How Reliance Is Building Its Sports Business

How Reliance Is Building Its Sports Business

by Business Briefs - Apr 29, 2022 07:46 AM +05:30 IST
How Reliance Is Building Its Sports Business
Ambanis with Sachin Tendulkar
  • With the launch of Sports18, the announcement of a significant investment by Bodhi Tree, and the strong focus on winning media rights for IPL, Reliance is clearly looking to fill the sports gap in its media portfolio.

Reliance Industries’ media arm Viacom18, which is a joint venture between Paramount Global and TV18, will receive an investment of Rs 13,500 crores from Bodhi Tree Systems. Bodhi Tree is a content platform owned by Uday Shankar, the former President of Walt Disney Company Asia Pacific and James Murdoch’s Lupa Systems.

Reliance has been producing its own content through Jio Studios while continuing to buy the rights for content produced by others. It has signed deals with various film studios over the last few years and has invested in several content-production and distribution platforms. For instance, it bought a 25 per cent stake in Balaji Telefilms that has emerged as a competitor in the streaming space through AltBalaji. It also has a stake in a movie production house, Eros. Simultaneously, it had brought music streaming platform Saavn, a music streaming platform that was converted to JioSaavn.

The company has picked up a stake in the US-based technology start-up Two Platforms as well. Two Platforms is involved in developing futuristic technologies such as metaverse and mixed realities. Jio owns Jio TV and Jio Cinema which offers users Jio’s entire library of video content.

In the past, it had been announced that customers of Jio Fiber would even have access to the first day first shows in the comfort of their homes.

Reliance has invested in cable operators such as Den Networks and Hathway Cable. These operators are involved in running TV and broadband connectivity for investors.

Viacom18 owns several on-air channels and the over-the-top content platform Voot. The company produces its own content through a subsidiary, Viacom18 Studios. Reliance is present in every segment except sports. Hence, it is only natural for the company to be interested in building up its own sports offering. Viacom18 has recently launched its own sports channel named Sports18.

The timing of the Viacom deal and the launch of the sports channel could indicate Reliance’s focus on winning the media rights for the Indian Premier League (IPL) for the matches to be conducted between 2023 and 2027.

TV18 is reported to be among the first few companies to show interest in the Invitation-to-Tender for IPL’s media rights. The auctions are expected to be conducted on 12 June, and some of the largest media companies in the world are expected to bid for television and digital rights of IPL. Earlier, companies such as Star and Sony were aggressive bidders for television rights, while digital rights were sold for a relative pittance. However, with mobile and internet penetration rising in India, digital rights are expected to contribute to a major chunk of IPL revenues.

While the base price is pegged at around Rs 33,000 crores for the entire media rights, industry sources suggest that the prices could reach up to Rs 40,000 to Rs 50,000 crores. Of the initial Rs 33,000 crores, digital rights make up around Rs 12,000 crores.

The companies that are expected to bid for IPL’s digital rights are Zee-Sony, Disney-Hotstar, Adani Group, Reliance, Facebook, Amazon, Netflix and several others.

Given the intense competition, Reliance is probably trying to ready dry powder through the Viacom deal, while bringing in experienced industry veterans such as Uday Shankar who understand the business well. Reliance has already been involved in the sports business through its

While the market seems to have appreciated the move and Reliance’s stock moved up by 1.14 per cent, TV18 and Network18 saw their shares being dumped by investors. Though the exact details of the deal haven’t been released yet, investors are probably afraid of the high investment required and equity dilution.

Network18 is the parent company that owns TV18 Broadcast, which in turn owns a majority stake in Viacom18. TV18’s share price fell by around 17 per cent, while Network18 witnessed a 19.96 per cent drop in its stock price.

In the case of a large investment in Viacom18 by Bodhi Tree, the markets possibly expect a significant dilution in the equity base that lowers TV18’s shareholding in the company.

In addition, if the rumours of the deal being a precursor to IPL bidding are true, investors might be worried about the company’s ability to recoup the money spent on acquiring IPL’s media rights. Nevertheless, these are mere speculations, and the actual structure of the deal is yet to be announced publicly.

In case it wins the digital rights, Viacom would be able to grow the subscriber base in its OTT business as well. Voot has significantly lagged behind players like Netflix and Amazon Prime in the OTT business, and IPL offers an opportunity to reverse the trend.

With the launch of Sports18, the announcement of a significant investment by Bodhi Tree, and the strong focus on winning media rights for IPL, Reliance is clearly looking to fill the sports gap in its media portfolio.

Also Read: How IPL's Digital Rights Emerged As A Money Spinner For BCCI

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