DID THE HEAD HONCHOS AT The Walt Disney Company not read their own memo? That certainly appears to be the case considering how far beyond even the most aggressive projections was the winning bid made by Disney Star to ensure the ICC TV and digital rights to both men’s and women’s global cricket events for the next 4-year cycle were kept “in house”.
As per information made available to SportzPower by one industry insider, the winning bid for world cricket’s second most valuable media property after the Indian Premier League was $3.011 billion (Rs 23,900 crore), with the next highest being from Reliance and James Murdoch-backed Viacom18 at $1.75bn (Rs 13,900 cr), followed by Sony Pictures Networks India at $1.4bn and the lowest being Zee Entertainment Enterprises (and soon expected to be SPN’s equity partner) at $1.3bn.
Discussions SportzPower has had with a cross-section of industry insiders corroborate the above figures except on the all important one of how much the ICC will actually get from The House of Mouse at the end of the upcoming 4-year rights cycle (2023-24 to 2026-27)
While all of the numbers circulating in the media are around a $3bn ball park, SportzPower has it on reliable sources that the actual figure is $2.8bn.
Therefore, as per SportzPower’s assessment, below are the composite bids made for the 4-year ICC TV and digital rights:
Disney Star – $2.80bn
Viacom18 – $1.75bn
SPN – $1.40bn
Zee – $1.30bn
So whether the bid was for $2.80bn (and SportzPower is convinced it was), or $200 million more, whichever way one slices and dices this, there is no getting away from the fact that Disney Star went out on a mighty long limb to ensure the ICC rights “stayed put”. Or to put it another way, “out of reach” of Viacom18.
Rewinding to earlier this month, what Disney senior EVP & CFO Christine McCarthy had to say during the company’s Q3 earnings call, while lowering the 2024 forecast for its Disney+ streaming service, is revealing: “We are, however, updating subscriber guidance for Disney+ Hotstar to up to 80 million subscribers by the end of fiscal 2024. We intend to refine this target over time as subscriber visibility in India will be clearer once the ICC and BCCI cricket rights sales processes are completed. As you may know, we recently made the disciplined decision to not proceed with the Indian Premier League digital rights and we’ll evaluate these rights with that same discipline (emphasis ours).”
So what could explain the heave-ho given to said discipline in favour of a keep at any cost strategy? In this scenario, the potential loss of ICC digital rights, on top of the IPL streaming rights having already been lost to Viacom18, was preying on the minds of the people who matter at the media & entertainment behemoth, far more than what was being let on.
The position taken by Disney on the ICC rights brings back memories of 2013. ESPN Star Sports, then an equal joint venture between Disney and Rupert Murdoch’s Star, won the ten-year commercial rights (telecast and ground sponsorship) for the Champions League Twenty20 for $975 million. What was the next highest bid from then IPL media rights holder Sony? All of $651m. It is worth noting that then as well, it was a reaction to a rival having the IPL rights (TV as digital was irrelevant then) in its kitty that drove what ultimately proved to be a disastrous buy.
Disney Star sub-licenses 4-yr ICC men’s events TV rights to Zee for $1.288bn
And even as the bean counters across the media and entertainment sector had their calculators out computing the projected ramifications of Disney’s bid for cricket’s stakeholders, came the bombshell development literally “out of left field” on Tuesday.
Disney Star announced that it was sub-licensing the television broadcasting rights it held for ICC’s men’s and U-19 events to rival network Zee.
While financial terms of the landmark agreement were not disclosed, information provided to SportzPower by top level industry insiders puts the financial allocation of the $2.8bn total at 52:46 in favour of digital, which means $1.288bn for the TV rights.
Speaking about the strategic development, Zee MD & CEO Punit Goenka said: “This is a first-of-its-kind partnership in the Indian media & entertainment landscape, and this association with Disney Star reflects our sharp, strategic vision for the sports business in India. As a one-stop television destination for ICC men’s cricket events until 2027, Zee will leverage the strength of its network to offer a compelling experience for its viewers and a great return on investment for its advertisers. Long-term profitability and value-generation continue to be our areas of focus across the business, and we will always evaluate all the necessary steps that will enable us to make sports a compelling value proposition for the company. We look forward to working with ICC and Disney Star, to enable this strategic offering for our television viewers in India.”
