21st Century Fox CEO James Murdoch has hinted that STAR India will not make a too aggressive bid for the IPL media rights.
The bidding process for the five-year new cycle of the Indian Premier League media rights is on. The RFP document is available for sale till August 24. The last date for submitting the bid is August 28 and the outcome will be announced the same day.
Murdoch, according to US Media reports, has said that the company would be fiscally prudent to acquire new rights in order to not to upset its near-term and long-term targets of achieving $500 million EBITDA by 2018 and $1 billion by 2020. Even as STAR India is keen to further strengthen its strong cricket rights portfolio, which includes International Cricket Council and Asia Cricket Council rights till 2023, BCCI till 2018 (to come up for renewal next year), and England Cricket Board rights up to 2018.
The IPL is a crucial property for Indian sports broadcasters. The BCCI rights, coming up for sale next year, are the next big thing. However, any market force getting the IPL will not mind to let the BCCI rights go.
“From time to time, new rights are available in the market, and I would just say to you that the Star Sports cricket portfolio is very strong right now. If we could really strengthen it, we’d love to do so, but being very disciplined about that and certainly we don’t want to do things that are going to make a problem in terms of our near-term and longer-term goals for the business,” Murdoch has told analysts in the US recently.
The company’s CFO John Nallen has expressed confidence that Star India, notwithstanding the ad revenue loss due to demonetisation, is well on its way to achieve the milestone of $500 million EBITDA by 2018, which is in line with the company’s original plan. “Internationally, we’re expecting strong total revenue growth, driven by Star’s advertising increases, where we’ll continue to generate market-leading organic ad growth, will lap the impact of the demonetisation policy, and we’ll hit the $500 million EBITDA milestone,” Indiantelevsionpost.com has quoted Nallen as saying.
Murdoch is ecstatic about Star India’s OTT platform Hotstar as it had crossed one billion minutes of watch time in a single day during the fourth quarter ended 30 June. He further stated that the OTT business allows the company to reach a diverse set of audiences in different markets. “From Hotstar in India to Hulu Live and SkyGo and SkyQ, we’ve never been able to reach customers and as diverse, flexible and rewarding a fashion as we can now. This is, of course, just the beginning. We’ve got great confidence in the future of this video business for us,” he stated.
On minority investments in companies outside the group, Murdoch said that the company does not buy minority stakes very often, but when it does it sees if there is an opportunity in a new category or brand where it can add value. He cited the Indian DTH company Tata Sky as an example where the company holds 30%. Tata Sky is another good example where, from a regulatory perspective, we couldn’t own a certain amount, but we think it’s really important to drive that business forward and great for the Indian television marketplace and for our business there,” he explained.
However, Murodch’s comments on IPL rights acquisition strategy are needed to be taken with a pinch of salt. The rights for the 2018-2022 cycle are going to be the key to determine the Indian leader in sports broadcast market. Each bidder will be keeping its strategy closest to its chest at this crucial juncture when the all-important bid is going to be decided in a fortnight’s time.