Thursday, October 25, 2007

ICL & IPL. Can BCCI blacklist Zee/Ten from bidding?

There is a report in The Economic Times that says BCCI is likely to blacklist Zee Group and Ten Sports from bidding for its cricket telecast rights.

Naturally BCCI is pissed off at Zee Group for starting Indian Cricket League - ICL. However, can that be grounds enough to blacklist Zee from bidding for rights? BCCI claims this has to do with Zee pulling out of overseas crickets telecast rights. Zee claims it has initiated arbitration proceedings.

Ten Sports is only partly owned (majority stake though) by Zee. Can BCCI also blacklist Ten Sports?

My view is that BCCI's blacklisting will not be sustainable in the court of law. Zee is certain to contest such blacklisting, if it happens.

However if the rights in question relate to IPL, BCCI may have a point whereby it can claim that Zee may not promote IPL properly, since it also owns ICL - supposing Zee wins the bid to telecast IPL. Courts may agree to this point. The same however cannot be said if the rights are for One-day internationals or Tests.

Cricinfo to picth for other sports

After ESPN has acquired Cricinfo, here are some bytes indicating what is in store for the future. [ET article]
  • Cricinfo like operations to be created for other sports.
  • Cricinfo journalists will now be seen on camera on Sportscenter shows in Australia and South Africa. [Not India?]
  • ESPN will promote Cricinfo through TV commercials around the world.

Monday, October 08, 2007

Frankfurt Book Fair 2007

Our company, New Horizon Media Pvt. Ltd. will be participating in Frankfurt Book Fair. This is our second trip to Frankfurt.

Last year, India was the guest of honour at the Frankfurt fair. National Book Trust had set up a special pavilion. Several Indian publishers had used this opportunity to come to Frankfurt. But this year, very few are attending.

Our stall is at 6.0 E 904.

Thursday, August 30, 2007

UP move on large-format retail store

Following an attack on a few Reliance Fresh and Spencer Daily stores in Lucknow, the Uttar Pradesh Chief Minister Mayawati has ordered a closure of all large-format retail stores.

The hooliganism was organized by a sitting Rajya Sabha MP Banwari Lal Kanchal of the rival Samajwadi Party and his organization UP Udyog Vyapar Mandal.

There has been a lot of anger against large-format retail chains across several states. Some states have resorted to violence - most notably Ranchi in Jharkhand, near Kolkata in West Bengal, Indore in Madhya Pradesh. There have been several demonstrations in Tamil Nadu.

In West Bengal, the ruling partner AIFB has promised not to let Reliance Fresh in and has said it will demonstrate (and perhaps also indulge in violence) in front of Reliance Fresh stores.

For a while, I was under the impression that it is not possible for state governments to control who sets up what kind of shop and what can be sold there. I was wrong. An archaic and bad law in the form of Agriculture Produce Marketing Committee Act exists in all the states. This seems to be a state subject and hence you have roughly 30 variations of this act, state to state.

This act has primarily been used till now to determine to whom farmers can sell foodgrains. Vegtables, fruits and such have been left to open market purchase and resale. However, I fear this law can be (mis)used by left leaning governments to impact organized retail from selling agricultural produce.

This will affect shops like Reliance Retail from selling vegetables, fruits and may probably even be extended to cover milk. Such a retail shop then will be forced to only sell groceries and FMCG products.

The state variation in such a law can also determine where agricultural produce selling shops can be opened, the size of the shops, licenses for such shops etc. This will be an extremely retrograde step.

It may be worthwhile for the central government to enact a law which at best controls only foodgrains (even that should be avoided, if at all) and release the rest of the agricultural produce from the state list and abolish Agriculture Produce Marketing Committee Act across the states once and for all.

Tuesday, August 14, 2007

The need for Indian Cricket League

The BCCI - Board of Control for Cricket in India - has been a monopoly, controlling professional cricket played in India. Similar organizations do the same in other cricket playing countries, but in countries like Australia and England, the cricket boards are professional bodies.

In India, on the other hand, BCCI is filled with all the undesirable elements in the society - led by the politicians. BCCI's aim is supposedly to promote and manage cricket. They fail miserably in this aspect. Cricket promotion in the country happens on its own, through corporate involvement and television coverage. BCCI merely extracts its annual income from television rights and sponsorship of matches. They pay a portion of this to the players, but rarely explain what they do with the rest of the money.

BCCI office bearers are supposed to be honorary, elected members. So they cannot draw huge salaries. But, they also deal with more than a billion dollars each year. Huge presidential suites, massive expense bills, and financial mishandling is the norm. BCCI top honchos also act as bullies when they deal with television companies and their own players.

You cannot find a single good thing they have done in the last 10 years. No new statium anywhere to speak off, no pension to past cricketers - though there were fancy statements thrown around, but nothing concrete has happened, no cricket scholarships for under-16, under-19 kids. Nothing. They have increased the salaries to players playing in International matches, and also the domestic matches. But that is nothing compared to their earnings.

