News Corp and ESPN announced on June 6, 2012 that News Corp will buy ESPN’s 50 per cent share in the ESPN Star Sports (ESS) joint venture. This will allow both companies to pursue their individual business objectives in Asia. Media observers were expecting the move for some time now, specifically after STAR India bid and won BCCI media rights for six years.
ESS’ Managing Director Manu Sawhney will transition his role to Peter Hutton, SVP of Sports for Fox International Channels.
Sawhney’s exit is perhaps one of the first changes that News Corp and ESPN’s decision has brought but senior industry leaders believe that there is more in store not only for the sports genre in India but also for STAR India that gains significant strength in the sports genre with this move.
Survival of the big league
Consolidation is not new to the Indian sports genre. In 2010, Zee upped its stake and acquired Ten Sports, which has been a leading sports channel in India and was perhaps one of the few examples where a non-cricket property, WWE, was delivering for the channel.
Neo Sports Broadcast has been on the market for a while and after losing out the BCCI rights to STAR India earlier this year, moved away from cricket and both its channels went the all-sports route. The fact that amongst the various companies bidding for Neo Sports at the time, one was media behemoth Bennett, Coleman & Company Ltd reiterates the interest that large media players have in the sports genre.
Even as some sports channels are struggling to survive, the genre itself has seen growth in India. This was perhaps one reason, in addition to the fact Multi Screen Media owns the telecast rights of the IPL (Indian Premier League), that encouraged the company to move forward and launch its own sports channel Six in April 2012.
CVL Srinivas, Chairman, Starcom MediaVest Group India observed, “Media per se has become so fragmented that consolidation is a natural phenomenon. This is true across genres, not just sports. The supply side is experiencing a phase were the properties’ price, whether it is cricket or movies, has become unrealistic. They will not get that kind of support from advertising or distribution. What we are seeing is a rationalising of outlays and the beginning of some sanity coming in the overall equation.”
The New Stacking Order
Sports is a long-term game and what is seen time and again in India is that sports equals cricket and that leads to any revenue worth talking of. There are also examples such as Ten Golf that charge Rs 200 for subscription per month and that is their revenue model. Sports such as football, hockey, tennis, racing, basketball and the likes are also there and will continue to be around but a channel-driver is cricket. In that conversation, ESPN STAR Sports is the best placed Network at present.
The key question after the News Corp buyout of ESPN’s stake in ESS is how the ESPN brand shapes in India. In a press statement, John Skipper, President of ESPN and Co-Chairman, Disney Media Networks has said, “With the growing digital landscape in Asia, we look forward to continuing to serve Asian sports fans through ESPN-branded digital businesses like ESPNCricinfo, the leading digital cricket brand in the world, ESPNFC and ESPN Mobile.”
At present, ESPN Star Sports has BCCI (Board of Cricket Control in India) and ICC (International Cricket Council) rights in addition to rights of ECB (England and Wales Cricket Board) and the ACB (Australian Cricket Board). GroupM’s Hiren Pandit stated, “ESPN Star Sports has the media rights for all the key countries whose matches Indian viewers are interested in. For the sheer money that ESS and STAR has paid, at present it is the best placed sports bouquet in India.”
Indian viewers have shown interest in matches of England, South Africa, Australia and matches, where India plays Pakistan, Sri Lanka and so on.
Six and Ten are the other two that have strength in the Indian market given IPL and the cricket properties that Ten has.
The challenge moving forward for the genre is ensuring sticky content and since in sports, unlike general entertainment, the content is finite and cannot be easily created, the battle ahead of indentifying and securing rights to relevant properties.
STAR’s big move
As News Corp and ESPN get into a definitive agreement that allows News Corp to own and operate all ESS businesses in India, the big advantage is for STAR India.
OMD India’s Chief Operating Officer Harish Shriyan explained, “This brings STAR India to a very favourable position. They are strong in general entertainment, movies, English entertainment, regional and now they have got a strong foothold in the sports’ genre as well. Their presence across genre is much sharper and this gives them a very strong outlay.”
Pandit added to this, “Cricket is the equivalent of a big-ticket property on a general entertainment channel. By itself the property may not turn out to be too profitable but it makes the overall channel profitable. It takes care of the low visibility programmes. And with all the rights that ESS has, STAR now has not one or two but quite a few big ticket properties.”
Srinivas said, “With digital convergence in the offing, I think we are headed to very interesting times with STAR India can do by bringing cricket into their overall mix.”
STAR India, given the Network’s presence is seen best placed to even handle and well monetise a property like cricket. Its distribution JV with Zee, Media Pros, also gives it expertise in the distribution space that can help it take forward ESPN’s legacy of monetising subscription revenues. Even though the implications of the deal are not clear at present as STAR India officials state that clarity will prevail only after the buyout of ESPN stake is completed, the first impression auger well for STAR.