Multi-Billion-Dollar Bids For Cricket Rights Are Expected From Disney, Sony And Reliance In Duel With Global Streaming Implications

Today is the day when bids are to be submitted for rights to the Indian Premier League, a cricket league whose games are a massive draw across South Asia and other parts of the world and have helped propel Disney’s global rollout of Disney+.

After taking on cricket as part of its $71.3 billion acquisition of most of 21st Century Fox in 2019, Disney is expected to be one of three bidders in the auction, along with Reliance Industries and Sony Group Corp. The multi-year rights package is expected to fetch somewhere between $6 billion and $8 billion, with the winner of the auction expected to be picked in the coming days. The IPL’s two-month tournament is usually held in April and May.

In a surprise, Amazon dropped out of the running late last week, according to multiple press reports. The tech giant has not been afraid to shell out hefty sums to carry the NFL, European soccer and other live sports, but it has also faced a choppier operating environment of late and a cratering share price.

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With Amazon out the picture, Mukesh Ambani’s Reliance is widely tipped to be in pole position for the cricketing mega package.

Reliance has reportedly been preparing for the auction for months, hiring top executives since last year to deliver the win and oversee coverage if victorious.

One of Reliance’s major subsidiaries is Network 18, the mass media conglomerate that operates Viacom 18 and History TV 18 with Viacom and A+E Networks respectively, and the outfit will be keen to wrestle back some of the Indian viewer market share from Disney by securing the lucrative package.

Sony’s interest has been galvanized by its recent merger deal between its India subsidiary and Zee Entertainment, which will create a newly fortified local player.

A person familiar with Disney’s strategic thinking heading into the negotiations told Deadline the company was not inclined to get carried away, given its many other priorities in funding streaming and the rest of its global operations. Yet cricket has been an important driver of the company’s steady subscription gains, especially given the distribution setup for Disney+. In India and some other territories, the service is offered as a low-cost add-on to Hotstar, which was the former Fox property established several years ago in the region. More than one-third of the nearly 138 million subscriptions to Disney+ are on Disney+Hotstar, which has resulted in lower average revenue per subscriber compared to that of streaming rivals.

Many Wall Street analysts say the billions required to keep cricket could be better invested in areas with better prospects for higher returns. “Ultimately we think a disciplined approach to these rights makes sense, even if Disney loses the IP,” Morgan Stanley media analyst Benjamin Swinburne wrote in a recent note to clients. “It will likely put downward pressure on Disney+Hotstar subs and maybe put Disney’s fiscal 2024 guidance at risk, but the profit potential out of India is minimal in most scenarios and we do not see this materially impacting long-term earnings power.”

CEO Bob Chapek has not been afraid to wave the yellow caution flag when asked about his view of the bidding. “While certainly, it’s an important component” of the company’s streaming offering, he said on an earnings call last February, “the local content that we’re developing really will mitigate the impact of this if we were not to win the auction on IPL.” The company last year began ramping up local-language original production around the world, putting dozens of film and TV titles in the pipeline.

One looming question is whether Disney would be forced to lower its projections for 230 million to 260 million Disney+ subscribers by the end of fiscal 2024. Thus far, the company has reiterated that guidance as well as its forecast of profitability in streaming by that same point.

Max Goldbart contributed to this report.

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