They have fought paying taxes. They put enormous strain on the cities that hold cricket matches and do not adequately compensate the city administrations and police force during that period.

The stadia owned by the constituent state cricket associations where International matches are held are extremely poor. They are concrete blocks with very poor civic amenities such as toilets. Food served is invariably poor. Crowd control is horrible - the policemen whack spectators with lathis. Ticket sales is pathetically organized. You will have to stand in long queues for days and may still not get a ticket, while bulk of the tickets are siphoned off and given for free to politicians and other VIPs. Tour schedules are poorly organized. As a comparison, tour schedules in Australia and England for the next year is made available well in advance and tickets can be bought over the Internet.

BCCI do not publish annual reports. They do not have a vision statement, or a list of their accomplishments. Heck, they don't even have a web site in this age! They do not issue press releases. They do not explain any of their actions to the people of India.

Every year they conduct elections. Horsetrading abounds, making Goa legislative assembly a sweet place. The current President is a Minister in the Union Cabinet, handling an important portfolio - Agriculture. He had to be brought in to check the growing clout of the previous incumbent, who was considered extremely autocratic. BCCI has never been democratic.

In all, it is amazing that despite BCCI, the national team wins a few matches.

It looks next to impossible to clean the system from within.

It has to be done from outside.

While I have no special sympathies for Zee's Subash Chandra, the Indian Cricket League (ICL) floated by him could very well shake the board to change its ways.

ICL seems to be quite motivated and willing to spend money.

Whether they succeed financially or not, if they help in achieving a sensible administration and a change of constitution in BCCI, it will go a long way in reforming the game in India.

(Strangely, ICL's website is also down now! So can't link them.)

Titanium Di-oxide mess

Every move by the Government in Tamil Nadu is extremely politicised. The weakening of the ruling party DMK has caused this.

In particular, the Government faces vocal and mostly meaningless criticism from its partners and supporters - PMK and the communists.

The job of these two parties is not offering constructive solutions. They merely instigate local people, issue statements condemning the government move, and eventually force the government to backtrack on such projects. The (Chennai) satellite township project and the (Chennai) airport expansion project both have been killed because of such intransigent behaviour on their part.

The latest in this series is Tata's attempt at setting up a Titanium Di-oxide plant in southern Tamil Nadu, in Sathankulam in Tuticorin (Thuththukkudi) district.

Titanium Di-oxide is used as a pigment in paints and coatings to provide the white colour. It is used in antimicrobial coatings because of its disinfectant characterestics. Being a light and strong metal its alloys can be used in various engineering constructions and biomechanics.

Large titanium deposits are available in Sathankulam in the form of its ore ilmenite. It has not however been exploited so far. No company has put forward a sensible proposal to mine the ore and convert it into a value added product. Some limited mining rights have been given to few companies and they are known to be exporting the ore.

During the last AIADMK regime, Tata Steel with their mining and processing expertise asked for the license to set up a mining cum processing operation. Nothing came of it. The current DMK regime signed an MoU last month with the Tatas allowing them to set up a mining and processing operation.

AIADMK protested. But then, PMK and the communists also protested. Vijayakanth of DMDK protested. Sarath Kumar, another actor turned politician protested.

The government have stated that land will be acquired at market rates. The government will not invoke a Singur like operation and acquire land and turn it over to Tatas.

Tatas want 16,000 acres of land, to ensure they will have a solid supply of the titanium ore for a reasonable time to come. The government is suggesting that only 315 acres out of this is likely to be fertile land. The communists and PMK disagree with this.

The other concerns are that
(a) Tatas are asking for too much land.
(b) The mining operation will result in sucking the water completely from the nearby regions and convert the place into barren lands.
(c) Tatas cannot provide employment to all those who will be surrendering (read: selling) their lands.
(d) Pollution will adversely impact the local ecosystem.

The government announced that it will send a fact-finding team and ask the local people about their opinion. Each opposing political party said they will also send a fact-finding mission of their own. So yesterday (Monday), there were as many as three fact-finding missions talking to people. Each mission will deliver an entirely different version.

Any industrial activity of the type envisaged will result in some pollution. It is fair on the part of the Pollution Control Board to ask what measures Tatas will undertake to deal with the pollution caused and how to minimise the same without affecting the people, flora and fauna nearby. Water issue should also be dealt with. Tatas should come up with their views on how the nearby areas will be affected and what they intend to do.

Being a coastal land, Tatas can be told not to use the ground water, but to set up a desalination plant for all their water requirements. They can also be asked to ensure that water table not be tampered with, so that far away agricultural lands are not affected.

What could be the benefits of setting up such a plant? The southern Tamil Nadu is poorly developed. There are not many jobs for educated youth. Agriculture is an unsustainable job creator. The Rs. 2500 crore investment from Tatas can help in kickstarting the manufacturing sector in south Tamil Nadu. Provided the livelihood issues affecting the nearby people are taken care of, this project should be welcomed by all.

However, the short sighted political parties are making the life very difficult for the ruling party and the government.

