The Hindu Business Line : A Neo approach

Nimbus hopes to be a trendsetter by launching two sports channels — one for cricket, one for other games. However, industry peers are not sure it's a good idea.

SHASHI KALATHIL, CEO, Neo Sports Plus (right), with sports stars Sania Mirza and P. Gopichand, at the launch of Neo Sports Plus television channel in Mumbai.

Bagging coveted cricket rights can propel any sports broadcaster to the top of the viewership chart. It has helped Neo Sports, the new incumbent from the Nimbus stable, to achieve it. Within a week of its launch, it has already become the No. 1 sports channel in India. TAM ratings for the period October 1 - 7 have Neo Sports ahead of all sports and news channels and most leading general entertainment and movie channels. The channel achieved its peak full match TVRs during the Challenger Series for the NKP Salve Trophy recently.

"Domestic cricket, when packaged well, can attract a large audience. We have tapped only the tip of this iceberg; nevertheless, this is as good a start as we could have had. The process of re-branding and refurbishing domestic cricket, which we have undertaken with the BCCI, couldn't have generated quicker results. With the entire domestic season in the pipeline in the forthcoming months, we are going to see much more of this on Neo Sports," says Shashi Kalathil, CEO, Neo Sports.

Sports broadcasting is witnessing a churn and it all depends on the kind of rights a channel bags for a particular game. The viewership shares could change every week depending on that. While Nimbus is betting on its Neo Sports channel to drive viewership for India's favourite sports, it is simultaneously promoting other sports through its second channel Neo Sports Plus. Graduating from a service provider to floating its own channels, Nimbus Communications expects to break even in the broadcasting business within two years of launching its cricket-centric channel, Neo Sports. Betting on the popularity of the game, Harish Thawani, Executive Chairman, Nimbus Communications, says, "Cricket continues to have the highest reach across the country while other genres including soap operas are on the decline. We expect to break even within a year-and-a-half of launching our new channel, Neo Sports." Close on the heels of launching its first channel, Nimbus is unleashing its second channel, Neo Sports Plus, which will have sports-related entertainment programmes followed by a Neo Sports News, an exclusive news channel, which will make its debut next year.

Having sold air time and acting as licensers for broadcasters such as Sony and Star in the past, Nimbus is now investing in launching its own channels. "Previously, we did not have deep pockets but now with almost Rs 350 crore coming in, we have emerged from being a service provider to a consumer product manufacturing company," says Thawani.

With its existing experience in ad sales, Nimbus expects to sell the ad spots for its own channels as part of annual and five-year deals. For instance, for a typical five-year deal, it would charge its founder sponsors between Rs 150 crore and Rs 275 crore while the annual deals would attract clients with budgets between Rs 8 crore and Rs 12 crore.

Recently, Nimbus appointed Star India as its distribution partner. "We already have a long-standing relationship with Star and since it operates in almost every segment of the market, we expect it to give us deep penetration for our channels. Besides, they also have a track record of honouring payment obligations, and knowledge of new media such as DTH will also help us," states Thawani.

The leading distributor/owner of cricket rights and producer of cricket coverage, Nimbus Sport, a subsidiary of Nimbus Communications, will exclusively markets media rights of ICC events in South Asia and sponsorship rights worldwide. At present, it distributes all commercial rights of the Afro Asia Cup worldwide, sponsorship and signage rights of the Pakistan Cricket Board and global media rights of the BCCI. It is also the producer of the world feed of the ICC Champions Trophy 2006 and all international cricket to be played in India till March 2010.

At the same time, betting on cricket alone is not going to be enough. Realising that the cost of acquiring cricketing rights has been going up between 20 and 25 per cent on a yearly basis, Thawani is hedging his risks by launching a second channel.

Close on the heels of Neo Sports comes Neo Sports Plus for sports beyond cricket. It has already acquired properties linked to India's favourite footballing nations. The channel has access to premier leagues such as Bundesliga, SerieA, Copa Sudamericana and Copa Libertadores. Besides, the channel would also offer motor sports action in the form of V8 Supercars and Superbike world championships. There would be renewed focus on badminton through properties such as the Sudirman cup, the Thomas Cup, the Uber Cup and the World Badminton Championship. Claims Kalathil, "Neo Sports' ideology of sports entertainment will seek to broadbase viewership in an attempt to build a passionate fan base for these games in the long run."

But competitors do not think there is much scope beyond cricket. According to Rohit Gupta, Executive Vice-President, SET India, "It would be tough to get advertisers as there would be little value attached to non-cricket-based sports content. It is still cricket which works and that is why players such as ESPN Star Sports have got left behind." Adds a sales executive from ESPN Star Sports, "There will be slow growth for such a channel. Considering it would not have given the same kind of money to bag cricket rights, it will take time to get ad revenues."

Getting content may also get tougher. "Neo Sports might have deep pockets but there is not enough content available in India. There is already small sports viewership and with further fragmentation, it will be brand loyalty among viewers which will matter,'' claims Gaurav Seth, Vice-President-Marketing, Zee Sports.

In fact, both Zee Sports and ESPN Star Sports have been focusing on non-cricket-oriented sports. While ESPN's attention has been on hockey with Premier Hockey League, Zee Sports has bagged the 10-year telecast rights for the all India Football association.

Expecting the sports broadcasting channels to consolidate in the near future, Thawani predicts that there will be a limited number of broadcasters in this genre. "There will be market consolidation with space for just about three players. While ESPN will continue to be the leader, there will be room for just about two more players and the lead will keep changing hands between the channels. Smaller broadcasters such as Zee Sports and Ten Sports might find it tough since there are not too many rights left to be bagged," states Thawani.

Segmentation will become the next logical step for the sports channels. As Atul Phadnis, Chief Evangelist, Media e2e claims, "Like news channels got segmented, different sports will lend themselves to the market getting segmented. It is still a virgin market and what will be critical will be the kind of broadcasting rights, marketing prowess and the ability to create for particular event. Neo Sports' prospects look bright at the moment.''

Adequate funding will be the key to sustaining the business and Nimbus expects to pump in additional funds when required. After investing Rs 300 crore in the first phase of its broadcasting operations, it will infuse an additional Rs 150 crore in the next phase with private investors such as 3i and Deutsche Bank also lending support. "We already have Rs 500 crore in the kitty. Sports acquisition is not cheap and in future we would look at more funding options," states Kalathil.

With Nimbus taking sports viewing to its next level through its Neo channels, it is no longer going to be a battle for cricket rights as other sports gain momentum in the still nascent market of sports broadcasters.

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