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Relief for broadcasters, Lodha panel’s reco on limiting ads doesn’t get SC nod
MUMBAI: In a major relief to sports broadcasters, the Supreme Court has accepted all of Lodha Committee’s recommendations except for the one that required the Indian cricket board to revise broadcast rights contracts to ensure that ads are played only during breaks.
This one recommendation had the potential to turn the sports broadcasters’ business models upside down as advertising revenue forms a big chunk of their revenue, which also includes subscription revenue.
A bench comprising Chief Justice TS Thakur and Justice Ibrahim Kalifulla allowed the Board of Control for Cricket in India (BCCI) to govern its broadcasting policy and existing contracts.
In its recommendations to the apex court, the panel had recommended that all existing contracts for International Test and One-Day matches be revised and new ones ensure that only breaks taken by both teams for drinks, lunch and tea are interrupted with advertisements, as is the practice internationally.
The panel also recommended that the entire space of the screen during the broadcast be dedicated to the display of the game, save for a small sponsor logo or sign.
The panel had pointed out that the BCCI’s aim to sell television rights had just been to maximise revenue by inserting advertisements at crucial moments of the game and to muzzle dissenting voices at all levels.
It had also noted that commerce had overtaken the enjoyment of the sport, with advertisements continuing many a time, even after the first ball and again commencing even before the last ball of the over, which interrupted the full and proper broadcast of the game.
Regardless of the wicket that had fallen, century having been hit or other momentous events, full liberty was granted to maximise the broadcaster’s income by cutting away to a commercial, thus robbing the sport of its most attractive attribute—emotion, the Lodha panel report had stated.
The recommendation of airing ads only during breaks had become a hot button issue with the BCCI vehemently opposed to it.
Immediately after taking charge as BCCI president, Anurag Thakur had voiced his concern with the Lodha panel’s recommendations on ad restrictions during live broadcast of cricket matches.
“Look at the money paid one time or on a monthly basis to the ex-cricketers. Where does that money come from? They come from these [the ads] only. If you block that, then who is going to suffer? Will it be only Thakur and Shirke who will suffer? No, it will be the state associations, the ex-cricketers, the current cricketers and the upcoming cricketers. The overall cricket will suffer because of this,” The Indian Express had quoted Thakur as saying.
Broadcasters had also sounded the alarm bells with Star India CEO Uday Shankar and Sony Pictures Networks India CEO NP Singh stating that the value of cricket rights would take a hit if the Lodha committee’s recommendations were to be accepted.
Talking to The Times of India, Shankar had stated that the broadcaster would renegotiate the contract with the BCCI if the recommendations on ads become binding.
“If the recommendation is implemented, that revenue share will have to be dramatically revised downwards, and in that case the BCCI will have to be prepared to live with lower value. If the rates go down, we will renegotiate the contract [with the BCCI],” he had said.
Since the recommendations, presumably, would have been binding only on BCCI-organised events, the value of TV rights of other boards like Australia, South Africa, England and ICC would go up drastically.
“This will have a huge impact on the entire ecosystem of cricket. Much as we love our cricket, we have to bear in mind that somebody is paying for it. Whether anybody likes it or not, today the economics of cricket—be it through viewership or the game’s financial muscle—is being supported by India. And if that changes, then the entire economics of the game changes,” he had noted.
Fearing that the recommendations might also apply to its cash-cow the Indian Premier League (IPL), SPNI CEO NP Singh had said that the value of the IPL would take a hit as there was a correlation between the value of a sports property and ad revenue that a broadcaster made.
“Given the current distribution landscape where there is no true addressability, any inventory reduction will lead to a loss in the value of a property. If the recommendation goes through, we will consider the implications the next time we bid for a property,” Singh had stated.
In January 2015, the Supreme Court had appointed Justice RM Lodha to look into the functioning of the BCCI and suggest structural changes with the objective of bringing in more transparency.
Meanwhile, the apex court has accepted other major recommendations of the Lodha committee such as barring ministers from being BCCI members, barring individuals aged above 70 years from holding posts in the BCCI, one state having only one vote and having a Comptroller and Auditor General (CAG) nominee on the BCCI for auditing. It has left it to the government to bring BCCI under the ambit of RTI and to legalise betting.
The SC has given BCCI six months to implement these changes.