A sudden suggestion has come from CPI that instead of getting a private company, the Union Government should be asked to set up the Titanium plant. If that is done, somehow the pollution and land acquisition problems will go away. This exposes the communists' double standards about what they want in West Bengal and what they will settle for in other states. (Shouldn't the Union Government be asked to set up an automobile factory in Singur instead of Tatas?)

The Union Government is in no position to set up new industries. When was the last time, they undertook industrial projects to the tune of Rs. 2500 crore?

Tamil Nadu has achieved significant manufacturing growth in the last decade because of automobile and auxillary manufacturing units near Chennai. Something similar has to be done in the south and west Tamil Nadu. Will our politicians make this happen?

Sunday, August 12, 2007

TN Government to offer cable TV connections

In a recent interview, the 2006 Nobel Peace Laureate and Economist Mohammad Yunus said "business should not be the business of government. Business should be in the hands of the private sector."

But there are times, when one has to welcome a government initiative in starting a business - that too in the service sector.

The Tamil Nadu State Government has decided to set up a business venture to offer cable television connections to homes. This may look quite strange to people living in other states who have not been following the affairs of Tamil Nadu carefully.

Here is a quick recap.

The DMK lead by M.Karunanidhi won the state elections in 2006. One of the campaign promises was distribution of free colour TVs to every household. Yes, every household, provided they had a ration card. There was no other condition attached to the offer. You could already have a TV. You could be rich. If you had a valid ration card, you were eligible for the TV. You could of course, bribe the local DMK functionary and ensure that your name got on to the list of beneficiaries ahead of genuinely poor people.

The government actually fulfilled this promise - to a substantial degree. Colour 14 inch TVs have been procured and delivered to the households. Some of these TVs have also found their way to consumer electronic shops for reselling, though.

Nevertheless, the DMK government felt that the TV media was very important. The dominant Tamil television channel is Sun TV, run by Karunanidhi's nephews - Kalanidhi Maran and (then) Union Minister Dayanidhi Maran. The Marans also controlled cable television networking (SCV) in several parts of Tamil Nadu and had also gotten a license to operate DTH services.

The idea was to supply colour TVs to all the poor people in the state who could not afford to buy one and even offer them free electricity to run the TVs (along with the electricty subsidy already being given to them for normal light bulbs). There were allegations that this will result in Marans making a killing through the cable TV charges each month.

Then, the Marans fell out with Karunanidhi's son M.K.Azhagiri. A poorly timed opinion poll in Dinakaran daily, owned by the Marans showed M.K.Stalin (Karunanidhi's another son, and currently a minister in Karunanidhi's cabinet) as a leading contender after Karunanidhi and pushed Azhagiri and Kanimozhi (Karunanidhi's daughter) to nowhere and suggested Dayanidhi Maran as number 2. Azhagiri's rowdy follwers went berserk in Madurai, Azhagiri's backyard, burnt Dinakaran's office there and killed three staff working there. The police watched the entire show from a distance.

Rather than being angry at his son's follwers, the Chief Minister Karunanidhi was apprently mad at Marans and decided to punish them. Dayanidhi Maran was asked to be dropped from the Union Cabinet. Dayanidhi Maran resigned.

The relationship soured further and reached a stage of no-return.

Suddenly Karunanidhi's DMK was left without a TV media, while 14 inch colour TVs were being delivered all over the state. So an announcement came that 'Kalainjar TV', a private channel with the blessings of the Chief Minister will be launched shortly.

It is not enough if you launch a TV channel, to reach the people. You need a strong distribution. Marans control the distribution in most key cities. It is alleged that Marans monopoly distribution of cable was mostly due to DMK's tacit support whenever the party was in power in the last two decades. Now, DMK had to do something to gain the television power.

The last AIADMK regime had wanted to clip the power of Marans' television distribution in the state. AIADMK also has a television channel - Jaya TV - a distant second to Sun TV. Peeved at the position Sun TV and SCV had, Jayalalitha decided to take over all the cable distribution in the state under the government wing, and passed an ordinance. DMK rushed to the Governer to protest against the palpably partisan and illegal attempt. Good sense prevailed and the Governer did not sign the ordinance. AIADMK was shortly defeated in the elections.

Now, Karunanidhi could not attempt to do the same that Jayalalitha tried. So he decided to launch a Government controlled cable television distribution network. This is fairly legal and no one can protest against this move. All licensing conditions will be quickly worked out, as DMK controls the corresponding ministry at the centre. Given that Kalainjar TV is to be launched in September, the distribution company will be launched well before. The Tamil Nadu Cabinet approved the move yesterday (11th August 2007).

Is this move good for the people of the state?

The answer is yes. Though the entire move is driven by political compulsions, it is bound to do good for the people in the medium term. In the long term though, the company floated by the government will lose money, will be corrupt to the core and will eventually be shutdown. But yet, this is required now.

Even in the days of DTH, cable distribution is required because of the inexpensive service offered by them. DTH operators demand up front payment of Rs. 3,000-5,000 for the set top boxes. Cable TV distribution was in the hands of several small time players during the unregulated period and thus not enough investments were made in the infrastructure. When organized players including SCV came in, they came with the political muscle rather than the capitalistic efficiency. Thus, cutomer service was completely ignored and thugs ruled.

