[ad_1]
ZeThe move to acquire TV rights International Chamber of Commerce Events $140-150M (2024-27) supports an emerging view that (1) sports broadcasts are less vulnerable to OTT disruptions and (2) a combined approach (entertainment + sports) is critical to protecting core TV business . Sports broadcasting is often unprofitable, and that’s unlikely to change given the dramatic expansion of content and TV’s transition to OTT. So, we don’t fully understand/understand Zee’s decision to increase investment in sports TV rights (we would have expected a higher investment in OTT). In addition, CCI raised some issues that could delay the Sony-Zee merger.
Zee secures exclusive TV rights to ICC men’s cricket match (2024-27)
To that end, Zee has signed a licensing deal with Disney stars. Recently, Disney Star won the TV and digital rights for the ICC Cricket event (Indian market 2024-27). According to media articles, Disney stars won TV and streaming rights for about $3.1 billion and licensed TV rights to Zee for about $140-150 million (meaning TV/digital rights similar to IPL) are roughly similar in value). We note that ICC media rights (4 years; Indian subcontinent) are $3.1 billion in 2024-27, compared to $2 billion in 2016-23 (8 years; global media rights), implying a compound year of 15% + 8 years Growth rate (in USD). For IPL media rights, 5-year CAGR of 24% in Indian rupees (Rs 484 billion in 2023-27 and Rs 163 billion in 2018-22). The dramatic increase in the cost of cricket rights could lead to (1) increased sports losses/decreased profitability for OTT/TV players, and/or (2) pressure on entertainment advertising on TV.
READ ALSO | MCX crude oil September futures: Short covering ahead of OPEC+ meeting; only long above Rs 7382/bbl
Trading is full of risks
Men’s World Cup 2027 (the most valuable ICC asset is five years away, and its monetization on TV depends on how quickly TV goes digital over the next five years.
Time zone risk – We note that the Men’s T20 World Cup (2024) is held in the US and West Indies, which may favor streaming platforms (Hotstar) over TV.
Risks associated with India’s performance – On-field revenue (ad rate) for semi-finals/finals is a function of progress for Indian cricket teams.
Currency risk – ICC contracts are denominated in US dollars, if the rupee depreciates, the actual payout in INR may be higher.
The distribution of viewership between streamers/TV for key ICC events will be influenced in part by differences in Hotstar’s production quality and subscription prices.
Regulatory Risk – Domestic subscription revenue from the cricket industry is restricted by TRAI regulations.
We note that the advertising revenue potential of IPL is much better than that of ICC cricket. We expect Star TV to start pushing for a significant increase in advertising rates in the next IPL season to pass the content cost inflation to advertisers. Continued liquidity pressures will put pressure on the startup ecosystem (major advertisers).
It remains to be seen whether ICC events will maintain their fair share on TV relative to the IPL, or the latter will get a disproportionate share.
[ad_2]
Source link