Ten in Zee net
Zee Telefilms acquisition of a 50 per cent stake in Dubai based Taj TV, the owners of Ten Sports, highlights the fact that when it comes to sports telecasts in India, cricket is still king.
Zee Sports has struggled to obtain cricket content since its launch in 2004. Meanwhile, Ten Sports broadcasts cricket from Sharjah, the West Indies, Pakistan, Sri Lanka and Morocco to the Indian sub-continent, Asia, Europe and West Asia. The acquisition immediately catapults Zee Sports into a much stronger position as it ventures into new markets in West Asia. At the same time it gives Ten Sports a much-needed impetus from a successful broadcaster in the country, thereby changing the stakes among sports channels.
Highlighting the benefits of the deal for Zee, Subhash Chandra, Zee Chairman, said, "The acquisition of a stake in Ten Sports not only gives us a strong foothold in the arena of sports broadcasting across Asia but also strengthens our operations in West Asia.” With possibilities of even merging the two entities, their combined strengths will be a force to reckon with.
The Abdul Rahman Bukhatir owned Taj Television’s Ten Sports is beamed to nearly 50 million cable and satellite households worldwide. Taj TV is expected to have annual revenue of $50 million in the next three fiscals while the annual profit is expected to be in the region of $14 million.
In addition to its cricket content, Ten Sports also owns exclusive rights for the WWE, the UEFA Champions League, US Open Tennis and World Cup Hockey. Zee Sports on its part has access to certain BCCI matches. It also has the rights to Indian football, Davis Cup, WTA, Italian Serie A. Considering the channel does not have landing rights in certain countries in West Asia such as Pakistan, it gains access to new markets and territories through its association with Ten Sports.
Besides Zee is hoping consolidation in the space of sports genres will help bring in more realistic levels to sporting rights. Himanshu Mody, Business Head of Zee Sports, says, "Today there is no business model for us. The consolidation should help in bringing down the rights fees although both the channels would continue to bid independently.”
While Sony had made a beeline for the channel, there were firm denials from Ten Sports every time there was an imminent possibility of a deal being signed. A few months back when Brand Line contacted Sharmistha Rajwani, Managing Director, Ten Sports, she said, "There are talks but nothing has been finalised. We will let you know as and when we have something to announce.” A couple of months later Zee quietly informed the stock exchange about the deal with Ten Sports putting an end to the speculation.
Multiple language feeds shared between the channels should also boost their respective TRPs. Citing the success of having multiple language feeds shared between SET Max and SAB, Mody claims, "Multiple language feeds would ensure penetration of cricket properties, the TRPs of which have been going down. Simultaneous casting of matches done by SET Max and SAB in the past has shown increased ratings as compared to when they are being done independently.”
Outlining the implications of the deal, Nikhil Vora, Partner SSKI Securities, "The acquisition brings immense value to the table in the form of access to one of the best sports broadcasting properties in Asia and Middle East. There would be synergies in the form of content sharing, infrastructure sharing and distribution synergy in the long run, once Ten Sports moves from One Alliance Bouquet to Zee Turner bouquet post 2008.”
Considering Ten Sports has already inked a distribution deal with One Alliance (Sony’s distribution arm), it may take a while to reap the advantages of immediately bagging additional ad revenues. "Once the contract with One Alliance ends, we would be in a better position to command better rates and even to go after sporting rights. Both the viewership and the ad rates are expected to go up once Zee Turner starts distributing both the channels,” claims Satish Menon, President, Business development, Zee Sports. Presently Zee Sports commands between Rs 1.5 to 2 lakhs for a 10 second spot for its cricket matches. "The cricket rates depend on the particular series being played but with Ten Sports coming into the fold, we would be able to deliver better value in terms of ad revenues,” adds Menon.
But competitors do not feel enthused by the new turn of events in their genre of channels. R.C. Venkateish, Managing Director, ESPN Star Sports, said, "I don’t believe anything will change. There is no new channel being launched. It is simply a change of ownership and it is more of a financial transaction. Both the channels are already existing in the market and have their own equity. It will not be possible for Zee Sports to simply take on the rights to the games, which Ten Sports has."
According to Shashi Kalathil, CEO, Neo Sports, "For Zee Sports it will bring in a bunch of assets which will be to its advantage. Zee Sports has some rights and so does Ten Sports but the rights are not that deep.”
Another industry observer says, "In the short term it will not affect the dynamics of the business but in the long term it will make Zee a little stronger. Considering it is still cricket which rules, Ten Sports has rights to certain matches only till 2007-8 after which there is going to be a gap. So unless Zee manages to bag the ICC media rights, there is no chance for the channel.”
The immediate turning point for Zee would be if it manages to get the rights to the ICC (International Cricket Council) World Cups and tournaments for the next eight years. As a group, Zee has a history of being unsuccessful when it comes to obtaining cricketing rights. In 2000, before there was Zee Sports, Zee bid for the ICC Cricket World Cup rights. Despite having the highest bid of $600 million, the ICC awarded the rights to Rupert Murdoch’s Global Cricket Corporation for $550 million. Zee also failed to obtain the BCCI rights to international cricket in India in 2004, despite having the highest bid once again. This time it lost out to ESPN-Star Sports after much wrangling in and out of court. It was after this second unsuccessful attempt to obtain cricket rights that Zee launched Zee Sports.
Reports of Zee Group bidding in excess of $ 900 million for the ICC telecast rights have been doing the rounds, although Mody claims the bid amount is much less that reported. "While we cannot disclose the bid amount it is certainly less than $900 million,” claims Mody, who is presently in Dubai where the ICC bids are likely to be announced next month.
Whatever the actual amount of Zee’s bid, it is sure to be far more than the Rs. 250 crore that Zee paid to acquire its stake in Ten Sports. And it shows just how far Zee is willing to go to capture a share of the cricket pie and establish itself as a serious player amongst sports channels in the country.
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