Lodha report could change cricket's TV economy
One of the more radical recommendations of the Lodha panel report is one that would resonate most with cricket fans: restricting advertisement breaks during broadcast of Tests and ODIs in India to only the drinks, lunch and tea intervals. This effectively would mean no ad breaks at the end of overs, which could turn the Indian cricket economy on its head and, according to those in the TV business, ultimately send subscription rates sky high.
The Lodha report is fairly clear: "It is recommended that all existing contracts for international Test & One-Day matches be revised and new ones ensure that only breaks taken by both teams for drinks, lunch and tea will permit the broadcast to be interrupted with advertisements, as is the practice internationally. Also, the entire space of the screen during the broadcast will be dedicated to the display of the game, save for a small sponsor logo or sign."
Taking note of how commerce has "overtaken" the enjoyment of cricket, the Lodha panel pointed to how "regardless of the wicket that has fallen, century having been hit or other momentous event, full liberty is granted to maximise the broadcaster's income by cutting away to a commercial, thereby robbing sport of its most attractive attribute - emotion."
The recommendation stems from the committee's belief that fans' viewing experience is interrupted in international games. To offset the commercial impact of this recommendation, the committee exempted the IPL, from which the BCCI makes the bulk of its revenues. The recommendation would ensure the viewers would have uninterrupted views of the game, the changes, and the emotions even at change of ends.
One of India's top sports broadcasting professionals, however, felt such recommendations would have a "cascading effect" on Indian cricket's ecosystem. "There is a certain cost that a broadcaster pays, a certain rights fee," he told ESPNcricinfo. "The rights fee has to be recovered either through a combination of advertising and subscription or only through subscription. The broadcaster does some recovery from advertising."
According to him, a reduction in the quantum of advertisements would invariably result in a greater burden of subscription fee being passed on to the end consumer. He pointed to the scenario in the US where the subscription charges are significantly higher when compared to India.
"Right now they [subscribers in India] barely pay Rs 5-10 for a cricket channel like Star Sports or Sony Max," the official said. "[If advertising revenue is curbed] it will jump to the levels in the US."
He said advertisements wouldn't get much play during the lunch or tea intervals as viewers tune out. This, in his opinion, would result in a fall in the number of advertisements and the value of advertisement inventory. It is understood that Star Sports, who hold the broadcast rights for Indian cricket, wouldn't stand to lose since its contract with the BCCI allows for renegotiation of terms should the recommendations come into effect.
The official, though, felt the larger problem was the financial implications it would have on the BCCI given the revenue earned from sale of broadcast rights was the board's major cash cow. "What a broadcaster can pay for these rights will have to be revised downwards, and I mean really substantially. The numbers will go down by half if not more.
"The BCCI is a healthy body and you have so much cricket infrastructure in this country because the BCCI gets all this money," he said. "Let us say if the implications of all this would mean a billion-dollar contract becomes half-a-billion dollar contract then the BCCI's capacity to invest in cricket will have to come down by half."
He also said it would dissuade broadcasters from investing in Indian cricket given other viable options. "If a broadcaster is looking at cricket then everybody should dump BCCI rights and start bidding for Australia and England and South Africa and rights of other countries where none of these encumbrances apply. Tomorrow if I have to bid I will bid for those rights."
The official also felt there were inconsistencies in the manner the committee had exempted T20 cricket, more specifically the IPL, from these regulations. "Cricket rights are already seriously overheated on per-match value," the official said. "For the BCCI rights, Star Sports pays around Rs 43 crore, while in the IPL the per-match license fee is only about Rs 10-11 crore, they are fine for the ads to run.
"If Star is expected to cough up Rs 43 crore, it would need legitimate avenues to recover that money. A broadcaster wouldn't mind broadcasts being made totally ad-free but then the value of the rights will have to be equally adjusted."
While it is learned the committee studied broadcast models adopted in countries like Australia and the UK, there is no reference in its report to broadcasting corporations in India being interviewed. "They didn't speak to companies like Star or Sony," the official said. "I don't know what input they have used [to arrive at the recommendations]."
With inputs from Nagraj Gollapudi. Arun Venugopal is a correspondent at ESPNcricinfo.