Friday, February 02, 2007

Key Talking Points 5

Hey guys,

Here comes some simple questions on a recent Govt decision

Govt of India has decided to make an ordinance regarding cricket telecast. The ordinance makes it mandatory for the rights holders of sporting events to share advertisement-free live broadcast signals with Doordarshan. DD will sell advertising time for these matches and give 75 per cent of the earnings to the rights holder, using the remaining 25 per cent to promote non-sponsored games on radio and TV.

Questions on this are as follows
1. Will this add to the revenues of the right holders?
2. Will it be good for the cable industry in long term?
3. Will Doordarshan benifit from this?
4. What effect will it have on the future biddings for Cricket telecast in India?
5. Should it be done for other sports also?

I wanted to have a GD on this. But thought that people shud be thinking more in pinpoint terms. So you are free to add anything extra if you want apart from the answers to this.

For complete news Click Here

People dont seem to have read the previous key talking point or they have shied away from answering. Reading is a very important part of preparation for a GD.

Click here for the answers

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16 Comments:

Anonymous Anonymous said...

1. In current scenario, it will not add revenues..even though DD will pay the channel..advertisers would not go to that channel(say Neo) if its not available to many people.

2. It wont be good for cable industry because its not good for Neo. The cable industry could lose out on a pay channel.

3. DD will benefit from this if it attracts more viewers than Neo. i.e. if Neo is not available to many people...otherwise people may prefer Neo maybe cos of better quality.

4. Channels wont bid high for future events cos they will have to share it with DD.(however if response to que 1 is yes...they may bid even higher :)

5. It should not be done for other sports as they dont attract such viewership. However to promote other sports(non-profit) it could be done.

Hope I make sense...
Akash

6:05 AM, February 02, 2007  
Anonymous Anonymous said...

1)Yes it will. Since DD has a lot of viewership in rural India, products related to that would want to advertise on DD.

With the people having a cable connections, it would corner the viwership since the broadcast will be better than DD.
With people having only DD, they get the revenues.

2)No.Cricket is a game followed nationally, & possibly the sole reason for a lot of the people getting a TV. DD is a free channel, so that is a factor as well.
Given the recent orders to switch to CAS, there is a big investment involved for the viewers. Plus the new arrangement of making them pay channels, is more expensive.

If DD decides to take all cricket broadcasts, in the long term, people wont pay for the sports channels, because they will always have DD.They may not even switch to CAS.

3)Yes. Earler it had to fight with other private channels for the broadcasting rights, & if it lost out, it meant no revenues for an organization already raking up huge losses.

This move, has put it in a convenient slot, where it gets a lot of revenue from ads, in any match. The viewership goes up, & so do the Ad rates.

4)Cant say. The entire idea of paying a lot of money for broadcasting would be soured by the fact that DD will get a free ride.

They may form a cartel & decide not to telecast at all, which may force DD into paying money for the rights!

But given the amount of Ad revenue generated by cricket, they would probably go the usual way.They would still have an advantage over other paid channels.

5)No. This is a case of the govt forcing orders on other private organizations for lifting its sagging dept. All under the guise of public good.
A similar case is that of the Postal Dept trying to get all couriers less than 50g (letters), sent compulsarily by Post.
This was to cover the losses incurred by the Postal Dept, since almost 50% of the couriers are business mails or letters.

Aparna

4:37 AM, February 04, 2007  
Blogger Himanshu Gupta said...

1) No, it won't add to the revenues of Neo Sports in this case. As DD has a far higher reach and as it is free to consumers(which means more viewers), Advertisers will prefer DD more to Neo Sports.

2) No. It won't be good for cable industry. Such kind of arm-twisting measures will discourage entrepreneurs in cable industry who will feel that their ventures and efforts can go down the drain just due to any arbitrarily announced ordiance of government.

3) Doordarshan will definitely benefit from this. It had lost in the bidding process for cricket telecast rights but now it's getting a healthy sum of advertising money for free (without paying any money to Neo sports as regards with bidding for telecast rights)

4) It will have a negative effect on future bidding processes as channels would feel DD is riding free on their marketing efforts. It would have all been alright if DD wasn't being given a clean feed(feed without advertisements from Neo), in which case Neo would have projected to its advertisers that they will get added benefit of a large viewership. But in this case, advertisers will ditch Neo for DD.

5) Well.. in case of other sports, DD itself won't be interested in showing them (they don't generate lucrative advertising pie). So, Indians will be spared from sports which are not of national importance. Anyways, any kind of arm-twisting with no respect for market forces is wrong and should never be promoted.

- Himanshu

6:49 AM, February 05, 2007  
Anonymous Dilip said...

