content. Stories may still be based around families and social change, but the treatment is less heavy and emotional than what it was before. Meanwhile, reality shows are going through a tricky phase, with no new ideas coming up, except Satyamev Jayate. We seem to have saturated the formats available to us.

    How do you see GECs getting affected from IPL this year?
    There is definitely diversion of viewer attention, but like Bollywood, GECs too have realised that at some point, they will have to take the IPL on. The key is to identify which programmes to focus on during IPL and which to duck. Understanding of IPL viewing behaviour becomes critical for that.

    What do you think of all the sports entertainment properties that are coming up…like Super Fight League? Will they gain traction?
    Mixed Martial Arts, being presented through UFC and SFL, is a very popular International sport. It should surely find its audience.

    What are the trends in sports viewership? Are non-cricket sporting events growing?
    Yes, the growth is there, but slow. Marketing is the key. I‘m glad that a new channel (Sony Six) has launched, as any channel launch always gives impetus to sports in general.
    ‘Language feed is the way forward as C&S penetration will continue to increase in smaller towns. Subtitling has helped English language channels a lot, and so have language feeds for English infotainment‘

    Your view on declining viewership of IPL?
    All trends and data we have suggest IPL viewership is actually 20 per cent higher than last year. I will not like to comment on the ratings.

    Is too much cricket causing viewers’ fatigue?
    A lot of it depends on India‘s performance. Having said that, we have a fairly lean period over the next few months, so cricket should be back in its full glory later this year.

    What are the trends in English infotainment and niche programming? Do you see language feeds getting more eyeballs?
    Language feed is the way forward as C&S penetration will continue to increase in smaller towns. Subtitling has helped English language channels a lot, and so have language feeds for English infotainment.

    And what about programming trends in the English general entertainment space?
    The genre needs some Indian programming desperately. The issue is – are the costs affordable. But a good Indian show, especially comedy or non-fiction, can definitely prove to be a game changer.

    What do you think about English music channels – now three… Will they manage to get viewers share without appointment viewing?
    The genre is very niche and its business model is based largely on imagery, perception, innovations and client servicing. So viewership doesn‘t matter that much.

    How has been the year for Ormax Media in terms of revenue and business growth?
    2011-12 has been an excellent year. We showed 62 per cent growth in our revenue, and added 24 new clients. Our proprietary product line now stands at 19 in number. Film research has been a big growth area for us last year, and should continue to grow this year too. But overall, growth has been across sectors, including television, radio and media agencies.

    What all new clients and new tools and products the company has launched or is launching in the near future?
    We recently launched the third edition of our IPL ad tracking study, Day After Cricket. Our music countdown product ‘Heartbeats‘ is now available in a Kolkata edition also, where we track Hindi and Bangla music in the Kolkata market. Our flagship products Cinematix and Showbuzz recently went through major market expansions. Cinematix expanded from 6 cities to 16 cities, while Showbuzz expanded from 6 to 14 cities. In the coming months, we have a huge product launch lined up. Without revealing much, we can say that it will be a product every advertiser and media agency will find extremely useful and relevant.
  • ‘We are looking at 20% revenue growth this year’ : India Cements joint president marketing Rakesh Singh

    ‘We are looking at 20% revenue growth this year’ : India Cements joint president marketing Rakesh Singh

     

    IPL franchise Chennai Super Kings has been slowly and steadily building its brand over the past four years on the back of its iconic captain Mahendra Singh Dhoni. The sustained efforts of the last four years are beginning to show result as the franchise looks at a 15-20 per cent revenue growth this year.

     

    By retaining its key players, the franchise has managed to build a loyal fan base not just in Tamil Nadu but also among the Tamil diaspora. The two time IPL champions is leaving no stone unturned as far as engaging with fans is concerned and is stepping up efforts on the merchandising front to grow this revenue stream.

     

    In an interview with Indiantelevision.com’s Javed Farooqui,India Cements joint president marketing Rakesh Singh shares the franchises journey so far and the growth path ahead.

     

    Excerpts:

    Isn‘t Chennai Super Kings targeting a revenue of Rs 1.7 billion this year? What is the break-up?
    We did Rs 1.40 billion last year and are looking at a 15-20 per cent increase this time. It’s difficult to give a break-up for the simple reason that a major chunk of revenue comes from the central pool. There are components in our revenue pool – one is central pool which to my mind was Rs 60 crore (Rs 600 million) plus last year; then there are our sponsors and gate collections.

    Have you reached operational break even?
    In the first IPL edition, we broke even. We lost money in the second season (due to shift to South Africa). While we made marginal profits in the third IPL, we widened that in the fourth edition.