Hathway, another cable distributor was banished from Tamil Nadu using the political muscle. Since then, no other organized player has come to Tamil Nadu to offer cable distribution business. SCV has also not increased its footprint because they have no competition and hence no need to expand at a fast clip.

Now, the government entity will be driven to set up distribution business across the state. This will result in a more efficient service offering from SCV, and a more responsible customer service. The prices will be cut, as the government has promised to offer low prices. The growth will immediately prompt players like Zee and others to jump in and offer competing services. In the end, the government service will fail, but would have paved the road for three to four new players who will be fighting in a level playing field.

Customers will certainly benefit from this.

Friday, July 13, 2007

Podcast: Arun Shourie and Cho Ramaswamy on Pratibha Patil

The Indian Liberal Group, Chennai, had organized a meeting on 13 July 2007, where Arun Shourie and Cho Ramaswamy participated and talked about the Congress Presidential nominee Mrs. Pratibha Patil.

To listen:

Arun Shourie (English, 32.16 min)

Cho Ramaswamy (20.55 min, English and Tamil)

To download: Arun Shourie | Cho Ramaswamy

Monday, June 11, 2007

ESPN acquires Cricinfo

ESPN International has acquired Cricinfo website. Note that the acquisition is by ESPN International and not ESPN-Star Sports the Disney-Murdoch joint venture. ESPN Star Sports has its own sports site, but that doesn't have the same fan base as Cricinfo. So there will be some tension between ESPN-Star and ESPN International on how Cricinfo is treated.

Disney's long term gameplan is not clear. However, looking at Soccernet, I am not very confident that great things may happen with (as the site will be renamed soon).

Current Cricinfo earnings are too small to merit enough focus here from ESPN bigwigs.

A few things, well funded Cricinfo can do (but may not do):
  • Video scorecards of every Test and One-day match - at least the wickets and fours/sixes clips linked to every match scorecard.
  • Additional key moments like centuries, fifties, controversial (non-)dismissals etc.
  • These clips to be linked to the statsguru database.
  • A good mobile interface to statsguru, as well as the above video database
  • Allowing for embedding (ad supported and delivered by Cricinfo) video clips into third party blogs, when fans want to build up an argument and support the argument with video.
  • Archived full highlights of video of classic past matches for pay-per-view streaming.
  • Live audio streaming (legal I suppose. Off tube may not work with Disney) of all Test and One-day matches online (paid + ad supported).
  • Video profiles/biographies (30 mins) of important Test cricketers (both online and offline in the form of DVDs)
  • Better coverage of domestic cricket in all Test playing countries, including live scorecards of first-class games

Wednesday, May 30, 2007

Cricket: When you are too greedy...

BCCI is an example of how you will suffer when you are too greedy. Also, when your approach is not to build partnerships but opportunistic deal making and screwing the 'opponent'.

Jagmohan Dalmiya was a deal maker. He will care the least about the telecast partner or sponsor. He will not work out the nitty gritties. He will talk in terms of the larger number and leave the rest to sponsors and telecasters, who invariably suffer in the end.

Lalit Modi, who replaced Dalmiya as the main negotiator for BCCI is just as arrogant. As long as Dalmiya was in BCCI - irrespective of whether he is the Secretary or President or Treasurer or whatever - he will discuss all the commercial deals. Modi is the equivalent. He is one of the several vice-presidents of BCCI and is entrusted with the television negotiations.

His dealing was downright harsh and Zee (after winning the overseas bid) even complained against Modi's behaviour.

With India's showing in World Cup downright pathetic and Indian Government's legislation on sharing TV feeds with Doordarshan on top, all of BCCI's partners are in trouble - which means BCCI is in trouble.

Nimbus has been renegotiating with BCCI and there seems to be some agreement with them on reducing their $612 million, 4-year rights deal. Zee, in the meantime, desperate for cricket, had talked about a separate professional league. Now, Zee has announced that it is cancelling a deal with BCCI for telecasting overseas cricket matches organized by BCCI.

When cricket is played in any of the full member countries, the host controls the television rights. If International cricket has to be played in any of the associate or affiliate member countries, the respective cricket association in that country has to stage the matches and will, in turn, own the telecast and other rights.

IMG/TWI exploited this later concept and organized matches in Toronto. Canadian Cricket Association was the organizer namesake. IMG/TWI did everything and pocketed a neat profit and paid small monies to Canadian Cricket Association. Sharjah (UAE Cricket Association) was WorldTel's property, but later became Bukhatir's Taj Television's.

BCCI hit upon this wonderful idea of cutting out the middlemen, and become the event organizer abroad to maximise its revenues. Alas, the team's poor performance, greedy and mindless deal have all come together to roost now.

BCCI can survive only by hiring sensible corporate managers who are also kind and decent and build a sustainable business and not be corporate thugs, who bully bidders into submission. Because, when you fall - as in cricket you always fall - you won't have any friends left. Like it is now for BCCI.

