Shortly after it was formally announced that Mumbai-based Nimbus Communications will have the rights to all BCCI matches till 2014, and that the firm paid a considerably lower amount for the deal compared with a similar transaction in 2006, Harish Thawani, the founder and chairman of the firm, discussed the deal and related issues with contentSutra. Excerpts:
So is the deal official now and what is the final price?
Yes, today it’s official and there is no price, but the estimate is that with the margin of some flexibility, it is about Rs2,000 crore.
How come you got a price that is substantially lower than what you paid in 2006?
Sports rights are a bit like stock prices. There is no precise logic to it. How do you value a sports property? There is no methodology here that you can say it’s a multiple of such and such parameter. Yes, there is a recognition that the price should reflect a balancing of interests of the sports federations and the commercial players. We must also recognize that there has been a correction in asset prices everywhere–be it securities, oil, real estate and what not. So, the days of bidding up prices to stratospheric levels and having all the stakeholders suffer are over.
We saw some reckless deals in 2007 and 2008.
I think this is the way forward. People can do business with each other only if all parties can make profits. This is a win-win deal.
Also, when you work it out, the per match rate we are paying is actually similar. We also got about a ten percent discount on the past deal after the mandatory feed sharing act was passed.
What is the per match rate you are paying and is the case that this time there are fewer matches?
Again, it depends on the exchange rate and other factors, but it is about Rs31 crore. The number of matches are about 15% lower at this stage. The schedule is subject to change and we have left enough flexibility in the deal to work around future changes.
How did the process work? As the incumbent rights holder, did you have the right of first refusal? Was there a bidding or several rounds of negotiations?
We are bound by contract to not discuss the details. Yes, we did have the right of first negotiation. We submitted a price. I can only speculate that the board (BCCI) would have scoped the market to see what anyone else may have been willing to pay.
In 2006, the perception was that you were overpaying for the rights. Did you make money from it?
That deal is in place till March 2010 so I’ll be able to talk about profits from that deal only then. But you must keep in mind that we launched a whole broadcasting operation called Neo out of that deal and with this extention, we are also looking at the expansion of that franchise. So the benefit to us, over and above selling the matches, is that we have built a whole new business that has grown well and will hopefully create tremendous value over the years.
So has Neo turned operating cash flow positive? Yes. Has it wiped out the accumulated losses over the years? Not yet.
What are your views on the mandatory sharing of the feed with the public broadcaster? How does it affect deals like these?
At a conceptual level, it’s a noble thought. It’s a social cause. But let’s look at the practical side. In the West, pay TV penetration is normally 10-30% of the total TV viewing universe. So it makes sense to say that important games should be made available to even those who can’t afford pay TV. In India, pay TV is very cheap and hence ubiquitous. The pay TV penetration here is about 75-80% of the total TV viewing universe. Now DD puts the feed not just on its terrestrial service. They also put it on satellite and DTH and that directly affects the broadcaster who has paid for the rights.
What does the deal mean for Nimbus? Are you looking to raise cash?
We are not looking to raise money. We had a third round of investments in 2009 by our existing investors 3I, Cisco (NSDQ: CSCO) and Oman International Fund. The focus is on growing Neo Cricket. The channel will soon be available also in Europe and North America. We already have a very strong presence across Asia. We are also planning two new channels.
Do you also have digital rights? Do you plan to stream the matches live on the Internet?
We have some parts of the digital rights. The rest BCCI has retained. We will have a strong Internet presence through our portal CricketNirvana.com where we will have highlights and clips. We tried free live streaming in the past and found that highlights and clips were getting far more traffic that the streaming, so taking into account the cost of doing it, it’s not a worthwhile propositions. Wherever there are Indians who want to watch cricket, our channel is available on TV.
Do you think that ODIs will suffer due to the popularity of the 20/20 format?
That is the biggest myth ever. Cricket between countries have a 150-year history. You cannot replace that with a few seasons of a new format. The fad of 20/20 cricket will pass. Ratings show that IPL season 2 was 17% lower than the first edition. And you know what is happening with Champions League T20. So there is no question about diminishing popularity of ODIs.

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