    How has IPL season 5 been for CSK?
    The IPL season has been good for us. Our total number of sponsors have gone up. Aircel is our main sponsor. Gulf Oil is our principal sponsor and then we have Life Ok and Washington Apples as new sponsors. We also have Amrapali Group, Hercules, and Usha International as sponsors.

     

    While our revenue continues to grow at a steady pace, what we are also trying to do is step up the merchandising efforts. We plan to grow merchandising by positioning it as a lifestyle brand so that fans not only buy CSK T-shirts during the IPL season but also wear them during the non-IPL season.

    How did the deal with a Hindi GEC like Life Ok happen with a team franchise from the South?
    There is a study done by one agency which says that 46 per cent of the fans support Chennai Super Kings andMumbai Indians. Now if that is the case, anybody who wants to take full advantage of the IPL needs to come to one of us. For somebody who wants make a Hindi GEC popular, it is a nice way of riding on the popularity of Chennai Super Kings. Another thing is that while we are the most popular team in Tamil Nadu, in most other cities we turn out to be the second most popular after the home franchise. I think that is because of the kind of team that we have with four Indian players – MS Dhoni, Suresh Raina, Ravindra Jadeja and R Ashwin.
    ‘We had made Rs 1.4 billion last year with revenue from central pool contributing over Rs 600 million. We have got new sponsors in Life Ok and Washington Apples‘

    The IPL has seen a lot of sponsor switches. How did CSK manage to retain its sponsors?
    We believe in consistency and that is the reason we don’t believe in changing our players. We don’t change our management and we don’t believe in changing sponsors. That has clicked because that does not confuse the fans. We treat our sponsors well and we give them a value for their money for at the end of the day sponsors look at RoI.

    There are reports that title sponsor DLF is not sure of continuing its IPL sponsorship?
    I don’t know about that but what I would like to say is that when the BCCI terminated the Nimbus contract, everybody was saying that the BCCI won’t get Rs 31.25 crore (Rs 312.5 million) per match. But ultimately the rights were sold for a much higher price. I think it has become a favourite time pass for everybody to talk ill of the only sporting brand that India has today.

    So are the team loyalties settling down?
    I think so. If you see the matches where Mumbai or Chennai are involved, the viewership will be high due to team loyalties. That is also the case globally where matches involving Man-U or Chelsea will have higher viewership as compared to other smaller teams. In the first three IPLs, most of the matches were 8 pm matches and the number of teams were less. But now we have more teams and the number of matches have gone up.

    What do you think is CSK’s USP?
    Our USP is that we always focus on cricket, unlike other teams who are focussed on glamour and parties. Not to say that these things don’t work but IPL at the end of the day is a cricket tournament. We have a disciplined team; so whether its on-field or off-field, our team carries a certain character. We have a very strong fan following in Tamil Nadu and Chennai in particular. As per one survey report, 96 per cent of Chennaites support Chennai Super Kings, which is the highest for any franchise in their home city. Mumbai Indians come second with 86 per cent fan support.

    How did you engage with fans?
    Besides youngsters between 15-24 age groups who form our vital fan base, we believe that we have also get a lot of support from families. If you look at our merchandise, there is a lot of emphasis on women and children – it’s not just the typical male cricket fan. A lot of families come to watch our matches in the stadium. To reach out to our fan base, we have also tied-up with Radio Indigo besides The Hindu and Dina Thanthi. Our media tie-ups is a cash plus barter deal. But the barter part is helping us a lot on activation. That is something that was missing last year. What it has done is bring down our marketing cost.

     

    We also launched a new video ‘Wave your hands” which has got one lakh views within no time that it was uploaded on YouTube. We launched this campaign sometime in the first week of April, and by the third week we already have one lakh views on YouTube. Earlier we had done “Whistle podu” which was also a big hit. Every fan wants to do something to support his or her team, so that way we are channelising their energy into doing something to support the team.

    How is licensing and merchandising doing?
    We have been giving merchandising a big push since last year, but it takes time. For example, we got almost Rs 4 crores (Rs 40 million) through merchandise sales last year but what comes to us is only 10-15 per cent after excluding the costs. What we are seeing is that it is a good platform to engage with fans. But in terms to revenue contribution, it is only about five to seven per cent. But internationally this percentage is 60 per cent and that is what our goal is: how to grow this stream. This year we have opened an exclusive in the Chennai airport where you get all kinds of stuff. We have also partnered UniverCell for distribution of merchandise in North America and Europe.

