Why Reliance opted out of TV rights in battle for IPL media rights

Mukesh Ambani’s group ultimately dropped the pursuit of television broadcast rights to India’s top cricket league that Walt Disney Co. secured for $3 billion as the Indian conglomerate saw limited opportunity for long-term profit from the legacy platform.

The joint venture between Ambani’s Reliance Industries Ltd. and US media giant Paramount Global instead focused on winning the rights to digitally stream the lucrative Indian Premier League, betting its advertising revenue will be four-fold bigger than that for TV in five years, a person familiar with the group’s strategy said. The view was that television would struggle to deliver double digit growth, according to the person, who didn’t want to be identified discussing deliberations that were private.

While Viacom18 Media Pvt., the Ambani-Paramount JV, bid for TV rights in the initial rounds of the auction, this person said the focus was always on ensuring it secured digital rights. A representative for Reliance Industries declined to comment on the auction strategy.

Viacom18 paid 238 billion rupees ($3.1 billion) for the rights to stream the IPL tournament, one of the world’s most-watched sporting events, almost on par with what Disney shelled out. The decision gels with Ambani’s ambitions for his digital unit Reliance Jio Infocomm Ltd. The billionaire, currently India’s richest man, wants to create a consumer ecosystem that marries entertainment and e-commerce to lure local users who are increasingly hooked to their smartphones.

The decision to let go of television rights saved Reliance billions of dollars, funds that can potentially be used to boost the conglomerate’s chances in the upcoming India auction for 5G spectrum. A prized cricket broadcast, which can add millions of subscribers, streamed on a speedy wireless network can be a potent mix for turbocharging Jio.

Jay Shah, the head of Board of Cricket Control in India, said in a separate interview that the country may see 900 million internet users in five years, underscoring the potential of digital rights. While TV was the staple source of entertainment in Indian middle class homes, the past few years have seen a rapid pivot toward online streaming — a trend exacerbated by the pandemic.

Reliance will be using its IPL rights as a tactical asset to build out streaming and digital platforms including Voot, Jio and others, this person said. Viacom18 has already secured media rights in soccer, badminton, tennis and basketball events, giving it a diverse portfolio of sports assets.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor