Reliance on top after Viacom's media rights purchase in IPL e-auction

In a first, broadcaster is subsidiary of team owner; experts say these are mutually exclusive franchises

The e-auction for the media rights of the Indian Premier League (IPL) has thrown up an interesting picture: Reliance Industries (RIL), which owns Viacom18 along with Paramount Global and Bodhi Tree Systems, will be the digital streaming partner of the tournament. At the same time, the conglomerate also owns the Mumbai Indians franchise.

In fact, this is the first time in the history of the IPL that one group is both a broadcaster and team owner, some experts said.

From a global perspective, too, there appears to be no precedent of a single company being both a broadcaster and team owner, if leagues such as the National Football League or the English Premier League are taken into account.

This is relevant because the e-auction, which saw the Board of Control for Cricket in India (BCCI) walk away with Rs 48,390 crore in revenue, has made the league among the most valued in the world.

As BCCI Secretary Jay Shah tweeted on Tuesday: “Since its inception, the IPL has been synonymous with growth & today is a red-letter day for India Cricket, with Brand IPL touching a new high with e-auction, resulting in Rs 48,390 cr value. IPL is now the 2nd most valued sporting league in the world in terms of per match value!”

Experts that Business Standard spoke to across the sporting and media world say they do not see a conflict of interest here.

“The BCCI owns and organises the IPL. It is their property. If a company acquires the media rights as well as owns a franchise in the IPL, I don’t think it can influence the tournament in any way. So, I don’t see a conflict of interest,” said Shailesh Kapoor, founder and chief executive officer of Ormax Media.

“RIL is a large group and has diverse business interests. Viacom18 and the Mumbai Indians franchise are separate entities. They are mutually exclusive,” says Deven Choksey, managing director at brokerage KR Choksey, who tracks RIL closely.

A media executive, who belongs to one of the big networks that bid for the media rights, says that conflict of interest would have arisen if an RIL executive had been a part of the BCCI board.

“The BCCI is led by Sourav Ganguly as its president. He has a team working with him that does not have an RIL representative,” he says.

“I don’t think there is a conflict of interest here just because the Reliance-owned Viacom18 has bagged the digital and overseas rights. It also owns an IPL franchise. So what? If there was an issue, the BCCI would not have permitted Viacom18 to bid for the rights at the e-auction in the first place,” he says.

Viacom18 was amongst the most aggressive bidders during the three-day e-auction, which concluded on Tuesday, forking out a total of Rs 23,491 crore for the India sub-continent digital rights as well as digital rights for a special set of 18 matches per season. The amount it spent for the overseas rights could not be ascertained immediately.

However, the digital rights have made Viacom18 the home for all IPL matches online, which it is expected to leverage by bundling IPL content with RIL’s Jio telecom services, media analysts said.

“The Viacom18 digital rights win could boost Reliance Jio Platforms’ content pool significantly, and digital rights exclusivity could boost Reliance Jio’s data subscribers,” brokerage CLSA said in a report released Wednesday.

A June 14 report by Bank of America Securities notes that while Viacom18 has won the digital rights, the telecom arm of RIL, namely, Jio would act as an exclusive digital distributor for the IPL rights.

“Jio’s improving fixed broadband rollout in coming years could further improve the monetization beyond mobile screens to “high ARPU” smart TV audience,” the report said.