     

    In terms of licensing, for the first time we have partnered with Café Coffee Day to make it a hub for Chennai Super Kings fans. Similarly Park Sheraton has converted their lounge into a CSK Bar. So we want to see how these deals work and whether we can make it a yearlong thing. We are working on a fixed fee basis wherein licensees can use our name and do certain things. This year we aim to double our licensing and merchandising revenue.

    How has been the response been to ticketing? There were lots of empty seats during your home matches?
    There are three stands in the stadium which, due to certain clearances issues, the state government has not allowed us to use. On the rest of the stadium, we are overselling. Till we get the clearance, we won’t be able to sell tickets for those stands.
  • ‘We have no intentions of selling Deccan Chargers currently’ : Deccan Chargers COO Venkat Reddy

    ‘We have no intentions of selling Deccan Chargers currently’ : Deccan Chargers COO Venkat Reddy

    For IPL franchise Deccan Chargers, it has been a story of ups and downs. The team had a miserable run in the inaugural season but bounced back strongly in the second edition to walk away with the title.

     

    Even off the field, Deccan Chargers had to deal with uncertainty what with the main shirt sponsor changing hands every year. However in the fifth edition of the IPL, the franchisee has finally found its true calling striking a multi-million dollar three year sponsorship deal with Emirates besides roping in a host of other national and local sponsors.

     

    The franchise has also been in the news frequently that it is on the blocks. Deccan Chronicle Holdings had mandated KPMG Corporate Finance to find a buyer and was looking at a valuation of $250 million in 2008.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, Deccan Chargers COO Venkat Reddy clears the air about the team’s sale reports by asserting that it is committed to the team and is not planning to presently sell the team. Reddy, a man of few words, also said that the franchise has broken even and is looking at good revenue growth this year.

     

    Excerpts:

    Will Deccan Chronicle sell IPL franchise if the valuation is attractive or will you wait for it to mature further?
    Presently, we have no intentions of selling the team. Deccan Chargers is very much owned fully by Deccan Chronicle Holdings Limited.

    Deccan Chargers posted revenues of Rs 1.15 billion in 2010. What has the growth been since then and have you operationally broken even?
    We have achieved break even and expect the growth to be good this year. It is an exciting season for us and we have got good response from sponsors.

    How did the deal with Emirates come about? Which are the other new sponsors who have joined?
    IPL 2012 is a huge opportunity to leverage revenues with the Deccan Chargers being a well known and growing brand. Strategic trading in auction without compromising on the team balance has brought in sizeable revenue in its kitty. We are privileged to have Emirates as our team sponsor. And our other main sponsors are Jaypee Cement, TVS Motors, United Spirits, Kingfisher, Xenoh and Puma. We were associated with Jaypee for the inaugural IPL season and are pleased to have them back. We are reaching out to our fan base, taking the matches to the catchment areas of Vizag and Odisha.

    Is the Telangana issue going to affect your ticketing revenues once again?
    This year we have three confirmed cities as Deccan Chargers home grounds – Vizag, Cuttack and Hyderabad. Our matches are well distributed in these three cities, which will see a considerable growth in gate revenues. Added is the special hospitality seating areas created for the spectators to enjoy the matches and have a great experience. The match entertainment is also very carefully planned, keeping the local flavour in view.
    ‘We have achieved break even and expect the growth to be good this year. Emirates is our team sponsor. Our other main sponsors are Jaypee Cement, TVS Motors, United Spirits, Kingfisher, Xenoh and Puma‘

    Given that it has been four years since IPL started, has licensing and merchandising become a serious revenue stream or is there still a long way to go?
    Yes, it is and there are challenges yet to be faced.

    Has Deccan Chronicle got what it aimed at when it decided to be involved with the IPL franchise?
    Deccan Chronicle has always supported sports and has nurtured the Deccan Chronicle cricket team for years. IPL was a great opportunity to get into big league and cricket is religion for us Indians. We are now a well known sports brand globally and want to extend further. T20 cricket is challenging. We have emerged as winners in 2009 after suffering a major setback in the inaugural season. We believe in working hard and motivating our team to perform well without putting any pressure. We have seen a tremendous growth trend in our fans base, which continues. As per the latest study on Top Ten Social Media Influencers by DataQuest, Deccan Chargers has been in the Top Ten Indian Brands.

    How do fans perceive the Deccan Chargers and how do you maintain a relationship with them across the year even after the IPL season gets over?
    Deccan Chargers is always full of surprises. We have a loyal fan base that supports us thick and thin. We maintain interaction through the social media sites like Facebook and Twitter.

