Star India financials hit by cricket rights costs

Incremental rights fee increases for cricket’s Indian Premier League and World Cup, as well as a lukewarm advertising market, have been cited as reasons for pay-television broadcaster Star India suffering an operating loss of over Rs4.25bn (€53.4m/$59.7m) in the quarter ending June 30, 2019.

The loss was revealed in the financial results for Star’s parent company, US media group the Walt Disney Company.

Star holds the global rights to competitions organised by the International Cricket Council under an eight-year deal, running from 2015-16 to 2022-23, which was struck in October 2014. The World Cup, which took place last month in England and Wales, is the showpiece tournament of the agreement.

In September 2017, Star India ousted Sony Pictures Network India as the main rights-holder to the IPL after securing the global television and digital rights to the Twenty20 cricket competition across its five editions from 2018 to 2022.

“Star’s results this quarter came in well below our expectations and were driven primarily by a meaningful step-up in rights cost for the Cricket World Cup and the Indian Premier League as revenue growth was more than offset by the incremental rights expense,” Christine McCarthy, senior executive vice-president and chief financial officer at Disney, said, according to Indian newspaper the Economic Times.

“We estimate Star had generated about $150m of operating income in the third quarter last year.”

The ET had earlier reported that Star India’s annual expenditure on cricket rights, through the IPL, ICC and a separate deal with the Board of Control for Cricket in India, is over Rs70bn per year between 2018 and 2022.

McCarthy also highlighted that Star was affected by the abandonment of a number of key 2019 World Cup matches due to weather conditions.

She added: “They have insurance coverage for some of those, but any proceeds would be in future periods. And there was also some weakness in advertising revenue that was related to the local advertising market.”