Sun TV and IPL: A bold step?

The Sun TV Network has won the bid for the Hyderabad franchise of IPL for the next five years, after the erstwhile owner Deccan Chronicle Holdings lost the rights recently. afaqs! explores what the deal brings to the table.

After a bitter battle which resulted in the termination of the Hyderabad franchise Deccan Chargers, owned by Deccan Chronicle Holding Ltd (DCHL), the franchise finally found a new owner, Sun TV Network, on October 25. The media company will have to pay Indian Premier League (IPL) Rs 85.05 crore per year for the next five years. Sun TV Network won the bid against PVP Ventures, which bid for Rs 69.03 crore per year.

The new franchise will play in the forthcoming season of IPL.

Sun TV Network is owned and run by Kalanidhi Maran, the nephew of DMK chief M Karunanidhi. Apart from the television network which has about 32 channels, it also owns private radio channels 93.5 Red FM (across the northern region) and Surya FM (in the South). Overall, it has 45 radio stations across the country. Besides this, the company recently signed a content-sharing agreement with Arasu, the government-owned cable operator in Tamil Nadu. It also runs a direct-to-home (DTH) business under the brand Sun Direct.

Sun TV Network also owns two daily newspapers, Dinakaran and Daily Murasu, and six magazines apart from Sun Pictures, the film division. Interestingly, it also owns low-cost carrier, SpiceJet.

With a group which already has a huge presence in the media and entertainment sector and other businesses, how important was it to get its hands on a franchise of the IPL? afaqs! explores.

According to analysts, Deccan Chronicle's decision to move beyond its core media business (newspaper) to ventures such as the IPL and in the aviation sector with Flyington Freighters led to the fall of the firm and hence, being debt ridden, it was forced to exit in such a manner.

Ramanujam Sridhar, CEO, Integrated Brand-Comm, says, "As a firm, it should have concentrated on consolidating its main business - the newspaper - and then should have thought of taking a leap. However, all the bad news has proved one thing, that all franchises will take time to make money. Apart from Chennai Super Kings and Kolkata Knight Riders, it will be a slow process for the rest."

As it turned out, one's loss has turned into gain for another. With the network running about 32 channels under various brands including the parent Sun TV, Gemini TV (Telugu channel), Udaya TV (Kannada channel) and radio stations, newspapers and magazines, it gives a chance to bundle and sell inventory across the southern market.

According to Anita Nayyar, chief executive officer, India and Southeast Asia, Havas Media, the network can leverage the win through content, and various sponsorship and branding deals. It can further cash in through additional benefits for players and the team. In all, there is a lot of opportunity for the group to cash in from the win. She adds that there will be a lot of bundling happening across the group.

Moreover, the move will allow the group to look at additional revenue streams. "If the group is serious about the business of sport, then this is just the foundation for future investments. Also, then it can look to build other revenue streams such as merchandising and licensing as the market matures over the next five-ten years. The network also has the option to show team-related programmes on its channels to build a stronger association," opines Jehil Thakkar, head of media and entertainment practice, KPMG.

The win brings a lot more to the table than is apparent. Sun TV Network, which already owns a media empire down South, can actually leverage the deal and give a big fillip to the franchise brand. "The franchise will provide an opportunity for the network to expand to other southern states and further build on the main brand. The IPL team will provide a brilliant platform to create a connection with the audience of other southern states. There has to be a long term vision behind the win," notes Indranil Das Blah, COO, KWAN.

CVL Srinivas, chairman and managing director, LiquidThread Asia-Pacific, Starcom MediaVest Group also adds that the deal is a perfect platform for the Sun TV Network to activate an already strong regional brand and build national presence.