    What marketing activities are being done to create excitement?
    Our local campaigns have already started. We recently organised events in Hyderabad and Vizag like the See U in Blue event, Buildings lit in blue, Cycle rally, Beach Corporate Cricket etc. A separate fans blog, selecting some active fans on social media sites and giving away DC goodies and many other fan engagement activities are lined up. unstoppabulls.deccanchargers.com/ featured a contest to find “Super Blogger, Photographer & Videographer” who‘ll be part of DC Crew to follow & cover team DC.

    Could you talk about your deal with My Rewards International?
    We have agreed to market membership based programmes under a co-branding arrangement. This will give our members and their family access to the My Rewards benefits which are available throughout India and the world. Similarly, over one million My Rewards members throughout India, Australia, Hong Kong, New Zealand and the Philippines will have the opportunity to join the Deccan Chargers and enjoy all the benefits of being a member of one of the premier IPL teams. I am sure our fans will enjoy the plethora of rewards.
  • ‘We expect to break even this year’ : Kings XI Punjab COO Col Arvinder Singh

    ‘We expect to break even this year’ : Kings XI Punjab COO Col Arvinder Singh

    Kings XI Punjab is yet to recover from the shock, its break even target having gone haywire after the Board of Control for Cricket in India (BCCI) terminated its franchise contract in October 2010 for breaching ownership rules. The Bombay High Court came to its rescue, allowing it to be a part of the Indian Premier League (IPL) after submitting $20.7 million in bank guarantee.

     

    Having paid $76 million to acquire the IPL franchise, Kings XI Punjab is now on recovery course. Sponsorship deals have been stitched and the Mohali franchise is hoping to improve its performance this year.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto,Kings XI Punjab COO Col Arvinder Singh says the franchise should break even this year and post a revenue growth of 15-20 per cent.

     

    Excerpts:

    Q. Could you talk about how the IPL as a property has grown year on year?
    Cricket has achieved cult status in our country. In last four years since its inception in 2008, IPL has further strengthened the bond it has with the people of India.

     

    With time it has also amassed worldwide audiences. The league has grown beyond the realm of cricket and is considered as a complete entertainment package encompassing the entire family.

    Q. Kings XI Punjab had expected to break even in the fourth year. Has this happened or did the BCCI termination play spoilsport?
    We have not yet broken even. Break even is expected this year, for sure.

     

    Not everything goes as per plan. Ups and downs are a part of every business and they should not deter from chasing our dreams – that is to get the Cup home this year. We are constantly working towards creating a team which is extremely valuable and as partners, we will give all it takes – time, energy and resources for the love of the game.

     

    And yes, the arbitration process is yet to conclude.

    Q. What revenue growth do you expect this year and who are your sponsors?
    We expect 15-20 per cent growth this year and are on course to meet that target. ACC, ONN, USL, Kingfisher, Coca-Cola and Max Healthcare are some of our sponsors.

    Q. Emirates has not renewed its deal with you. Is the economic slowdown forcing brands to look at the cost of association more carefully compared to earlier years?
    We have been extremely fortunate that we have had the right partners since the inception of this tournament. This year too we have some of the best brands on our side – and we hope that there will be many more to come. When we enter in to a partnership with any brand, it is based on a set of mutually agreed and understood objectives.
    “We expect 15-20 per cent growth this year and are on course to meet that target”

    Q. IPL ratings fell last year, making it more expensive for marketers and sponsors. Do more efforts need to be taken in terms of marketing the event to consumers?
    IPL’s fan following is not limited only to India; it has also gathered audiences worldwide. While the ratings went down because of the World Cup just preceding the IPL season, the overall reach did see a substantial increase. IPL is looked as a complete entertainer and it will be interesting to see the ratings this year.

    Q. Has the licensing and merchandising area grown?
    This is a crucial source of revenue for the franchise. Having experimented with a few models in the past, we have now tied up with an international company to increase the reach of our L&M programme worldwide. This is a unique and long term agreement.

    Q. A sports marketing expert noted that the IPL has become more an icon-led rather than a franchise event. This means that if icons like Sehwag and Dhoni do not perform, viewership will get affected as people mainly want to watch icons. Do you agree with this?
    Our belief is that cricket is a team and not an individual game. Although iconic players have a definite rub off on the likeability of a team, this is but limited appeal to start with.

     

    For a more concrete connection with the fans, the franchise must establish itself as a custodian of the values and attitude that the region represents. This kind of association will withstand any player movement.

    Q. If you look at the IPL so far, which three players have been the most value for money in terms of performance for the franchise?
    Every player in our team is a performer and we do not undermine their strength. Each one of them is a valuable asset and we are confident of bringing the IPL trophy home this year.

    Q. On the field, Kings XI Punjab did not fare well in the previous couple of seasons. How much has this affected your brand valuation?
    Brand value is a cumulative total of a number of factors. Our performance last season almost ensured that we made it to the playoffs and this year we are pretty sure that our team has in it to make it there.