Friday, April 20, 2007

ESPN-Star renegotiating ICC cricket deal?

There is a news item in The Economic Times that says ESPN-Star is looking at renegotiating the ICC cricket rights, which was pegged at around $1.2 billion.

The reasons quoted by the paper are:
  • India's performance is poor, and the value of Indian rights is more than 70% of the global value.
  • 2015 World Cup in Australia is non- prime time.
  • Advertisers are looking for safety clauses in contracts (if favourite teams flop, if rain impacts the tournament etc.)
  • Indian super stars will have retired by then (Sachin, Rahul, Saurav, Virender etc.)
  • DD-Nimbus encryption problems.
I think this is complete garbage. Firstly, team performance is mostly cyclic. Australian matches, if day-night, will get into reasonable prime-time. Maybe, they can hold more matches in Perth than anywhere else:-) Current super stars will be replaced by future super stars.

I think, the real issue is that the price quoted is anyway high, irrespective of all the above reasons. ESPN should not have bid $1.2 billion.

The main problem I see is the Indian government legislation on sharing the feed with Doordarshan. That lowers the value of World Cup rights and other cricket rights. India cannot enforce such legislation on matches played outside Indian territory. So, it is upto ICC and other cricket boards to join the broadcasters and fight the Government legislation in the Indian courts.

Sunday, April 15, 2007

Cricket World Cups and Cricinfo

The first World Cup after the advent of Internet was in 1992, in Australia and New Zealand. K.Robert Elz, known as 'kre' who was a fairly senior officer in the Australian Internet Setup would write a brief match report and the scorecard as on that point and will mail that to the newsgroup The same was broadcast across two email mailing lists maintained by Prof. Sankara Rao at North Dakota State University.

After this, Internet Relay Chat (IRC) was used to provide ball-by-ball text commentary. Cricket was perfectly suited for this. Cricinfo followed soon, in 1993, developed initially as an IRC bot by Simon King and then moved into Gopher and then the World Wide Web.

In time for the World Cup 1996, which was to be played in India, Pakistan and Sri Lanka, Prof. Sankara Rao was very keen to have live ball-by-ball upto-the-minute scorecards on Cricinfo. He approached Jagmohan Dalmiya, then heading PILCOM, the body that was staging the World Cup, and obtained the necessary permission. Dalmiya, with his usual bluster, said all arrangements have been made to collect scorecards from every venue through a complex network, set up by Puncom (A Govt. of Punjab undertaking), pushing the content to a media center in Kolkata (then Calcutta). And that, this can be taken to the Internet, but Cricinfo would have to make its own arrangements for the same.

The first match went on, but no connectivity could be established and in any case, when I looked at the scorecards that came from the wonderful network, it was in complete shambles. Names spelt a million different ways. No cricket statistician would look at those scorecards and accept them.

Cricinfo had a reputation to stick to. A South African, Jacques de Villiers, (perhaps along with a few friends) had developed a cricket scoring software called 'Dougie'. It was a Unix term based program. To record a ball event (either a run, or a wicket, or an extra), you just need to enter a few characters. That was it. The program updated the scorecard, changed the batsman facing the bowler now etc. The scorecard in the original version went to a Unix finger file. 'Fingering' was the mechanism by which one could follow the score.

After the PILCOM fiasco, Sankara Rao suggested that 'dougie' be resurrected and used for scoring the games. A cricket crazy Dutchman, Louis van Dompselaar, took the program, modified it and made it working well in time for the second match. The matches were available on satellite in US via KBS (later merged with Echostar). A chap (the name Ravi comes to mind, but now i cannot remember the name fully) convinced a motel owner in Louisiana who was getting the feed, got an Internet connection installed in the motel, and used dougie to score the matches. I pitched in, operating the software most of the time by taking the data from him through IRC. We had excellent scorecards in Cricinfo. It was an extremely popular site during that period.

Immediately after this World Cup, Cricinfo was incorporated as a private limited company in UK, with Simon and I as its directors.

Just before 1999 World Cup in UK, Cricinfo received commercial funding. A sports portal called (then called Pangolin) brought in some money in early 1999, into Cricinfo. Dougie had improved substantially thanks to several others but most notably Travis Basevi (who still works for Cricinfo). Travis, an Australian, was flown to Chennai, and form there he provided running text commentary and scoring for most of the matches. Cricinfo took on the official site, run by the ECB and won hands down. By now, Cricinfo was quite commercial and was soon to receive couple of major fundings. First to invest was Michael Watt, a New Zealander, who had founded CSI - a television production company, which was later sold to Octagon. Then, in early 2000, SIFY, an Internet Service Provider in India bought out Watt's stake, and invested more moneies into Cricinfo.

2003 World Cup, played in South Africa (and Zimbabwe/Kenya) was another turning point in Cricinfo's history. Between 1999 and 2003 Cricinfo had gone through a cash crunch and a heart-aching restructuring. Wisden Group acquired a majority stake in Cricinfo and soon took 100% control of the portal. The deal happened right in the middle of the World Cup.

