Amazon is again attacking Ambani in India. This time, more cricket.
IPL is as big a business as a craze in India: the total audience for last year’s edition was 242 billion minutes. In 2017, Star Sports, the previous winner of the five-year deal for TV and digital rights, paid $2.55 billion under Rupert Murdoch. When Facebook Inc. joined this fray, offering $600 million to broadcast the games live, the Australian-born media mogul received a warning shot about how quickly the media landscape was changing. He went to sell his 21st Century Fox Inc. assets to Walt Disney & Co.
Now owned by Disney, Start Sports recently sold 10-second TV spots for more than 1.7 million rupees ($22,000) each. Add to that the subscription and advertising revenue from the Disney+ Hotstar app, where matches are streamed live, and the current take – plus the potential for growth – could easily justify a winning bid of over $5 billion. dollars this time.
The cricket league testifies to the growing weight of consumers in emerging markets. Amazon’s Prime Video will have an advantage over Netflix Inc. and Disney in India if it manages to close the streaming deal. The importance of this is not lost on Ambani, who wants his own consumer empire to rest on the three pillars of transport, content and commerce. With over 400 million customers, Reliance’s Jio is the country’s largest telecommunications operator. As his subscribers burn through their data plans to watch cricket, Ambani has the opportunity to harness their love of the game not just to earn advertising money, but also to sell them more stuff – provided the eyeballs are tied to its media properties rather than those of its competitors. .
And Amazon, which broadcasts English Premier League football live, is just one of those rivals. Reliance failed to take the driver’s seat at Zee Entertainment Enterprises Ltd., the nation’s largest publicly traded television network. Zee is instead partnering with Sony Group Corp. Never mind. If Ambani gets the Super Bowl of India rights, he could face Zee-Sony, a very real possibility now that he is said to be in talks with Murdoch’s son James and his loyal lieutenant Uday Shankar, the former Star boss. TV in India, for a 39% stake in Viacom18, Reliance’s local TV content joint venture with ViacomCBS. Sony will also most likely bid for IPL. If Americans can play the sport of the former British Empire, so can the Japanese.
Ambani’s involvement in cricket goes beyond media rights. It also owns the Mumbai Indians, whose five titles since the league began in 2008 have made them the most successful team in the IPL. The franchise gives Ambani the opportunity to introduce his children to the art of buying players on a budget, immersing them in the much larger capital allocation decisions that await them as the man of 65 years old is about to hand over the management of his empire to the next generation. The control of the team also qualifies the Indian businessman for the title of the richest sports team financier in the world. Depending on the stock price, that crown continues to pass between him and former Microsoft Corp. CEO Steve Ballmer. The owner of the Los Angeles Clippers, a professional basketball team, was Ambani’s classmate in business school at Stanford University. (Both gave up.)
Indian media has thrown names from Meta Platforms Inc. (formerly Facebook) to YouTube and Alphabet Inc.’s Apple Inc. as likely candidates for the June 12 media rights auction. Given that Alphabet’s Google and Facebook have stakes in Jio, they are unlikely to want to get into a crowded bidding war. Apple just took over Major League Baseball in the US and needs to sell more phones in India before it can monetize Apple TV+. Netflix may well want to stabilize its core business after losing 200,000 customers in the first three months of the year. India won’t be much help with its dwindling stock as it can’t offer rich country prices yet.
Ambani, Amazon and Disney in place are the most obvious hopefuls. Viewer fatigue with the match format, leading to lower ratings, is the biggest risk for successful bidders for domestic and foreign television and digital rights. For Ambani and Bezos, however, gambling is more than just advertising dollars. A large captive audience for 65 days a year, five years in a row, can do wonders for one’s own offline and online retail ambitions in India. That’s why everyone expects the duo to be the most aggressive.
Reliance took physical control of many stores from the unprofitable Future Retail Ltd., which agreed in 2020 to sell its assets to Ambani to repay creditors. Amazon is trying to block the deal for alleged breach of contract as the Future founder took money from the e-commerce giant, promising not to sell the company to Ambani. If this legal battle is any guide, June 12 audiences should get their money’s worth.
More from Bloomberg Opinion:
• Amazon ends up with a big sale without a sale in India: Andy Mukherjee
• Ambani’s succession plan may contain a triple punch: Andy Mukherjee
• I can’t watch Netflix, I wash my hair: Andrea Felsted
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Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He was previously a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.
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