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Tag: Kunal Dasgupta

  • Sahara, DD ad sales revenues for England series gross Rs 2 billion

    Sahara, DD ad sales revenues for England series gross Rs 2 billion

    MUMBAI: The first chapter of Nimbus’ boss Harish Thawani’s audacious gamble with the India cricket story is over with a battered English side glad to be back in the cooler climes of Old Blighty and the Indians getting some well deserved rest before they head out to the Caribbean.

    For Thawani however, the rollercoaster he’s been on since his Nimbus Communications swung the telecast rights to India cricket for the next four years with a bank-breaking $ 612.18 million composite bid has barely begun. The India-England tour — the first of ten international series (and four domestic cricket seasons) that constitutes the deal — is over and the calculators are out tallying the revenue numbers.

    Indiantelevision.com’s discussions on the matter with media buyers indicate that the series, which involved three Tests and six ODIs (one was washed out), has generated about Rs 2003 million in ad sales from national broadcaster Doordarshan and Sahara One. Going by these calculations, DD accounted for Rs 987 million while Sahara One mopped up Rs 1016 million.

    But what is of critical importance to Nimbus is really how much it is able to net from this series. Indiantelevision.com estimates show the ad sales revenue picture for this series looking something like this: Nimbus’ Net income from DD is Rs 630 million (deducting 25% share to DD and 15% agency commission) and for Sahara it is Rs 864 million. That makes a total of just under Rs 1500 million ($ 35 million).

    Considering that Nimbus’ bid for the India territory rights was a whopping $ 504.09 million, there’s a huge mountain still that Thawani’s privately held Mumbai sports management company has left to climb to clear the profit threshold.

    THAWANI’S GAMEPLAN

    Having said that, and going by a recent report in Forbes, Thawani is already in the clear on the international territory rights (Nimbus’ bid here broke down as $ 108.09 million). The report says that Nimbus has sold BCCI’s telecast rights internationally for $130 million. The jury’s still out on that one though, with some industry observers calculating that Nimbus could not have made more than $ 89 million from the sale of international rights.

    As for the India part, everything points to Nimbus launching its own sports channel before the end of the year and for this the market expectation is that Thawani will soon be announcing another round of funding for this purpose.

    Thawani claims that investors are currently valuing Nimbus at $400 million to $500 million, which would mean that Nimbus has tripled in valuation terms in less than a year. It was last August that UK-based private equity and venture fund 3i acquired around 33 per cent stake in Nimbus for $45.50 million (approx Rs 1.97 billion).

    In conclusion, what is the downside in this gamble (for Thawani and any investor who wants to buy into his vision) and what could be the upside. That is really what will have guided Thawani in making what still remains a hugely difficult play to pull off. As the head of a broadcast concern told Indiantelevision.com, the current thinking is that there is just no way anyone can make more than $ 550 million from this deal. So at the outset itself, Nimbus is looking at a $ 62 million hit on its investment, or $ 15.5 million per year spread over four years.

    But there is the upside as well, which is that with all the new broadcast delivery platforms that are opening (DTH, IPTV, mobile TV) and if all the constellations of a booming economy, a brilliantly performing team and the kind of possibilities that a young on-the-go populace provide are in consonance, then $ 800 million might well be within reach.

    Before jumping to conclusions either way, it might be worth remembering a certain Kunal Dasgupta and his now well documented masterstroke of a gamble on the ICC cricket rights in 2002 for a then unheard of $ 208 million. There is no one who today does not see the SET India CEO’s bid as a really inspired play.

    A potential loss of $ 62 million versus a best case gain of $ 200 million. Which way the dice falls by the time 2010 comes around will determine whether Thawani is ultimately acknowledged as a visionary or someone whose go for broke gamble went bust. Unsurprisingly, there are many a respected industry stalwart who believe that if anyone can pull this off, it is the fashionably bald head honcho of Nimbus.

  • CAS Rollout Could Provide Huge Push for DTH Operators as Well

    In business as in life, timing is everything. And despite all the expected noises from the government (state elections are due in Kolkata after all) and the broadcasters (re-dusting the same arguments against CAS that they offered in 2003), one lot who might not be so peeved by the developments are the DTH operators.

     

    IF, the CAS Dwitya rollout saga doesn’t get derailed again by the usual suspects, we have quite an interesting proposition that is on offer for the consumer. Tata Sky is quietly preparing its launch schedule and would more than likely advance its timelines if there is a definite direction from the powers that be that CAS is really going to take off.

     

    In the meantime Dish TV, at present the only existing private sector DTH service provider, would be expected to sort out programming contracts with SET Discovery before that and any and all contentious issues with the Star Network at least by the time Tata Sky launches.

     

    One could ask why is the CAS rollout timeline critical here? After all DTH retains the advantage of having a national footprint while CAS will be limited to the three metros in the first phase.

     

    There is of course Chennai, which is already under the CAS regime but that should be kept out of this debate. Why? Because despite SET India CEO Kunal Dasgupta’s comment on “the CAS experience in Chennai not having been a happy one” the fact remains that the biggest reason that set top uptake did not happen was because the channel that is most critical in the Tamil viewer’s scheme of things – Sun TV (and others of its ilk) – is available in the FTA package so there was and still is no compelling enough reason to invest in one.

     

    Coming back to the main discussion, crucial to our premise is the staggered rollout of the addressable system of transmission of pay channels that had been notified in 2003.

     

    As per the notification, each of the three metro cities (Delhi, Mumbai, and Kolkata) would be divided into four zones. Within a one-month time frame, in Zone A in each metro, pay channels can be watched only with the use of STBs. From the second month onwards, CAS will take effect in Zone B in each metro. And so it follows in Zone C from the third month onwards and Zone D from the fourth month onwards.

     

    For the government, there are two choices — implement the court order or appeal. For the purposes of this argument we are going with the implement premise.

     

    The court instituted deadline for CAS rollout is 10 April. Therefore, the government after due consideration would be expected issue its fresh updated notification on 10 April that within a month all pay channels in Zone A would have to be delivered through a set top i.e deadline for Zone A to be “set top compliant” 10 May. Taking that timeline forward, Zone B’s deadline would be 10 may, Zone C 10 June and Zone D 10 July.

     

    IF Tata Sky can launch by 10 April then it, along with Dish TV will be able to go to the consumer with their individual offerings as possible alternatives to cable delivered addressability. What is critical here is that the consumer is COMPELLED to take a set top box if he wants to get his daily fix of Star Plus or HBO (whatever the case may be). Since the set top is a given the only issue is which service he / she selects.

     

    It will all then come down to which of the three alternatives is the best as per consumer understanding. Who offers the best deal, who is perceived as being capable of delivering the best in terms of technological quality and viewer experience at the most competitive cost?

     

    We believe that of critical importance here will also be the perceptions and prejudices that are attached to the service providers. These issues could well guide choices if all other parameters remain basically the same.

     

    What we could see is more “sophisticated” Zone A consumers opting for the DTH option while the skew could well be towards the more familiar “cablewallahs” in Zone D for example. Whichever way the skew swings, STBs will move. That ultimately is what all the players in the digital delivery game want.

     

    A moot point though is this. IF the CAS rollout does go forward as per the Delhi High Court ordered schedule and IF there is a huge uptake of set top boxes (digital cable or DTH), one big loser could potentially be Anil Ambani’s Reliance, which is neither ready with its IPTV nor its DTH offering. Once there are a large number of boxes out in the market, to get consumers to make the switch to something else would take twice the effort.