ESS, Zee in clash over cricket rights in India

The Board of Control for Cricket in India (BCCI) had initially awarded the rights to domestic satellite broadcaster Zee TV following the broadcaster's bid of US$308 million to secure the rights for the next four years.

However, the BCCI decision was challenged by ESS - Zee's initial bid had been $260 million, but when ESS upped its offer from $230 million to $308 million, Zee matched it and was granted the contract.

In early September, ESS filed a motion to the Mumbai High Court challenging the action and Zee promptly filed a caveat. ESS claims that it was the highest eligible bidder under the rules of bidding specified by the BCCI and that the process had been changed in violation of rules.

The High Court had asked the parties to either settle the matter among themselves, failing which they could either contest it or ask for a rebid.

The Zee board has decided to fight ESPN in court.

Zee has no prior experience with sports broadcasting, but has revealed plans to launch a new channel, Zee Sports, to showcase the cricket.

While the verdict still hangs in the balance, the massive acquisition cost of $308 million has triggered a debate among media watchers, who fear either channel would be unable to recover that investment from sponsorships and advertisements alone.

"Cricket ad rates have peaked and they are likely to hover between $2,000 to $4,000 per 10-second slot in the current as well as the next cricket season," said Nitin Jain, general manager of Group M.

Meanwhile, viewership ratings continue to fall. The India-Pakistan matches at the recent Asia Cup held in Sri Lanka and the Tri-Nations Cup in the Netherlands registered television ratings points of eight and 12, respectively, compared with 14 and 15.32 in last year's World Cup and the India-Pakistan series in March of this year.

Meanwhile, total sports advertising on TV accounted for around $152.5 million last year.

However, Zee noted that it intends to tap the international pay and syndication market, as well as merchandising.

"We are a business entity and have not done this without thinking it through. Cricket is such a huge property that it could be what Kaun Banega Crorepati (the Indian version of Who Wants To Be A Millionnaire) did for Star. Also, we have the largest footprint outside the country. The possibilities are huge," said Ashish Kaul, vice-president of corporate brand development group, Essel Group, which owns the Zee group of channels.

In addition, Zee expects the new acquisition to boost its DTH operations.

"Subscriptions are an assured return in DTH business. We are earning around $653,500 already through presence in 50,000 homes; with cricket on board, we expect it to more than double immediately," said Kaul.