     

    We have been able to establish ourselves as a local team; we also have a loyal fan following in our catchment and also have a very huge fan following internationally. We have been growing for the past four seasons and we can only see it growing further this year.

    Q. What strategy was followed during the two player auctions and were you affected by not being able to retain some of them?
    We are very happy with the way the team has shaped up. We have great cricketing talent like Adam Gilchrist, Shaun Marsh, David Hussey, Praveen Kumar and Piyush Chawla, to name a few.

     

    We believe that we have the required strength in our team to take us all the way. Based on lessons learnt last season, we have enhanced the team strength with players like Azhar Mehmood and James Faulkner. We also have a great mix of experienced and young domestic players.

    Q. What are Kings XI Punjab‘s marketing efforts this year?
    Marketing is an integral part of our overall strategy; it helps us build a stronger connection with our fans. Our efforts are aimed at reaching out to our fans through all possible mediums.

     

    Currently one of the unique activities undertaken by us is our association with Indraprastha All India Sports Foundation for the ‘Cricket Champs‘ reality show. This initiative aims at nurturing youth to develop skills which not only will make them successful cricket captains but also help them in their personal endeavours.

    Q. Is Kings XI Punjab able to do activation during the off-season once the IPL gets over or is non availability of players an issue?
    We are there in our catchment area throughout the year whether through our presence on the social media like Facebook or with activities like KXIP Cup, Rocky and Ranjit Voice Hunt. We have always been doing activities to connect with our fans from time to time. Player availability is not an issue.

    Q. With the Big Bash league doing well in Australia, the debate about club versus country has again raised its ahead given how financially lucrative it is to play for clubs. How do you see things shaping up going forward?
    I see this format of the game with different perspective rather than just the financials. We believe that the club / IPL format provides the budding cricketers to showcase their talent and further hone their skills as they get an opportunity to play with and learn from experienced players. IPL has been a suitable platform to judge performance.
  • ‘IPL is our biggest property and we can’t afford to undersell’ : MSM president network sales, licensing & telephony Rohit Gupta

    ‘IPL is our biggest property and we can’t afford to undersell’ : MSM president network sales, licensing & telephony Rohit Gupta

    Multi Screen Media (formerly Sony EntertainmentTelevision India) is beginning to enjoy a remarkable turnaround story. The Indian Premier League (IPL) has surfaced as cricket‘s most lucrative property, Sony Entertainment Television has climbed to the No. 2 position in the Hindi GEC (general entertainment channel) space andSab has grown beyond its flanking channel status.

     

    The other channels have also moved up the hierarchy. English movie channel Pix has raced past HBO and AXN has protected its turf quite strongly. Mix, the pure music channel, has had a good start. Being the only channel in that space that has network strength, it has taken up the challenge to grow the market and ramp up revenues.

     

    In an interview with Indiantelevision.com‘s Sibabrata Das, MSM president network sales, licensing & telephony Rohit Gupta talks about how the company is going to end this fiscal with a 40 per cent ad revenue growth and a 25 per cent growth in FY‘13.

    Excerpts:

    MSM raked in Rs 9 billion in ad revenue from the IPL last year. But is growth slowing down for the property due to a fall in ratings in the previous edition of the T20 tournament?
    I won‘t comment on how much ad revenue the IPL earned last year. But, yes, there is a little bit of anxiety on how IPL will do this year as advertisers have to set aside a large outlay for advertising on it. The ratings were down last time but we are sure that with marketing buzz starting, the IPL will come back on track. There was high intensity cricket with the World Cup preceding the IPL and India going on to win the championship. This year it is a clean slate and we have already stitched a few big sponsorship deals.

    Are we looking at a below double-digit growth as is evident from the deals that you have locked in so far?
    We have got marginal increase in rates but I can‘t comment on whether we will post double-digit growth or not. Also, don‘t forget that the base is already high.

    So has IPL as a property matured?
    We grew 30 per cent last year and so the IPL has matured to a certain extent. But if ratings start climbing, we will again see high growth.

    Hasn‘t it been a tough sell so far as by this time normally you manage to close almost 80 per cent of your ad inventory?
    Yes, it has taken us a longer time as we usually keep aside 20-75 per cent of the ad inventory time for spot sells. We have sold around 65 per cent of our inventory. But we will not be dropping rates as it will set a benchmark for next year. We have worked hard to scale up the value and won‘t undersell.

