Zee Leisure Enterprises Ranking: Add | ICC rights deal fraught with dangers

Zee’s transfer to accumulate TV rights for ICC events (2024-27) for $1.4-1.5 bn helps an rising view that (1) sports activities broadcasting is much less weak to OTT disruption, (2) portfolio strategy (leisure + sports activities) is vital to safeguard core TV enterprise. Sports activities broadcasting is mostly not worthwhile and that is unlikely to vary in view of steep content material inflation and TV-to-OTT shift. So, we don’t absolutely admire/perceive Zee’s resolution to step up investments in sports activities TV rights (we might have most popular increased investments in OTT). Individually, CCI has raised some queries that would doubtlessly delay Sony-Zee merger.

Zee acquires unique TV rights for ICC males’s cricket occasions (2024-27)
Zee has signed a licensing settlement with Disney Star for the aim. Not too long ago, Disney Star received TV and digital rights for ICC cricket occasions (India marketplace for 2024-27). Per media articles, Disney Star received TV and streaming rights for ~$3.1 bn and licensed TV rights to Zee for ~$1.4-1.5 bn (implies broadly related worth for TV/digital rights akin to IPL). We notice that $3.1 bn for 2024-27 ICC media rights (4 years; Indian sub-continent) as in opposition to $2 bn for 2016-23 (8 years; international media rights) implies 15%+ 8-yr CAGR (in $ phrases). Within the case of IPL media rights, 5-yr CAGR is 24% in INR phrases (Rs 484 bn for 2023-27 versus Rs 163 bn for 2018-22). Such a pointy enhance in price of cricket rights might result in (1) increased sports activities loss/weaker profitability for OTT/TV gamers, and/or (2) strain on leisure promoting on TV.

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Deal is fraught with dangers

Males’s World Cup 2027 (most precious ICC property is 5 years away and its monetisation on TV hinges on tempo of TV-to-digital shift over the subsequent 5 years.
Time zone threat— We notice that Males’s T20 World Cup (2024) is within the US and West Indies which could work in favour of streaming platform (Hotstar) over TV .
Dangers related to India’s efficiency—Spot yields (advert charges) of semi-final/closing matches are a perform of progress of the Indian cricket crew.
Foreign money threat— ICC contract is in $ phrases and precise payout in INR phrases could possibly be increased if rupee depreciates.
Viewership cut up between streaming/TV for key ICC occasions could be considerably influenced by distinction in manufacturing high quality and subscription worth of Hotstar.
Regulatory dangers—Home subscription income from cricket properties is constrained by TRAI rules.
We notice that IPL’s advert income potential is much better than ICC cricket occasions. We count on Star TV to push for important enhance in advert charges beginning subsequent IPL season in its bid to cross on inflation in content material price to advertisers. The continued liquidity strain would weigh on the startup ecosystem (main advertisers).

It stays to be seen if ICC occasions can preserve their fair proportion on TV vis-a-vis IPL or the latter will achieve disproportionate share.