Since 1996, Cricinfo's World Cup coverage has been the best out there. No other entity has scaled up to providing a better cricket coverage. That apart, as I have detailed above, every World Cup has been a momentous occasion for Cricinfo - as a venture/company.

Now, 2007 World Cup is being played in West Indies. Who knows... there may be an interesting deal in progress.

ICC's Cricket World Cup Official Site

[PS: I am not associated with Cricinfo anymore. I left the company in April 2005.]

Thursday, March 08, 2007

Private FM players may be allowed to broadcast Cricket commentary

An article in Business Standard suggests that the government may allow private FM channels to broadcast cricket commentary. As of now, FM stations are not allowed to broadcast news. Cricket is certainly entertainment and not news, but for some reason since their inception radio stations were not allowed to broadcast cricket. It would be great if the government notification happens before the World Cup next week.

Nothing outstanding may happen for the current World Cup. We may only get the standard Hindi/English commentary. But in future, city based stations can offer cricket commentary in respective languages. This will generate more listeners and hence more revenues for the stations, and consequently more revenues to the rights holders and the BCCI.

Tamil channels coming on air in Bangalore reports that slowly some Tamil channels have been let in the cable networks. One cable operator commented:
"Even now, we don't want to antagonize the Kannada activists by starting all the Tamil channels at one go," said a cable operator, who did want to be named. "We will do it slowly, and maybe meet in a few days to take a decision on the matter, because the entire process of notification may take a long time. Why should entertainment be mixed up with politics?" he asked.

Tuesday, February 27, 2007

Cricket world cup internet deal reports that Maruti has taken up a sponsorship deal on ICC Cricket World Cup official website amounting to $1 million.

This is a huge deal as far as Internet advertising in India goes. There might have been larger year-long deals in the near past, but nothing probably comes close to this deal - $1 million for a little over a month, to a site which is unlikely to be as popular as well known cricket Internet destinations such as Cricinfo.

Ban on Tamil channels in Karnataka

Tamil Nadu and Karnataka are locked in a conflict in sharing Cauvery river water. A tribunal was set up in 1990 which gave an interim award in 1991. This resulted in anti-Tamil riots in Bangalore, some people were killed and several driven homeless.

The tribunal has come up with its final verdict this month (5th February 2007). Unlike in 1991, there have not been any riots or murders. But there is still a lingering problem where Tamil television channels have been off air since the announcement of the verdict.

India Television News

I consider this a very disturbing news. India has moved forward substantially from the tribal mindset in the pre-1990 era. Economic growth (though quite lopsided), has brought considerable plurality and appreciation for opposing viewpoints and cultural sensibilities.

Problems between states in a federal set up should not result in linguistic minorities being tortured in one way or the other. A band of Kannada extremists are holding cable TV companies to ransom and are enforcing this 'ban', and an elected government is unable to revoke the ban in a liberal democratic country.

Karnataka people have every reason to be angry at the tribunal's verdict and they should take up all legal measures to push their case ahead. But if the state, intelligentsia and Kannada speaking people allow the Kannada extremist organization to dictate terms on how to treat the linguistic minorities in their state, Karnataka state will remain in dark ages forever.

Saturday, February 24, 2007

Cricket rights, BCCI and Neo Sports

Indian cricket allows for brash and innovative deal making. There is a lot of money riding on Indian cricket and poor management at all levels makes it very difficult to decide exactly what the size of the potential is. This results in heavy speculation.

No sports anywhere in the world has seen television rights value multiplying like the way Indian cricket has. A quick update of history here for your consumption. Before Jagmohan Dalmiya and IS Bindra started managing BCCI, Indian cricket matches were broadcast by state owned Doordarshan. Doordarshan made all the money (or none at all) and never thought of actually paying BCCI. Doordarshan probably thought it was its divine right to produce and broadcast cricket (and other sports) staged in the country. On its part, BCCI also did not know that it can ask the telecaster for a rights fee.

In 1993, BCCI for the first time tried getting a private broadcaster to produce matches (Hero Cup) and sell the broadcast to a private channel. This resulted in Doordarshan blocking the coverage by unfair means. Indian Customs was used to block the cameras from being taken inside the country. VSNL (at that time owned by the government), an uplinking company, was forced to not uplink the television signals. This resulted in a court battle, at the end of which it was established firmly that BCCI could sell cricket telecast rights.

India had started on a liberalisation process and private TV channels were coming to India, transmitting through satellite. Large dish antennae and cables strung over lamp posts were used to transmit the signals to homes. ESPN was in India, and so was Star Sports. Both these channels started looking at cricket as a big growth engine and started fighting amongst themselves and jacked up the rights fees.

Then, the two channels merged to create ESPN-Star Sports.

TWI negotiated a deal to bring Indian cricket on cable and satellite (C&S) television ESPN from 1995-1999. The five year deal was valued at approximately USD 5 million. This was also the period that saw Harsha Bhogle fronting cricket commentary for ESPN and technological innovation started coming into Indian cricket production.