My answers would be :
1. In rural places most of the people watch only DD. They don't have cable connection. As cricket is a religion irrespective of rural or urban. advertsiers will prefer DD to neo or any other right holders. so even though its getting 75 % of earning of DD .Right holder's own revenue will be less and its populartiy will bring down. Business will be divided with DD and viewers of neo will be come down. so It wont add value to right holders.
2. In long term , it wont be good for cable industry also. DD will have more viewership. And as it free. less people will subscribe for cable connection.
3. DD will surely benefit from this. As without getting right to telecast any cricket match DD will telecast matches and will generate some money and more importnatly will get brand as more viewerships it will target.
4. Future bidding will be affected. Right holders will consider DD before doing cost benifit analysis. and bidding price can be low.
5. As cricket has special sentiments with indians. I don't think people watch other sports as enthusiastically as they watch cricket. In this case promotions in other sports may not be desired. If it is done DD may or may not benefit depending on the viewership and then followed by advertisers.

2:37 AM, February 06, 2007  
Blogger Gyan-ee said...

I think, on the whole my answers are at logger-heads with all of your comments. So if you disagree after reading my answers, lets have a discussion.
For my answers go to

Akash,

Good to see new people coming in and putting their arguments. Makes the discussion richer

Aparna,
I dont think that Cricket is the sole reason for people buying TV. These days it is for the saas-bahu serials :)
DD gets only 25% of the revenue and most of that has to be spent on promotion of other languishing sports
And note that the public is actually getting benifited. After all we used to pay for all those Ads earlier :)

Himanshu,

DD and Neo address different segments of people. And advertisers love targeted audience. It is a case of larger audience vs targeted audience. Understand that Ads are not high just for numbers, but also for a specific profile. Neo addresses, urban/semi-urban, middle class and above segments. So a Santro would like to sell there. DD addresses semi-urban/rural and middle class and lower segments. A nirma would love to give an Ad there.

Good point on the last answer.

6:35 AM, February 07, 2007  
Blogger praful said...

hi everyone,

am a new entry to the blog..
will give my points though they maybe a tad repetitive!!

1.Yes, i think it will add revenues. Neo sports is the channel this time!! it might as well be star or espn the next time.. ppl wit cable TV's will stick to them because of better quality. DD will increase the reach of the advertisers. And they only loosin 25% of DD's revenues!! which is i think compensated by greater reach!!

2.neutral.. cable penetration is increasin in rural areas and emerging technologies like DTH will take it further. but may lead to reduced demand 4 pay channels in CAS implemented areas.

3. yes.. DD will benefit from it in terms of revenues. it would act like a kind of a subsidy for it.

4.future biddings will definitely rise as they have been rising exponentially.the 75% of DD's revenues will also be taken into account while bidding and it will remove the present confusion tat starts off before every tournament.

5. No.other sports arent such money spinners as cricket is!!and DD gets to air a majority of them rite now.
Eg: National games!!
and no other game creates as much passion as cricket in india.

8:47 AM, February 07, 2007  
Blogger Gyan-ee said...

Hi praful,

Better late than never :) you were bang-on on most. For my answers, check out Answer for Key Point Analysis 5

5:32 AM, February 08, 2007  
Blogger Atul said...

1) This may not surely add to the revenue of right holders as they may lose some of the direct revenue from cable tv networks but a large decline is not probable as Doordarshan has a much larger viewer base, the advertisements will reach to a larger audience. As the viewer base is much larger, the advertisements will be willing to pay more for the same time slot.

2) In a long term, it will be beneficial for hte cable industry as they will get a cushion from the price fluctuations of different channels. Its a common practise of sports channels to increase the subscription fee before a crucial event is about to take place. So, the cable operators can provide the service at a stable rate.

3) Doordarshan is sure to be benefited by this as its viewership is going to increase. People have started to look for options in other TV channels as the quality of programmes telecasted in DD has gone down. Now, DD can promote and showcase their prime time programs and increase its viewership.

4) The future bidding is bound to give a less amount of revenue to BCCI. The telecasters will not pay a exorbitent amount as their monopoly is lost and they cant charge their viewers and advertisers above a sensible amount.

5) For the other sports, usually the private sports channels are not keen to pay a price to telecast them as in India, the main viewership is only for cricket.

So, the govt. should promote the telecast of these sports on DD so as to give them more exposure and viewership.

10:27 PM, February 15, 2007  
Blogger Gyan-ee said...

Hi Atul,

Good attempt

Click here for my answers on the same.

11:58 PM, February 15, 2007  
Blogger mithun said...

