Sony looks for playing fields beyond IPL

Sony owns the broadcast rights to cricket's bestselling event, the Indian Premier League, or IPL, which begins its ninth season this April. With FIFA 2018, Emirates FA and UEFA Euro 2016 among the ten tournaments it has the telecast rights for, Sony is "the home of international football," as CEO NP Singh puts it.

Then there is NBA, Ultimate Fighting Championship (a mixed martial arts event), rugby, tennis and more. In October 2015, it got into a (non-equity) partnership with Disney's ESPN. The duo launched its first channel, Sony ESPN, last month. Later this year, expect a co-branded website and multi-sport app.

All put together, 25-30 per cent of Sony Pictures Networks' estimated Rs 4,225 crore revenues in 2015 came from sports broadcasting. As it continues to pump money and time into sports, Singh expects this to go to 35-40 per cent in the next year.

What is driving this mega push into sports? "Strategic and economic rationale," says Singh. What he doesn't say is that Sony is not just trying to diversify its portfolio but also trying to counter the rise of Star India as a powerful rival in both cricket and non-cricket sports.

Vinit Karnik, business head, GroupM ESP, the entertainment and sports arm of the agency, explains, "All sport is on the verge of exploding. Star has most marquee properties except IPL. The whole thing is majorly skewed towards Star. Sony and ESPN coming together means next time there is a big property (up for grabs), they will bid."

N P Singh CEO, Sony Entertainment
Early mover

For over three years now, the $28-billion 21st Century Fox, Star's parent, has been aggressively trying to grow its sports business. In 2012, it bought out ESPN's share in its Asian joint venture and has invested millions of dollars into cricket, basketball, football and other sports across the world. In India, Star, which is estimated to have an annual turnover of Rs 8,450 crore, owns the rights to almost all India cricket, English Premier League, Formula 1, US Open, among others.

The only big tournament it doesn't have is, not surprisingly, IPL. Sony, a subsidiary of the $68.5 billion Japanese major, holds the broadcast rights for IPL for ten years ending in 2017. The price of these rights, for which Sony reportedly paid just over a billion dollars in 2008, is expected to rise by two times or more in the next auction.

Star, which is committed to spending Rs 20,000 crore on sports, could be a tough rival in the bidding next year. Joining hands with ESPN then gives Sony the financial muscle of the $52.5 billion Disney's somewhat troubled but very profitable sports arm. Will they bid together for future properties?

Vivek Couto, executive director of Singapore-based consulting firm Media Partners Asia, is not sure. "Sony does not have a sports business outside India. ESPN is looking to redevelop its Asian business through markets that have scale (China and India) through digital and TV partnerships," says he. "There appears to be no move towards the big bets that defined its previous life. It really depends on how much Disney wants to bet on sports internationally. There's likely to be more caution on that front."

Beyond IPL

What happens if Sony doesn't get IPL? "We don't know," says Singh. "We have played a very big role in bringing IPL to this stage, a legacy has been created." True. Sony is almost synonymous with the tournament. "We have been investing in sports since 1998 through cricket first and then other sports," points out Singh. It remains a serious and well-funded bidder.

Meanwhile, there is the shift away from cricket that Sony is well-positioned for. For very long, cricket has been generic for sports in India. But even then viewership accounts for only two per cent of the total time spent watching TV in India.

About two years ago, Star began the Kabaddi league, Sony started investing in football and Ten Sports in wrestling, football, golf et al. The results have been pretty good. Basketball, a sport that Sony has been marketing aggressively, has seen viewership jump from almost nothing to 50 million in the last two-three years.

In 2015, for IPL, the urban reach alone was 192 million as against 89.6 million viewers for pro-wrestling. Overall, sports viewership has seen 30 per cent rise over the last two years. This has narrowed the revenue gap between cricket and other sports, somewhat.

Going by GroupM numbers, till two years ago, about 75 per cent of the Rs 4,806 crore spent by advertisers on air and ground sponsorship went to cricket. This has fallen to 70 per cent, says Karnik. A bulk of the increased spends in other sports has gone to Kabaddi and football.

"The new sports are attracting a new category of advertisers - ecommerce players, handset manufacturers - that are trying to talk to a younger audience," says Singh.

On pay revenues, however, the news has been dismal. "Many of the decisions in sports were made on the hope that digitisation will happen and we can charge per subscriber. But the distribution landscape remains hazy," says Singh. The ad-to-pay ratio in sports remains at 60:40.

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