     

    The IPL TV rights are with us for another five years and it is our biggest property; we can‘t afford to discount its current value. T20 continues to grow in popularity; the formats that are not doing so well are the Tests and the ODIs.
    “There is an entry barrier for new players as the cost of running a Hindi GEC is as high as Rs 5-6 billion. Which new player has that appetite after a few of them have severely burnt their fingers? This has helped us scale up revenues even as our own channels have grown“

    So the new BCCI tender for international cricket played in India will not be as valuable as it was when Nimbus held the TV rights a few years back? Will that be the calculation when Sony bids this time?
    Perhaps, Nimbus was not able to exploit the revenues as well as it could have. We have a strong ad sales team. We are a network and our distribution (as a JV with Discovery) has muscle.

    When Sony launches a sports channel, it will have to acquire other cricket rights than just the IPL and New Zealand board. Can ad rates be driven further up to support aggressive bids at higher acquisition costs for cricketing properties than their current value?
    We are not going to make irrational bids but evaluate properties from a profit perspective. We feel that some of the boards are overvalued and there will be some price rationalisation. Cricket seems to have plateaued off to a certain extent. A few years back, broadcasters could get massive rate increases . That led to steep rise in acquisition costs. We are not in that market situation today. Don‘t forget that some people have lost a lot of money on cricket.

    Are we seeing some categories of advertisers retrenching from the sport due to the current tough economic environment?
    Handset manufacturers are finding it difficult today. The auto sector has taken some hit. But though telecom service providers are under profit margin pressures, the intense competition in the sector will spur them to advertise.

    When will MSM‘s ad revenues touch the Rs 20 billion mark?
    I can‘t talk on financials. But as a network, we will post a 40 per cent ad revenue growth this fiscal. Between Sony Entertainment Television, Sab and Max we are the No. 1 network in the Hindi heartland. And in the Hindi GEC space, we have two among the top five channels. The best part is that each of them is commanding a different kind of target audience and not cannibalizing each other. We are looking at a 25 per cent ad revenue growth in FY‘13.

    How far has SET contributed to this growth?
    Our flagship channel has grown this fiscal and is today the second-ranked in the space. The rise of SET has increased our negotiating power. Kaun Banega Crorepati (KBC) is an impact property and is a strong revenue driver for us.

     

    Fiction is what we had missed out for the last 3-4 years. But it has started doing well. We have an upscale, urban skew; our male viewership is also very strong. Advertisers chase this segment and our fitment is the best.

    Will SET launch an afternoon band to create a new revenue stream or still have a primetime overhang?
    We have no such plans; it doesn‘t make a big difference to your ratings and, hence, advertisers have little interest for it. Hindi GECs have preferred to expand their primetime and it now fills up the early evening from 6 pm right up to 12 in the night; there is a lot of viewership in that time band. The market exists in the evening-to-night slot and not in the afternoon.
    Does Sab still play the role of a flanking channel or it has grown beyond?
    It is not anymore just a flanking channel; it is a proper GEC, has a strong viewership and, as a family comedy channel, is uniquely positioned. Sab has helped our network revenues to grow.
    Has the Hindi GEC ad revenue market expanded this fiscal and will we see more channel launches in this space?
    It (Hindi GEC space) has now become a game for the big boys. There is an entry barrier for new players as the cost of running a Hindi GEC is as high as Rs 5-6 billion. Which new player has that appetite after a few of them have severely burnt their fingers? This has helped us even as our own channels have grown. Even in a digital environment, it will be tough for a new player. Segmentation is not possible because GECs have to be mass and can‘t be niche due to the huge costs involved to run it.

    Is Max under pressure due to steep acquisition costs for Hindi movies?
    The Hindi movie genre, pegged at Rs 9 billion, is under pressure from revenue as well as high acquisition costs. Viewership for the genre in terms of GRPs (GRPs) is not growing. Though Max will post ad revenue growth of 15 per cent this fiscal, costs have gone up. We did intelligent buying.

     

    There is bound to be a price correction in movie buying. Though Star went overboard last year, that strategy won‘t work every year. Some broadcasters are looking at launching action movie channels keeping digitalisation in mind. We have no such plans, at least not this year. We will wait to see how digitalisation evolves. Like GECs, the consumption of Hindi movies is more mass.
    Why did MSM decide to launch a music channel when the market is too crowded?
    Though the ad size is around Rs 2 billion at this stage, it is a good genre to be in. Mix‘s positioning of capturing the various moods during the day has got accepted and we believe that we will be the leader. As a pure music channel, we are here to grow the market. MTV and Channel [V] have taken a different route and focus on reality shows as their growth drivers. While other players in this pure music space have a standalone presence, we are the only one to have the network strength and will be able to ramp up revenues.
    Isn‘t the English entertainment space getting spoilt with new launches?
    The genre is growing and is still undersold. It is an important space to be in and is sold not on ratings but on perception. AXN stands out in this genre. As digitisation grows, we will see more launches.
    MSM doesn‘t have a footprint in regional-language broadcasting that is growing the fastest. Was letting TV18 Group acquire ETV a missed opportunity?
    The acquisition has to come at the right price. We are not desperate to launch channels. We do not believe in width that does not give us profits.
  • ‘Premier League Soccer will have $20 mn revenues in year 5’ : Celebrity Management Group executive Director Bhaswar

