Why Sony should be scared, and national interest nonsense

March 26, 2008

This follows Prem’s post on the issue.

If I were Sony, I’d be very scared of this information and broadcasting ministry. The IPL is due to start on April 18, which is just over three weeks from today. In this time, the ministry could decide that the IPL is a matter of national importance. Perhaps (heh) the second half of the tournament – the bit where Sony execs see advertising rates hitting over 5 lakhs for ten seconds – could be of national importance. And there won’t be any warning. Just like last time, when on October 19, exactly two weeks before Pakistan played in India, the Test series was deemed to be of national importance. So I’d wrap up my advertising deals pretty quickly, and make sure they were darn watertight. 

Anyway, I had heard from an official at Doordarshan that it makes no money on cricket. In fact, it loses money. She wished the 75-25% deal with Nimbus didn’t exist (for those who don’t know, while Nimbus gets to keep its own advertising revenue, DD has to give 75% of the ad revenue it earns to Nimbus in return for taking the feed).

Now here’s an interview from 2005 (by Anjan Mitra of Indiantelevision.com) with KS Sarma, who was then CEO of Prasar Bharati:

Revenue generation seems to be the latest mantra in Prasar Bharati. Is that why the organization lobbied hard with the government to have laws favouring it where sports content, especially cricket, is concerned?
Why not ? Prasar Bharati’s reach amongst the masses, which is the target for the government, is maximum amongst all broadcasters present in India. And, what’s the big issue with cricket? That cricket is a big revenue earner for us is a big misconception. Moreover, the laws that you are referring to have been enacted by the government so that a huge chunk of the population that does not have access to cable and satellite TV gets to see quality sports, which may include cricket.

He goes on to say:

However, cricket helps DD in retaining viewership for other programmes. The chances of a viewer sticking around after a cricket match to check out the programme following it, is high. Feedback from TAM has indicated this and we are trying to capitalize on this.

Perhaps it hasn’t struck him and his colleagues that cricket isn’t just a loss leader for Doordarshan. When Sony promises hundreds of millions, it expects to barely break even. What it knows is that the “chances of a viewer sticking around after a cricket match to check out the programme following it, is high”. You make money on the edges.

But here’s another thing to think about. However you do the math, you can’t really make money off Indian cricket. It’s not a new trend. While it speaks about another country, here’s a bit from a 2003 edit, titled “Sports broadcast rights may head back to earth”:

The old economic model for TV sports is dated. The strategy among execs used to be that if they couldn’t recoup their investment in broadcast contracts, they could always use the games’ huge audiences as a one-of-a-kind opportunity to promote their prime-time lineups and other network programming. But today, the people watching sports are mostly men, and the people watching prime-time shows are mostly women. “Begrudgingly, executives are beginning to realize that sports is not a loss leader anymore, either,” says Richard A. Bilotti, a media analyst at Morgan Stanley. He estimates that sports losses wipe out about 40% of all profits from prime-time programs.

This is why you find fewer companies bidding for cricket rights. 

And here’s something handy for you to throw at government when it next talks about other countries making it mandatory for sporting events to be shown on terrestrial television. The other countries it is likely referring to have more than one terrestrial network, and they bid for rights.

Besides this, Nimbus’s grouse is perfectly valid. It’s been a year, and the signals have still not been encrypted. What this means is that this signal goes out to Pakistan, Sri Lanka, perhaps even the middle east and south east asia – all markets where Nimbus has sold broadcast rights. It also means, in a way, that DD’s DTH platform (subscriber base of over four million), regardless of where its subscribers live – city or countryside – will receive the broadcast. So this goes against the I&B ministry’s line that this is for people who don’t have access. Secondly, because it’s available on DTH as a free-to-air, why would anyone want to carry Nimbus’s Neo? If you’re Neo, you buggered. The DTH guys don’t want you, the cable guys sure as hell aren’t going to pay you. You’re so buggered.

Anyway, good luck to Sony. This is one messed up ministry.

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