While two of the three major cricket media rights for the upcoming cricket season have already been auctioned, the broadcasting rights for the Board of Control for Cricket in India (BCCI) bilaterals are still up for grabs. The IPL’s media rights value has indeed hit the sky, but it remains to be seen if the bilaterals command a premium too.

Industry experts caution that the upcoming cricket media rights may witness a significant drop in premium due to market constraints and a decrease in the number of players as a result of consolidation. Some attribute it to the demand-supply dynamic, which is believed to have an impact on value.

Lull in buyers’ market

According to Karan Taurani, Senior VP, Elara Capital, the cricket media rights auction has shifted from being a seller's market to a buyer's market. He stated that at the IPL media rights auction last year, the pricing increased dramatically and unexpectedly. "The kind of premium paid in the previous cycle was based on the assumption that advertising would always be strong, but what has happened in the last two years has completely reversed it because nobody expected such a sluggish environment in advertising. In some manner, all advertising channels, whether TV or digital, are under pressure.”

New-age companies are slashing ad spends because of the pressure to focus on profitability on account of valuations falling globally and macro concerns.

Taurani believes these macro concerns are here to stay. “They will still take two or three more quarters to come back on track. Advertising from a festive standpoint might grow, at least for the next one year it will be facing challenges both for TV and digital.”

A senior analyst on the condition of anonymity shared that the demand-supply equation has become worse. The macro-environment has changed post IPL and the ICC media rights auctions.  “During IPL, viewership might have done well both on TV and digital but in terms of monetization it was very tough. The macro-environment has become tough now.”

Delay in auction

Other experts say that apart from unfavourable market conditions, the delay from BCCI’s end is likely to have an additional impact on the value. It's important to note that players who bid for the IPL and ICC media rights may have already exhausted their budgets.

“The BCCI was long due to come up for their auctions for bilaterals. Those who have already bid for IPL and ICC media rights have already committed a good amount of capital and they need to focus on recovering those investments,” said a senior analyst.

Among other factors, he said was the format. IPL is played in the T20 format whereas the BCCI bilaterals include Test matches along with ODIs and T20s. “Test match ratings are not doing well. These factors also impact the value of the media rights.”

Decline in number of players

To add some context, broadcasters and platforms bid aggressively to get the IPL and ICC media rights. BCCI raked in Rs 48,390 crore by splitting digital and TV rights for IPL's 2023-27 cycle, and Disney Star has paid $3 billion to retain the ICC media rights for the Indian market. The base price for the four-year rights cycle stands at $1.44 billion.

Experts say small players may seek bilateral broadcasting rights as the sector consolidates. For example, the ZEE-Sony merger is still ongoing, while Disney is apparently considering strategic options for its India business.

According to Taurani, the majority of these businesses will now be consolidated. "The number of players bidding for these rights has decreased. So, because of these two bigger reasons, monetization is a challenge in the market. Secondly, the decline in the number of players will have a bearing on the value."

Not all gloom

Sharing reasons for hope, Jigar Rambhia, COO at Sporjo, believes the Zee-Sony merger will put everyone in a stronger position.

“It is Indian cricket at the end of the day. The media rights value is likely to be similar to the last time. There won’t be a drop or hike as such.” He highlighted that the title sponsor has gone at a lower rate compared to last time.

As per media reports, BCCI is planning to close the media rights process by the end of August 2023.