1) Cannot say! Two things will happen

1) Since the matches are shown in DD, more viewers will flock to DD compared to NEO, and hence the advertisers will naturally not like to pay more for Ad's in NEO , so direct earning from AD by NEO would be affected.

However since DD, will share 75% of AD revenue it will increase the AD revenue

2) No it would not because a channel like ESPN would refrain from bidding because , I presume their direct earning would be higher than NEO because of its popularity, and the bheekh given by DD would be less than the amount of viwership it will be scrapped off

3) Yes ofcourse, Public sentiments and 25% revenue. Jo mile sab acha, especially government will benefit, gain some brownie points from junta, and doordarshan is to a level a body controlled by government

4) On the lines of 2

5) Yes, i guess the sport channels would love that, because of the huge difference between popularity between other sports and CRICKET

3:35 AM, February 22, 2007  
Blogger Gyan-ee said...

Hey Mithun,

Some of the answers seem to be in conflict with mine :) Read mine, and if you still disagree, let us discuss and thrash out

8:15 AM, February 22, 2007  
Blogger mithun said...

1) Don't you think if I have to advertise a product in a channel. I will pay less for a channel if its viwership is less, so would not i negotiate on advertising charges in NEO .I do not know the data, I am just speculating by logic.

3) Don't you think, DD will gain sentiments and so will the apt action by government, Morover they will cahrge higher for a event like Cricket for AD's compared to a AD's shown in "Krishi Darshan"( do not know whether they show it even now ) and The daily sops
4
5) I think you would agree on my view point for 5, because of the huge difference between the viewership of cricket and some other sport


In response to your comments!

9:32 PM, February 22, 2007  
Blogger Gyan-ee said...

Hey Mithun,

For Q1, The revenue of Neo is now coming from DD and Neo both. And on the whole, since it reaches larger audience, the revenues shud be higher (Using your assumption that revenue is proportional to audience)
Also, as I have argued, the audience of Neo is almost mutually exclusive to that of DD and hence they may end up benifitting.
Also remember that the reevenues from Advertisement for channels is far superior that the subscription fee and hence it is fine even if Neo goes on to become a free channel (Since revenue from DD will more than offset subscription revenue)


For Q3, it is true they will charge higher for cricket, but the revenue will anyway not come to them (75% to Neo and most 25% they have to spend on other sports promotion)
And gaining sentiments as you have said will only help the Govt and not DD :)

Q5 - I agree with you that sports channels would love that. But Govt shud not do it since DD will suffer. Anway, why would one want DD to telecast Formula 1 instead of 'Krishi Darshan'

4:18 AM, February 23, 2007  
Blogger Himanshu Gupta said...

Hi mithun,

Perhaps you missed the logic of gyanee's points. this
story would prove his points.

Hi gyanee.. but i'm not convinced with your logic regarding DD being a loser here. I believe it has turned out to be a win-win situation both for NEO and DD. Neo is getting Additional revenue and on the other hand, DD is getting advantage of a free rider. It wasn't having any lucrative tournament in its kitty before this ordinance came along. So, it straightforwardly got a decent sum at no cost.

I agree with your points regarding Premium advertisers siding with Neo and the mass media advertisers siding with DD, which also is ultimately helping Neo. However, i feel that DD could have been a bigger winner here as this 75:25 ratio has been decided arbitrarily and can be a bone of contention (Terms and conditions of this 75:25 rule are not very clear)

3:10 AM, February 26, 2007  
Blogger Gyan-ee said...

Hey Himanshu,

I said DD will be a loser, if it is forced to spend that 25% on promotion of other sports. In that case, it will be revenue with zero profit (Will add to topline, not to bottomline :)).
In such a case, it would have been better off getting some revenues out of its serials or other stuff (Note that DD still attracts a lot of Ads because of its reach to areas that cables dont reach)

And also my suggestion was to move the feed to DD Sports rather than the main channel. In this case, it would have the best of both worlds. DD sports hardly attracts any good Ad revenues currently. Atleast this will make it justify its existence :)

5:26 AM, February 26, 2007  
Anonymous Sujay said...

1) revenus of rights holder will not rise.Since people will anyways get the event on DD channel they will not subscribe to the channel holder holding the rights. He will lose sunscription revenue .
(assumption is the interest of the people in that channel is for the event telecast only)

2)No.Instead it would have been better if Telecast is made available on DD also,entire revenues go to the rights holder and the rights holder is asked to contribute 5-10% of the proceeds to a USO type fund(USO in telecom industry) and should be available to create sports infrastructure and promote sports.

3) DD will definitely benefit from this as people will watch it where Pvt channel is unavailable.

4)

5)No.Sports which are making good money like cricket only should be subject to such rules.

11:21 PM, May 14, 2007  

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