    ‘Premier League Soccer will have $20 mn revenues in year 5’ : Celebrity Management Group executive Director Bhaswar

    After hosting big names in football like Diego Maradona in 2008 and Lionel Messi last year when the star Argentinean footballer toured India for an international friendly game against Venezuela played in front of a record crowd in Kolkata, Kolkata-based sports management company Celebrity Management Group decided to kick-start a venture like the Premier League Soccer, modeled on the lines of America’s successful Major League Soccer.

     

    An initiative of Indian Football Association (West Bengal), the governing body of football in the state, and CMG, the league has turned world’s attention towards Indian football which has been slowly realising its true potential as a marketable sport.

     

    Testament of the league’s potential is the fact that leading sports media company, MP & Silva, has bought the international media rights excluding South Asia. The organisers are targeting total revenues of $5-6 million from the inaugural season of the league.

     

    In an interview with Indiantelevision.com’s Javed Farooqui, Celebrity Management Group executive Director Bhaswar Goswami, the brain behind the project, shares his vision behind launching the league and its commercial prospects.

     

    Excerpts:

     

    What was the thought process behind launching Premier League Soccer?

    The day we brought Diego Maradona to Kolkata, we realised that we wanted to do something for Indian football which be different. We started looking at different options; we organised exhibition matches, got coaches down for clinics. But these were one-off activities. We decided to do something that is a combination of all these activities but is held on a regular basis and is part of the Indian football system. That’s when this idea came to us and we shared it with IFA (Indian Football Association); they immediately accepted (the proposal) and asked us to start working on how it should happen and what are the modalities.

     

    We studied global football from different perspectives, looked at MLS (Major League Soccer), EPL (English Premier League), and were sure that the franchise model is what we are going to follow. During this time, IPL (Indian Premier League) also happened in India and the cricket league was a roaring success. The inspiration was the MLS.

     

    The I League was going nowhere; it had no vision. It is India’s premier domestic football but only in words; it did not had any effect on the football scenario of India. So we thought we should do something which would create buzz across the nation and catch the imagination of the fans, the sponsors and everybody who loves football. We decided that we should bring the biggest names in football to come and play for our teams. That is how it started.

     

    How difficult was it to get international players like Cannavaro and Crespo to come and play in the PLS?

    It took us seven-eight months to put together these six big names because the first time when we sounded them out, they thought we were crazy; they didn’t understand what we were talking about. They had a long and illustrious career and have been sold and transferred from one club to another. But we came up with a proposal that they would have to sign an MoU and would be put up for auction for a base price which is acceptable to both of us. We also told them that their participation in the league would go a long way to develop football in India. They bought into our vision and accepted our offer. We are happy that we will have some of the big names being part of Indian football for the first time.

     

    Why did you restrict yourself to West Bengal rather than launching a pan-India league?

    I definitely want it spread across the country. But you need to have the endorsement of the AIFF (All India Football Federation) to organise a pan-India league. As AIFF has taken IMG Reliance as its marketing partner, they couldn’t have agreed to our proposal. And in case we want to do something, we have to go through them

     

    The reality is that there are more fans of Manchester United in India than East Bengal and Mohun Bagan put together. So then why can’t our clubs from Siliguri or Barasat have fans across India and beyond? It’s not just the name of the club but also how you create content. We believe that in the era of television, if you have the right product, content and packaging, it’s only a matter of time that it will travel across the world. You will have a winning brand and a winning combination. It doesn’t matter where the matches are played. If the content is seen in North America, South America and Europe besides India, I think we are up for a great future ahead for PLS.

     

    What will drive this league?

    We have the best combination of legends in the world of football who will actually come together and play with our young boys in India. I think the quality of soccer played will be much better than what we see in India now. Each of the teams will be headed by a world-class coach. And in football, we all know coaches play a huge role.

     

    Imagine a young local footballer from one of the catchment areas passing the ball to Crespo for a goal. I mean, just the thought of it excites me! What it will do is bring our young footballers to the global scene. This will become an inspirational story for a number of talented footballers.

