Star TV's big gamble

The Indian team has faltered on the field for nearly a year, several of its biggest names are nearing retirement or have just retired, and the previous home broadcaster struggled to pay the BCCI in time, but still Star TV bid a mammoth $750m for the rights to Indian cricket over the next six years. In the business paper Mint, Shuchi Bansal looks at the reasoning behind Star's gamble.

Star India’s chief executive officer Uday Shankar and his advisers probably feel that digitization of the Indian cable television industry will unlock the value of the cricket property the company has purchased at an eye-popping premium. On 19 December, parliament approved the Cable Television Networks (Regulation) Act 2011 clearing the decks for phased digitization of cable television beginning with the four metros – Delhi, Mumbai, Chennai and Kolkata by 30 June – and the entire country by 2014.

The switchover from analogue cable to digital where consumers will access television content only via a set top box is expected to improve subscription revenue for broadcasters beaming into approximately 120 million homes. Subscription fee is what makes television profitable in most parts of the world and with the transparency that digitization is expected to bring, Star hopes to hawk the home series to viewers for a price.

In Firstpost, Anant Rangaswami calls the move a "brave, considered bet". He also thinks Star's valuation of cricket rights was based on the expectation that digitisation of cable systems in India would lead to more revenue.