Zee, Star bid for lucrative India cricket rights

By Rina Chandran

BOMBAY (Reuters) - A fierce bidding war for the lucrative rights to broadcast international cricket matches in India has pitted a deep-pocketed sports network against the country's biggest listed media firm.

Up for grabs are broadcast rights for all matches organised by the Indian cricket board over four years starting in October, a bigger share of the expanding TV advertising pie and more subscriptions in the world's third-largest cable TV market.

Zee Telefilms Ltd., India's third-ranked network, emerged as the surprise highest bidder with an offer of $260 million. Its shares have gained more than 15 percent since the bids were made public last week.

But ESPN-Star Sports (ESS), a joint venture of Walt Disney Inc. and News Corp. that offered $230 million, has opposed Zee's bid on the grounds that the company did not have the required experience in broadcasting live cricket. Zee disputes that.

"General entertainment networks are looking to use cricket to drive the ratings and advertising on their other channels," said R.C. Venkateish, managing director of ESPN Software India Pvt. Ltd., which provides programming to ESS. "But we are a sports channel -- this is our bread and butter."

Bids from Sony Corp., Dubai-based Ten Sports and state-owned Prasar Bharati were much lower.

The Board of Control for Cricket in India (BCCI) is expected to award the broadcasting rights later this month.

BATTING FOR RICHES

Cricket corners three-quarters of sports advertising spending in India and draws millions of viewers. Air time during the recent India-Pakistan series sold at 200,000-300,000 rupees per 10 seconds.

Zee wants a share of the spoils.

"Cricket is an exceptionally positive property -- we have bid for cricket events in the past, as there's a lot of ad money to be had and eyeballs to target," said Ashish Kaul, a vice president of brand development at Essel Group, which owns Zee.

Sony Entertainment pocketed more than $43 million from advertising during last year's cricket World Cup after paying an estimated $225 million for rights to ICC matches until 2007.

The historic India-Pakistan series in March brought ad revenues of about 1.2 billion rupees to Ten Sports and the recent Asia Cup in Colombo generated nearly 750 million rupees for ESS.

ESS earns more than $60 million from subscriptions in India and has rights to six of the 10 test-playing nations.

Zee owns India's largest cable distribution unit, Siticable, which reaches 5 million of the 48 million cable homes, and the sole direct-to-home platform, Dish TV, with 150,000 subscribers.

Zee does not have a sports channel, but has said it will launch one next year. Adding cricket now will increase Zee's clout with local cable distributors and drive domestic and overseas subscription revenues, analysts say.

Research firm Media Partners Asia estimates India's cricket-related ad market at more than $70 million a year. Cable TV advertising is expected to grow more than 10 percent this year.

Analysts say the BCCI rights would strengthen Zee's cable and direct-to-home platforms, and provide greater stability to its domestic pay-TV revenues. Zee, once the top network, now trails Star and Sony in advertising and subscription revenues.

"But Zee will have to drive subscription and other revenues to justify the price," said Sanjeev Prasad at Kotak Securities.

"Advertisement revenues alone (about 4-5 billion rupees over four years) may be insufficient," he said.

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