     

    Also for the first time in India, a league will be telecast across the globe in Europe, in Americas and Africa. You never know what will happen in five years time – perhaps, there will be an Indian footballer who may end up with a contract in Europe. So the marketing ability goes up.

     

    The market has already expanded. In the last few days, we have mopped up around Rs 1.05 billion that is being invested in teams and overseas players in the PLS. That money was always waiting to come into Indian football. The Indian football market will continue to grow.

    ‘The Indian football market has already expanded. In the last few days, we have mopped up around Rs 1.05 billion that is being invested in teams and overseas players in the PLS. That money was always waiting to come into Indian football’
    Don’t you think that the PLS will compete with I League?
    I League will continue to be the premier domestic competition in India. But I do believe that the PLS will be popular.
     

     
    Will it be more popular than I League?

    I hope so, that’s what my target is. A large number of television audiences watch EPL and I want them to watch our Indian league; that’s where my target audience is. If you look at Tam figures, in 2010 there were 155 million television viewers that watched football. I want most of them to watch the PLS.

    I also think that the PLS will complement the I League. It will be a talent supply source that the I League can tap.

     

     
    While the PLS will have big foreign names, will Indian players be able to participate?

    The I League players will not be eligible to participate in the PLS. We are talking about the other guys. The Kolkata Football League, which is one of the strongest leagues in India, has 16 teams in the premier division. Both Mohun Bagan and East Bengal have been beaten by four teams in the league. This proves that there are a lot of good footballers outside these I League clubs. Similarly, in Goa there are a lot of good footballers in the local league. So it’s actually these footballers who will get to showcase their talent in the PLS.

     

     
    A lot of I League clubs have been shut down in the recent past due to lack of returns. Many have blamed these clubs for not investing in talent development and marketing. Do you have commitment from the franchises that they will invest in talent development and help in marketing the league?

    One of the terms in the tender mandates each of the franchises to run U-13, U-16, and U-19 coaching camps. It is in the interest of the franchises to nurse talent. Because if you have a footballer who is worth being exported to one of the clubs in Europe, you might earn millions. The commercial opportunities in developing a footballer are enormous.

     

     
    What is your business model and how are revenues to be shared between PLS and the franchises?

    PLS has a central revenue pool which includes commercial rights. The broadcast and other media rights form part of this. Fifty per cent of that will be distributed among franchises. They also hold the marketing rights for their own teams; they have ticketing, merchandising and licensing rights. We are sure that the franchises will make profit.

     

    When do you expect the league to be profitable? What is the break-even period for the league as well the franchises?

    The league will be profitable in year one because of the model. In a franchise system, you cannot make loss because you are paid a fee. Then you will sell the commercial rights packages, out of which you share 50 per cent with franchises. So your earnin is the franchisee fee (which is Rs 75 million and is expected to reach Rs 85 million with the addition of the sixth franchise). And if you have $6 million from commercial rights in year one, you will make another $3 million from there (after sharing 50 per cent with franchises). We are also sure that each of the franchises will make profit in year two.

     

     

    What kind of investments you are making to organise the league?

    We will be investing around $3 million. A large part of that will go into developing infrastructure at all the venues. There will be floodlights in all the stadiums; upgradation will also be done.

     

     
    Do we have stadias in each of the franchise cities?

    The franchise cities itself were chosen on the basis of whether they have stadias and hotels.

     

     
    What do you think is the revenue potential of this league?

    I am expecting the league to reach $20 million in revenues during the fifth year. So far as the franchises go, if they do a consolidated P&L account they will earn a profit of at least $15-20 million.

     

     
    Why have fixed the expense cap for the franchises at $2.5 million?

    We don’t want them to over-spend. This cap will, however, change each year after discussing with the franchises.

     

     
    What about your broadcast partner for India?

    We are in talks with three of them. We are still evaluating what kind of deal we want to have. We are looking at a broadcaster who would help us in promoting the league. We want the matches to be shown live.

     

     
    Will you have a local broadcaster in West Bengal besides a South Asian rights holder?

    We are not looking at a local broadcaster at this point, but you never know what happens. We are looking to sell a South Asian package. I want my league to be a pan-Indian product.

     

     
    How many sponsors are you looking to sign in?

    We will have a title sponsor, six on-ground sponsors and one referee sponsor. We haven’t started looking out for sponsors yet, but we will sign them very soon.

     

     
    Will slowdown have an impact on PLS?

    I am not looking at billions of dollars, so I am not bothered about slowdown.

     

     
    What are your marketing plans for the league?

    We are in talks with leading agencies who will work with us on marketing the property. We are seeing presentations from a lot of them. We will have a 360-degree marketing strategy.