ESPN-Star Sports also brought overseas cricket to India, matches involving India as well as matches between other teams.

This was the golden period for Jagmohan Dalmiya as he consolidated his position in BCCI. In between, 1996 World Cup happened, jointly organized by India, Pakistan and Sri Lanka (PILCOM) which was produced by Worldtel of Mark Mascarenhas. (Today Dalmiya is accused of embezzlement during that World Cup and has been stripped off his posts and memberships and is facing criminal prosecution.)

In the meantime, Dalmiya had squeezed himself into a powerful position in ICC as its President and set out his goal of generating money for ICC. Thus, he defined specific events for which ICC will hold rights and created the concept of ICC Championship Trophy (also called mini world cup). The 1999 World Cup held in England did not generate any income for ICC, but the subsequent Wills Knockout in Bangladesh did. Since then ICC events have been generating massive revenue. (The latest ICC global rights have been sold for around $1 billion to ESPN-Star Sports.)

When the Indian cricket rights were up for renewal in 1999, Prasar Bharati emerged as a surprise winner. The state-owned broadcaster agreed to pay the cricket board $54 million (Rs 227 crores) for five years (from Sep 1999 to Apr 2004). ESPN-Star Sports and other private players were beaten, and the rights fee jumped ten fold from $5 to $54 million!

Now Prasar Bharati set out to maximise its revenues. It ran the first series - India vs New Zealand - shoddily. Then, under Rajiv Ratna Shah, set out to generate massive income for the remaining 4.5 years of rights. It broke the rights into two parts - overseas distribution and India airtime rights, for the telecast in Doordarshan channels.

The airtime sales rights were picked up by an associate company of Zee Telefilms called Buddha Films, which bid a massive $120 million (Rs. 450 crores) for the same. Other bidders were TWI-Stracon and Nimbus.

TWI-Stracon, however won the overseas distribution contract by bidding $43.75 million.

Thus, within six months, Prasar Bharati turned the $54 million contract around for more than $160 million.

TWI, for its part, wrote into the contract just about everything it could, and created a funny thing called "multimedia rights" which was so poorly defined. Prasar Bharati thought it still had the "Internet rights" which it could sell further.

Prasar Bharati decided to offer non-exclusive Internet rights for all comers at "an annual license fee of Rs. 25 lakh" which included "scoreboard, analysis, graphics, stills (up to 30 frames per minute from the live signal) and interviews with players (this may include pitch report, weather report, interview on the captains, players and experts)." But it added, "if the license-holder, however, desires to have live and delayed streaming audio and video after obtaining the Internet rights from Prasar Bharati, it will have to approach Stracon-TWI who hold the multimedia rights.

In the end, none of the Internet portals bought the Internet rights from Prasar Bharati. But TWI found a sucker in PCCW's and sold a bunch of things to them including live video streaming, some kind of extended highlights for their TV operation etc. for something amounting well over $26 million.

Then, when PCCW sort of collapsed, TWI brokered a deal selling the rights held by to ESPN-Star Sports. This resulted in ESPN-Star Sports running extended highlights for India matches (which ran for well over 3 hours for each day!). This resulted in Prasar Bharati suing them, and getting an injunction in the courts preventing ESPN-Star Sports from broadcasting these extended highlights.

TWI also ensured that PCCW's streaming rights (outside of whatever Prasar Bharati thought) were exploited properly, by teaming up with to offer serious commercial cricket streaming.

It was clear that when this set of rights came to an end, BCCI will look at getting even more from its rights and the fight for the rights will be acrimonious.

That is what happened, and a period of chaos ensued.

Dalmiya still had control over the BCCI. He was in charge of rights negotiations. ESPN-Star Sports was the front runner. Prasar Bharati was not going to get involved in the bidding game in a big way as it was pushing the government to come up with a legislation for any winning bidder to share the terrestrial rights with Prasar Bharati on a revenue-sharing basis. Sony Entertainment Television had acquired ICC rights during this period for a whopping sum. Zee was aggressively looking at expanding into DTH space. Both were going to bid. Ten Sports, another sports channel was also in the fray.

The BCCI bid document was quite harsh as it demanded substantial experience in showing International cricket in its channels for two years. In the end, Zee bid $260 million (Rs 1200 crores) for four years. ESPN had bid $230 million, Sony TV at $140 million and Ten Sports at $115 million. But the story did not end there. BCCI disqualified Zee's bid on technical grounds and invited ESPN for further negotiations.

This resulted in Zee going to court against ESPN and BCCI. Nothing happened for the next year or so. The courts ruled that till the cases were disposed off, Prasar Bharati will show the matches in Doordarshan and will keep an account of the money.

In between, a further rebid happened, further lawsuits, further chaos.

Then, a palace coup happened and Dalmiya was removed from BCCI, Sharad Pawar, a Union Minister won, and took control of BCCI. This resulted all earlier bids being withdrawn and a new bidding process put in place. Various cases were withdrawn.

