IPL on turning track, broadcast revenue down by a third

The world's richest cricket competition, the Indian Premier League (IPL), is finding the going tough in its fifth season.

Multi-Screen Media (MSM), which runs the league's official broadcaster, SET Max, is likely to see a nearly 30 per cent drop in ad revenues this season, given the hard bargains most companies have driven.

With the tournament closing on Sunday, the channel is expected to rake in around Rs 600 crore (Rs 6 billion) in season five compared to Rs 900 crore (Rs 9 billion) last year, according to media buyers.

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The broadcaster had expected Rs 1,100-1,200 crore (Rs 11-12 billion) in advertising revenue from the fifth edition of the IPL. When contacted, Rohit Gupta, president, network sales, MSM, said, "We do not comment on numbers."

According to media buyers, this year, the channel had roped in five sponsors: Vodafone, Pepsi, Hyundai, Idea and Tata Photon. Last year, it had 10 on-air sponsors. Among them were Vodafone, Pepsi, Cadbury-Kraft, LG, Samsung, Godrej and Airtel DTH.

A just released Brand Finance report pegs the current brand value of the IPL at $2.92 billion (around Rs 16,162.5 crore) -- an erosion of 29.29 per cent (in dollar terms) over its peak of $4.13 billion in 2010 (around Rs 19,675.3 crore then).

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Last year, the IPL's brand value was down to $3.67 billion (around Rs 16,632.4 crore then), thanks to poor governance and transparency issues. This year, concerns have loomed over spot-fixing charges as well as the conduct of players off the field.

Unni Krishnan, global strategy director, Brand Finance Plc, says, "The seemingly never-ending series of governance and transparency lapses have contributed to the rapidly declining brand value of the IPL. It will not be too long before the IPL would have regressed to its benchmark value of $2 billion in 2009, putting the whole ecosystem and value creation of franchises under pressure."

People in the know said ad rates had been lowered from the initial asking rate and some sponsors offered additional airtime. For the final play-off, Set Max stuck to ad rates of Rs 8-11 lakh per 10 seconds. For the league matches, the channel had charged Rs 4.5 lakh per 10 seconds from sponsors and Rs 5 lakh for spot buys.

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It opted not to give huge discounts, considering it has the IPL's TV rights for another five years. Last year, spot ad rates were in the range of Rs 5-5.5 lakh per 10 seconds.

"It is our biggest property; we can't afford to discount its current value. T20 continues to grow in popularity in years," N P Singh, COO, MSM, had told Business Standard in an interview during the launch of MSM's sports channel, Six, last month.

The current broadcast deal was signed by MSM Satellite (Singapore) Pte Ltd, fully owned by MSM, in July 2010. The earlier contract, signed in 2009, had pegged MSM's payout at a consolidated Rs 8,200 crore (Rs 82 billion) for IPL 2 to IPL 10. "Instead of discounts, sponsors and advertisers have been given bonus inventory this year," said a media buyer on condition of anonymity.

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IPL's ratings have been slipping since last year, with the current edition being no different. At the end of 68 matches, according to TAM Sports data, IPL's season five generated average TVRs (television ratings) of just 3.27 as opposed to 3.39 in the first season. The first season had a TVR of 4.81.

Diminishing viewer interest has also pushed some big advertisers away, such as LG and Godrej who opted to give the tournament a miss this year.

L K Gupta, chief marketing officer, LG Electronics India, had told Business Standard earlier the decision to keep away from the IPL was taken keeping in mind the falling viewership.

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"You have to look at all aspects, the costs vis-a-vis the returns," he said. "While doing our annual budgets for 2012, we decided we would not advertise on IPL this year," he had said.

Even big spenders like Samsung, Celkon Mobiles, Sony India and Cadbury-Kraft, who sat on the fence for long, joined the IPL fold at a late stage.

"This is the year when SET Max has got a reality check. Our estimate is that ad rates for IPL 6 will stabilise and not increase," said a senior executive from a media buying agency.