Private sports broadcasters to pay for Doordarshan’s free lunch

There is a new war brewing in sports broadcasting. Between private sports broadcasters and state-owned Prasar Bharati. And if the latter is victorious, private sports broadcasters stand to lose. Substantially.

Earlier this week, the information and broadcasting (I&B) ministry proposed an amendment to the decade-old Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007. The Act requires private sports broadcasters such as Star India and Sony to share their live feeds of sporting events that are of national importance with the public broadcaster. Prasar Bharati, which runs television network Doordarshan (DD) and All India Radio, then retransmits the broadcast signals on its terrestrial network and its own direct-to-home (DTH) platform, DD Free Dish.

The idea behind the Act was to make important sporting events like cricket, football and hockey world cups accessible to as many Indians as possible. Now, the ministry wants such content to reach “the largest number of viewers, on a free-to-air basis.” With the new amendment, DD will be able to air these events on private cable and DTH networks as well. Previously, DD was only allowed to rebroadcast on its own distribution networks. 

22 million

The estimated number of subscribers on DD Free Dish.

The proposed amendment will come as a bonanza for DD and its customers. It will, however, cut into the earnings of private sports broadcasters—adversely impacting the subscription and advertising revenues of private channels that actually hold the rights to these events. Even sporting federations like the Board of Control for Cricket in India (BCCI) will not be spared as the value of their properties is likely to diminish without exclusivity.

This doom and gloom sentiment isn’t without cause. In fact, it has been years in the making. Ever since the Mandatory Sharing Act—as it is usually called—came into existence in 2007. Right from its inception, the Act drew a lot of flak. The issue stems from a key part of the Act—there is little clarity on how the government defines or categorises events of national importance.

In the absence of this clear definition, multiple industry executives indicated that the central government, which notifies such events, is abusing the Act’s provisions. According to them, the government often selects events that are less about public interest and more in line with improving DD’s viewership and advertising potential.

“They pick what they like and what can deliver results, not for the public but for themselves,” said an industry executive, who has been privy to the discussions between Prasar Bharati and the I&B ministry.

This is borne out by the I&B ministry’s priorities over the last few years. Last year, for months, the ministry worked on a proposal to include the Indian Premier League (IPL)—a T20 cricket tournament run by the BCCI but with teams owned by private players—as a listed event for mandatory sharing with DD. This came shortly after Star had acquired IPL rights for a five-year period for an eye-watering Rs 16,347 crore ($2.2 billion). After extensive discussions, Star agreed to let DD broadcast a delayed feed of select IPL matches.

On the other hand, sports that aren’t major viewership draws tend to get short shrift. “Many times, Doordarshan doesn’t even air the events that have been notified by the government; this usually is the case with non-cricketing events,” the industry executive quoted above added.

As the government decides to forge ahead with its new amendment, it will doubtless face legal challenges. Both from broadcasters and sporting federations seeking to protect their interests. After all, the amendment could hurt the Rs 3,379-crore ($458 million) sports television advertising ecosystem, as well as the multi-billion dollar deals private broadcasters pay for broadcasting rights of sporting events.

Down for the count

The timing of this proposal is rather interesting. Many industry executives and legal experts The Ken spoke to pointed out that it comes less than a year right before the ICC Cricket World Cup 2019. Cricket is, after all, the most valuable sport in the country.

In 2014, Star India Private Limited paid $1.9 billion for the broadcasting rights to all ICC tournaments for an eight-year period, ending in 2023. A few years prior, in 2012, Star paid the BCCI Rs 3,851 crore ($521 million) for the television broadcast and digital rights for India’s international cricket matches at home as well as a few domestic leagues until 2018. This year, they retained these rights for another five years for Rs 6,138.1 crore ($831 million). 

25

The number of sports channels in India monitored by TV ratings agency Broadcast Audience Research Council (Barc) India

Expensive though they may be, these deals represent a great investment for Star. They provide the network with content exclusivity, an opportunity to squeeze advertisers for a little bit more, and leverage for negotiating channel-pricing deals with private DTH and cable networks. Under the proposed amendment, private broadcasters stand to lose on all these fronts. After all, if DD airs the same content on the same DTH and cable networks as private sports channels, cable operators would be less likely to carry the latter. Why would they when they have to pay subscriber fees for private sports channels while DD comes free? In this case, private sports channels are likely to lose viewers and hence, their ratings. No exclusivity and shared content will also lead to broadcasters losing their bargaining power with advertisers.

“It takes a lot to strategise and invest in sporting events because no other content provides as much exclusivity as sports. Financially speaking, sports, particularly cricket, is a gold rush. Little doubt that DD wants it this much, but if they really get this, it is game over for sports broadcasting,” said an executive at a sports broadcaster, who asked not to be named.