Disney Star India country manager & president K Madhavan added: “By securing the IPL television broadcast rights for 2023-27 and now opting to retain only the digital rights for ICC tournaments for 2024-27, we have in place a balanced and robust cricket offering for our audiences across linear and digital. Over the years, Disney Star has strengthened the appeal of international cricket in India, enabling it to reach diverse age groups and cultural demographics across all parts of the country. As India’s leading media house, we will continue to do so with our strong portfolio of cricket properties across television and digital.”
Fully loaded content slate
The ICC events covered in the 4-year cycle offer a fully loaded and diverse content slate. Between 2023 and 2027, the ICC has 4 men’s events and 4 women’s events scheduled – ODI World Cups, ODI Champions Trophy, T20 World Cups, U19 World Cups.
Men’s events
2024
T20 World Cup (USA & West Indies host)
2025
ODI Champions Trophy (Pakistan host)
2026
T20 World Cup (India & Sri Lanka host)
2027 February
ODI World Cup (South Africa, Zimbabwe and Namibia host)
Women’s events
2024 (September-October)
T20 World Cup (Bangladesh host; 10 teams, 23 matches)
2025 (September-October)
ODI World Cup (India host; 8 teams, 31 matches)
2026 (June)
T20 World Cup (England host; 12 teams, 23 matches)
2027 (February)
ODI Champions Trophy (Sri Lanka host; 6 teams, 16 matches)
SportzPower’s take on how the ICC media rights sale played out
Putting on our own bean counter hat, here is what we believe the scenario looks like, as viewed from this perch.
For context, we examine what is Star India’s outgo for the rights to the current 8-year cycle. As per information available with SportzPower, Star India will have paid the ICC $1.8bn when the cycle is complete, in which was included 6 ICC events. So for 4 events (as mentioned above there are 4 ICC tournaments in the upcoming cycle), we can take a baseline calculation of $1bn over 4 years as a zero inflation + growth bid number.
Keeping the current market realities in mind, as a best case scenario, $1.5bn would be the upper circuit for achieving break-even so a 20% bid over that would be $1.8bn (close to what Viacom18 bid) and would entail the absorption of a $300m loss.
The $2.8bn bid meant that Disney would have had to absorb a $1.3bn loss. Offloading the TV rights to Zee means Disney’s loss load has reduced to $1.1bn. While Zee will be carrying a $200m loss load.
The immediate question that arises here is if it can accept a $1bn loss, what is another $300m for a company whose content budget alone for 2022 is a whopping $33 billion? Add the fact also that at a time when most reports coming out of India put the Disney bid for composite rights at $3 billion, the conglomerates share price was flat. Net net this means that the ICC rights retention price, while a big deal on this side of the pond, was of no significant consequence when it came to “moving the needle” on the Disney scrip.
Clearly therefore, the decisions that were made were driven by the Disney Star India team.
And the reasons were two-fold. The first is the straightforward one of spreading the risk. And the second, more compelling one is that two strong rivals working laterally makes for a better proposition to beat back the threat of Viacom18, which because of the backing of Reliance Jio, is not just cash awash, but has the technological wherewithal to follow through on its overweening ambitions to dominate the Indian media and entertainment landscape.
This also adds heft to reports doing the rounds that there was already an agreement in place between Disney Star and Zee to split the digital and TV rights, the information around which naturally had to be kept under tight wraps.
ICC the big winner
After having stood up to the pressure exerted by Indian networks (in particular Viacom18) over the bidding process (closed bids vs e-auction), the ICC’s principal architects in deciding the bid process – chief commercial officer Anurag Dahiya and vice president Media Rights Sunil Manoharan – stand fully vindicated.
The ICC rights value for this cycle have now reached that of UEFA club competitions in value. With this kind of revenue guarantee, it is the smaller cricket playing nations and associates that will be particularly joyous. This applies even if the current revenue distribution model, which is heavily skewed in favour of world cricket’s Big 3 – India (in particular), England and Australia.
And there still remains to be unbundled the non-India territories.
Underpinning this is also simple maths: by unbundling its package of rights into men’s and women’s events, into digital and TV, by going into different territories, the ICC stands to make much, much more money than they have in previous cycles.
