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    April 15, 2005

    BCCI pondering about television channel

    Last month, IS Bindra, head of the Punjab Cricket Association, revealed his wishlist for Indian cricket. It contained, curiously enough, a need for the BCCI to venture into starting its own television channel in order to ensure that the mess it got into on the TV rights issue is not repeated.

    Last year, he had dared to ask for a little more professionalism in the BCCI and treat the fans who turn up in droves at stadiums in a much better manner.

    One part of his wishlist seems to have been answered now with him teaming up with the head of the Rajasthan Cricket Association in coming up with a feasibility report of the BCCI floating its own tv channel. Rick has more details, including a link to the actual presentation.

    Apparently, there're Rs. 16,000 crores up for grabs over a five year period. How many zeroes in that, anyone? There're zero zeroes in five, obviously. I was talking about the crores thingy! They're talking of Rs. 3200 crores in revenue per year.

    I dont understand how they reached that number in the first place. Zee's bid, the highest for a three year contract, was for Rs. 1200 crores. This works out to Rs. 400 crores per year, on an average. If the BCCI's channel wins the rights to telecast all of India's tours, they would have need to now fork out more than the Rs. 672 crores ESPN-Star shelled out three years ago, at 2002 exchange rates, when it bought rights for five years of international cricket in Australia, England, New Zealand, South Africa and Zimbabwe. That'd make it an average of Rs. 130 crores per annum

    Add in what TEN Sports bid for five years of cricket in Pakistan, Rs. 200 crores, which means Rs. 40 crores per year. Assuming they got the West Indies rights, paying Rs. 90 crores, for five years, that works out to at most Rs. 20 crores per year. The Sri Lankan rights were acquired for Rs. 225 crores for four years, working out to Rs. 60 crores per year.

    SET got the rights for various ICC events, including World Cups and the Champions Trophy tournaments, for Rs. 1200 crores, the period of the contract being 6 years. Effectively, the expenses per year being Rs. 200 crores.

    If we excluded the rights for the ICC organized events, then the absolute minimum the BCCI must spend per year in order to acquire the rights is Rs. 650 crores. Obviously the stakes are higher than they were two or three years ago, perhaps say 10% higher at least. This means Rs. 715 crores. I would seriously doubt if the BCCI could earn Rs. 3200 crores per annum on rights acquisition costs of Rs. 715 crores. Mind you, we have not included the actual content production & telecast costs. I dont want to guess what they might be. Even if they were equal to the cost of acquiring the rights, it means they're aiming at making a 100% profit. I seriously doubt that. Besides, in spite of the fact that they are not exactly a "company", the amount of money they'd be dealing in could attract the attention of regulatory authorities and force them to spin off the television channel as a separate company. Once they did that, and if they had telecast rights for quite a few countries, they could be considered a monopoly and suitable action could be taken against the channel.

    Feel free to comment and correct if I've got my arithmetic wrong somewhere. For what its worth, I used an exchange rate of Rs. 48 to the US dollar for 2002 and 2003 and for figures related to 2004 and 2005, I used Rs. 45 to the dollar.

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    Thus spake Jagadish @ 5:54 PM |
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    4 sledge(s):

    Whenever I read an Indian business website, I get way confused with this crores business. This is how Americans must have felt dealing with British Pounds, shillings and Pence all those years ago.

    Mind you, I think in the long term, sports bodies will increasingly look to establish their own television networks as this becomes technically easier to do.

    In a market like India though it seems unlikely to happen for a while yet. In England, the ECB could make its own money by broadcasting its own channel and selling advertising during live broadcasts. Now thy have moved totally to Sky, this is going to be increasingly tempthing for them.

    In India, though, the diverse range of bidders for the TV rights and the willingness of bidders to use cricket as a 'loss leader' to drive subscriptions mean that BCCI will continue to make more money by selling its rights then keeping them in-house for a while to come.

    I am no television expert, but as for 'content and production costs', my understanding is that they are not a huge factor in televising sport.

    cheers

    Scott Wickstein

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    By Anonymous Watch Live Tv Channels (20-Aug-2009, 5:03:00 PM)  

    I dont understand how they reached that number in the first place.

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