While industry executives said that it is difficult to ascribe a precise figure to the financial loss that broadcasters may have to incur, this drop is a certainty. “Once the broadcasters lose the prospects of monetising on sporting properties by leveraging exclusivity, nobody would like to pay as much for the media rights as they do right now,” said a sports lawyer, who works closely with a leading private broadcaster, requesting anonymity.

Government’s clever curveball

What is most surprising is that this is not the first time Prasar Bharati will air sporting events on the same distribution platforms as private TV channels; this matter has been contested legally between Prasar Bharati and sports broadcasters for 10 years. Basically, since the Act was first introduced.

In 2007, a case was filed by Nimbus Communications Ltd and the BCCI; In 2013, Star India Pvt. Ltd and ESPN Software India Pvt. Ltd intervened in the case. The lawsuit arose from confusion about two separate laws. One was the Mandatory Sharing Act itself, and the other is section 8 of the Cable Television Networks Act, which makes it mandatory for all cable operators to carry Doordarshan channels notified by the government.

Now, these conflicting sections meant that cable operators got access to the broadcast of sporting events through two avenues—private sports broadcasters and DD, exactly what the Mandatory Sharing Act prohibited. Finally, in 2015, Prasar Bharati lost the case to Star India when the Delhi High Court sided with the latter. Prasar Bharati challenged the verdict in the apex court, but the broadcaster lost the case again when the Supreme Court, in 2017, upheld the Delhi HC order.

Rs 7,300 crore

The size of the sports sponsorship market in India as of 2017, according to a report Sporting Nation In The Making V

But just when private sports channels thought their nightmare was over, the government’s proposed amendment is set to play spoilsport. The amendment goes around the Supreme Court order to give Prasar Bharati practically the same rights as the actual rights holders for major sporting events. Without having to pay a penny.

In fairness, the I&B ministry has called for comments and feedback on the proposed amendment. Legal experts, however, indicate that this is a mere formality and say there is usually little scope for the government to consider negative comments or go back on the proposal. “It’s as good as done,” said one of them.

Star India did not respond to The Ken’s e-mailed query. Prasar Bharati CEO Shashi Shekhar Vempati, meanwhile, declined to comment, saying it would be inappropriate for the broadcaster to comment on the I&B ministry’s policy matters.

Unsporting conduct

“It is evident that DD’s own content is unattractive. Hence, this obsession with sports for viewership,” says the industry executive who spoke about how the I&B ministry and Prasar Bharati select events. An additional draw is that DD also gets to earn advertising revenue from these properties. While, by law, 75% of this revenue must go to the actual rights holders, the 25% that DD is able to earn is essentially free money.

The IPL deal

Interestingly, the IPL deal of select matches was on a 50:50 advertising revenue sharing basis, outside the ambit of this Act.

It’s also a shot in the arm when it comes to viewership numbers, especially with cricket. “Everytime DD airs popular cricket matches on private cable and DTH, its viewership shoots up by leaps and bounds,” said another industry executive who works closely with Doordarshan.

However, while the upside for DD is clear, it could harm the development of sports in the country. “If the I&B ministry tomorrow decides to notify the private leagues like Kabaddi in the name of national importance, all the incentive and exclusivity of developing a sport and giving it a national stage goes out of the window,” said the source quoted above. “Nowhere in the world does the law arm-twist sports broadcasters like this,” he added ominously.

In the United Kingdom, for instance, sporting events which have a “special national resonance” and which “serve to unite the nation” are required to be shared with free-to-air television channels which reach 95% of the UK’s population, according to a report “A Wider Spectrum”, released by Bengaluru-based think-tank The Sports Law and Policy Centre.

As for other providers, just the highlights of the events need be provided. While there is no statutory regulation in the US and Brazil, Europe has a directive to make sure that important events are not broadcast on an exclusive basis, with proper criteria to assess “important events.”

“It’s high time that India reconsiders the mandatory sharing law. Instead, the government is going in reverse,” said the sports lawyer quoted above. There is little doubt that this amendment will invite multiple lawsuits from private broadcasters, and possibly, from BCCI as well. “If the resulting law has to be challenged, the contesters will have to prove that this amendment is unconstitutional and/or arbitrary or that it is outside legislative competence,” said Nandan Kamath, principal lawyer at Bengaluru-based firm LawNK*.

“This will be an uphill battle for many reasons, especially because, in terms of optics, the government will be advocating a direct ‘consumer interest’,” he added.

In its quest to push mandatory sharing, the government has come out swinging. But this fight has many rounds to go, and while sports broadcasters are the clear underdog, it may be too early to write off their chances just yet.

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