In the meantime, the government had come up with broadcast regulation rules which stated that any private channel having telecast rights to any cricket event (whether staged within India or outside) must share the clean feed with Prasar Bharati for terrestrial broadcast on a revenue-sharing basis. Ten Sports contested this in courts and kept winning. Still, everyone thought the BCCI rights values will be lower because of government rules.

However, Nimbus came from nowhere to bid a massive $612 million for the next four years (March 1, 2006 to March 31, 2010) during which time there was a guarantee of 22 Tests and 55 ODIs to be played.

Thus, in three successive terms, the rights fee has jumped from $5 million (5 years) to $54 million (5 years) to $612 million (4 years).

Nimbus has taken a massive punt in bidding so high. The first series was shown on Sahara TV, a free-to-air channel. Subsequently, Nimbus launched its own channel called Neo Sports (and Neo Sports Plus), and showed the next two series there.

In the meantime, the government came up with an ordinance forcing private broadcasters to share the matches with Doordarshan. Nimbus refused and offered only a time-delayed (7 minutes) feed to Doordarshan. This prompted the government to issue a show-cause notice to Nimbus. On the other hand, TRAI - the broadcasting regulator attacked Nimbus' pricing policies. Four metro cities were being moved into CAS (Conditional Access System), where TRAI had mandated that each channel must be priced only at Rs. 5 (whether it is a sports channel or a movie channel or a nothing channel!), and in non-CAS areas, the pricing must be discussed with TRAI first and only with the approval of TRAI, the pricing can be enforced.

Nimbus had, in the meantime, done a deal with Star distribution to distribute its channels, and Star had promised a minimum guarantee of approximately Rs. 600 crores to Nimbus for the four-year period. The two channels were priced at Rs. 58.50 but TRAI hads slashed them to Rs 37.25 for non-CAS areas and Rs. 5 each for CAS areas. This is going to seriously impact Star and Nimbus' revenues. Another thing that will impact Nimbus' advertising revenues will be whether the government's ordinance can withstand judicial review.

The government is also trying to talk to BCCI and the channels in sorting out the sports broadcast ordinance. But BCCI will mostly side with Nimbus and sports channels on this one. A lot will depend on the judiciary now.

BCCI has, in the meantime, also created a new set of overseas rights, where it will conduct matches in neutral venues like Malaysia, USA, Dubai and so on. Telecast rights for such matches have been sold off to Zee for $ 219.15 million for five years (April 1, 2006 to Mar 31, 2011), during which time at least25 matches will be conducted.

BCCI and ICC have made a lot of money from Indian television channels. It is not clear whether the numbers can be justified in the long run though.

Friday, February 23, 2007

Vodafone's Hutch purchase

Vodafone has come out as a winner in acquiring the stake in Hutch held by HTIL, Hong Kong. HTIL is a publicly listed company which invests in various telecom companies across the world. Main shareholder of HTIL is Hutchison Whampoa group of Li-Ka Shing.

HTIL and Essar group of India have 67% and 33% respectively in Hutchison Essar Ltd. which runs mobile phone services across India under the brand Hutch. Hutch is one of the leading mobile phone companies in India, at the fourth position in terms of subscriber numbers after Bharti, Reliance and govt. owned BSNL.

About three months back, HTIL surprisingly decided to pull out of the venture and put up its stake for sale. The Indian operation amounts to a significant part of HTIL. Apparently HTIL felt that the telecom investments were turning out to be quite high in the competitive Indian environment. I think the main reason is HTIL's relationship with Essar which was going nowhere.

Hutchison Essar was supposed to go to the stock markets but that didn't happen because of internal fight between HTIL and Essar. The required investment for further growth could have easily come from the stock markets. The enterprise value at which Vodafone has acquired the stakes is about 18 billion USD or about Rs. 81,000 crores. A dilution of around 15% would have resulted in well over 10,000 crores from the markets for further investment. (This is the kind of number Vodafone is indicating it will spend. Bharti too will be spending only of this order.)

Essar is a difficult company to understand. Suddenly it seems to be flush with cash. It is into shipping, steel, telecom and what not. Essar even suggested that it will buy the 67% from HTIL. It still seems to claim it has matching rights to the stake held by HTIL, and if Vodafone doesn't agree to certain terms for the new shareholder agreement, Essar may invoke the matching rights clause or fight a legal battle. HTIL claims there is no matching rights clause in the shareholder agreement!

Vodafone may find dealing with Essar a difficult proposition. Essar does not seem to have a clear telecom strategy or the money and capability to execute on plans. If at all possible, Vodafone should try to buy out Essar completely, find some financial investors in India, and go IPO in Indian stock markets (since there is a limit of foreign holding in telecom companies in India).

Besides Bharti and Reliance Infocomm which are listed, Idea (of Aditya Birla group) has just now listed. Spice Telecom (operating in Karnataka and Punjab) has filed a draft red herring prospectus. BSNL, after a merger with MTNL, may also list.

Vodafone's purchase would also mean a complete rebranding. Hutch as a brand will go completely out of the country and Vodafone will enter India (and in my handset too!).