BCCI’s money-spinner a curse for Mukesh Ambani’s Viacom18: Will IPL make profits for media winners this time?

• Mukesh Ambani’s Viacom18 won the digital rights of the Indian Premier League for the next five years, beating Disney Star to the punch.
• On the other hand, Star retained the broadcasting rights for ₹23,575 crore.
• While India’s richest man Ambani has bagged two and half bundles for a premium of ₹23,750 crore, he will have to foot losses at least for the first three years.
• The winner of media rights has to pay mandate acquisition charges to BCCI, invest in marketing and advertising and bear a few other hosting charges.
• So, considering IPL hasn’t been a profit-making property for streaming platforms, what makes it so attractive?

In a bid to grab the 600 million viewers that the Indian Premier League attracts every year, India’s richest man Mukesh Ambani’s Viacom18 bagged two and half bundles of media rights for ₹23,750 crore. It includes digital, non-exclusive digital rights and a few international countries.

Ambani beat the erstwhile owner of digital rights Disney+ Hotstar, and along with Star, the business tycoon made IPL one of the richest entities in the sporting world as its value tripled over the previous five-year cycle.

The auction got so intense that Ambani and Disney-Star together paid nearly 11 times more money than Sony paid per year to broadcast IPL. Star and Viacom together would be shelling out ₹118 crore per IPL match for the next cycle of 2023-27.

IPL media rights – a winner’s curse

However, IPL can be a curse of sorts for the winner as they have to foot a hefty bill for content production, media acquisition, marketing costs, and other hosting expenses.

Ambani’s Viacom18 might not make a profit out of IPL in the first three years of the cycle. In the fourth year, as per industry reports, the digital streaming platform is expected to break even.

As per financial advisory firm Elara Capital, IPL’s content cost will remain at a huge premium of ₹10,000 crore annually.

The report says that any broadcaster with such expensive rights may be unable to break even until the fourth year.

Can Ambani make a profit out of IPL?

For Ambani’s Viacom18 and Star to break even and equate to their bidding cost, their advertising revenue will have to grow by 57% and 15% respectively, says CLSA report.


The prospects are brighter for television as Star is expected to reach the break-even point earlier than Reliance.

“Star will break even in the next cycle, that is my assumption. If you look at TV as a segment, it is already drawing revenues of somewhere close to ₹3,900 crore. This number will automatically go up to at least ₹5,000 crore in the second year when the matches are increasing to 84,” Karan Taurani, Senior VP, Elara Capital, told Business Insider India.

“So, I think the content cost for TV is far more reasonable. Unless viewership doesn't fall drastically, you will see a margin coming in from the second year itself, or breakeven the second year and maybe the third year, you will see them make some money on the property,” he added.

Digital too expensive, says Taurani

While TV seems to be worth the bet for media players, Taurani feels that digital is too expensive.

“It's worth the bet on TV because clearly now it has now seen a large number in terms of IPL revenue contribution, but on digital, you'd argue it is not worth it. It is very expensive, and they'll probably make profit only in the fourth year,” he said.

Hotstar did not make a profit from IPL cycle 2018-22

While Hotstar did win the lottery ticket with IPL’s digital mandate for the previous cycle of 2018-2022, it did not have a material impact on its profits.

Despite adding new subscribers and reporting incredible growth in advertising revenues, Disney+ Hotstar’s overall revenue of ₹1,500 crore was less than Netflix's at ₹1,700 crore. As per industry estimates, Netflix’s subscribers in FY21 were nearly 7x less than Disney+ Hotstar'.

In the previous cycle, as per capital market firm Kotak Institutional Equities, Hotstar garnered ad revenues of ₹1,100 crore (₹15 crore per match) and subscription revenues of ₹1,200 crore (₹16 crore per match).

Viacom 18’s winning bid of ₹58 crore per match for IPL 2023-27 implies a cost of approx. ₹63-65 crore per match including production/hosting costs, the report said.

The report further says that Viacom18 would seemingly incur losses in the initial years and perhaps break even in 2026 or 2027 seasons.

So what makes IPL such an attractive sporting property for media companies?

IPL leads to a big surge in various metrics such as monthly active users (MAUs) and daily active users (DAUs) for any OTT platform. The hope is that the surge in users hooks the subscribers to watch other content on those streaming platforms.

Viacom18 digital rights win could boost Reliance Jio Platforms’ content pool significantly, and digital rights exclusivity could boost Reliance Jio data subscribers, said CLSA report.

Sharing why IPL sees the most intense bidding war despite not making any profits, Taurani said, “I think whoever buys the rights of digital, they are not buying it for making a profit. It is a strategic move to drive a customer base on your platform, or it is to drive valuation of your platform, right, or to cross-sell your other content. So it's more of a customer acquisition strategy than to make profits.”