Disney Star, Viacom18 to Fight it Out on IPL Ad Pitch amid Merger Talks

Disney Star and Viacom18 Compete Aggressively for IPL Sponsorship Amidst Merger Talks

Source and Citation: Originally reported by ET Bureau in the Economic Times on January 16, 2024

Analysis for Layman

Despite undergoing merger discussions at the parent level between Disney and Paramount, their Indian subsidiaries, Disney Star and Viacom18, are gearing up for an intense battle in the advertising arena around the upcoming 2024 Indian Premier League (IPL) season.

Disney Star owns the broadcast rights, while Viacom18 live streams matches for free on JioCinema. Both companies are aiming to enhance monetization during this cycle after experiencing losses in 2023 due to a softened ad market. Disney Star is seeking over ₹80 crore for prime sponsorship slots, even on standard-definition feeds. Analysts predict an overall rebound in ad spending given the anticipated strong viewership and fan following.

Disney Star, Viacom18 to Fight it Out on IPL Ad Pitch amid Merger Talks

Impact on Retail Investors

For retail investors, this advertising competition signals the commitment of both Disney and Paramount to the high-growth Indian media market, even amid macroeconomic volatility. The potential merger could consolidate their strengths in this crucial Asian market. Partnerships, such as the one with Reliance backing Viacom’s growth plans through Jio, also indicate ongoing support.

However, the elusiveness of profits for marquee cricket rights owners, given massive costs, calls for caution. Conservative investors may prefer pure-play digital platforms like YouTube and Netflix over multimedia conglomerates until sustainable returns materialize.

Impact on Industries

The optimism expressed by the Madison Media CEO points toward a brighter 2024 outlook for ad expenditure in consumer-facing sectors, ranging from auto to e-commerce, compared to the tepid performance in 2023. The IPL offers a prime four-week launch window for advertisers.

Questions about Return on Investment (RoI) persist due to the fragmented migration of the digital audience. Broadcast still commands the majority of viewership. Advertisers and agencies are eagerly awaiting digital measurement standardization promised by BARC, which is critical for sharpening targeting.

Overall convergence across TV and over-the-top (OTT) platforms enables expanded reach, but ads competing with free content pose monetization challenges. Subscription models also need consideration.

Long Term Benefits & Negatives

Over the longer term, the expansion of the market through digitization and OTT provides significant growth opportunities for Indian sportscasters, despite short-term questions about profitability. The comfort of the younger demographic with ad-supported content bodes well, especially considering cricket’s major standing as a consumer passion point.

However, risks arise from blind auction prices crossing sustainability limits, especially as competitive intensity persists between key players such as Sony, Disney, and Viacom, all committed to India’s enthusiastic market. Guarding against winner’s curse as markets mature presents management balancing act challenges.

Short Term Benefits & Negatives

In the near term, the continued aggression of Disney Star and Viacom18 in IPL sponsorship pricing could boost overall cricket ecosystem revenues as optimism returns to advertiser budgets in 2024. A first-quarter consumption spike aids consumer sectors.

However, persistent macroeconomic worries may mean targets remain stretched. Ad pricing power is also split between fragmented broadcast, digital, and vernacular platforms. Risks of bidding overexuberance fueled by emotive events exist, and conservative pricing assumptions seem prudent despite cricket’s undisputed status locally.

Company Impact Analysis: Disney Star vs. Viacom18 in IPL Ad Battle

Indian Companies Gaining:

  • Disney Star:
    • Higher ad rates compared to Viacom18 could potentially increase revenue if they secure enough sponsorships.
    • Targeted ad offerings for southern markets could attract additional regional advertisers.
    • Strong brand reputation and reach on TV might give them an edge in attracting premium sponsors.
  • Viacom18:
    • Unchanged ad rates might attract more advertisers seeking cost-effective options compared to Disney Star.
    • Free streaming on JioCinema could potentially expand their audience pool, attracting advertisers targeting digital users.
    • Existing base of 500+ advertisers from IPL 2023 provides a strong foundation for securing sponsorships.
  • Other IPL Sponsors:
    • Increased viewership across TV and digital due to heightened competition could benefit existing sponsors with greater brand exposure.
    • Potential rise in overall ad expenditure on IPL could lead to larger sponsorship deals for all participants.
  • Media and Advertising Agencies:
    • Increased competition between Disney Star and Viacom18 could lead to higher demand for their services in negotiating and managing ad deals.
    • Growth in overall IPL ad spending could benefit agencies managing campaigns for various brands.

Indian Companies Potentially Losing:

  • Smaller Companies and Start-ups:
    • High ad rates on both platforms could pose challenges for smaller companies and start-ups with limited marketing budgets.
    • Intense competition for ad slots might make it difficult for them to secure visibility.
  • Companies not involved in IPL Advertising:
    • Increased marketing budgets directed towards IPL might lead to reduced ad spending in other channels, potentially impacting companies relying on alternative advertising platforms.

Global Companies Gaining:

  • Global Sponsors of IPL:
    • Increased viewership and reach of IPL due to heightened competition could benefit global sponsors with international brand exposure.
    • Potential rise in overall ad spending on IPL could lead to more attractive sponsorship deals for global brands.
  • International Media and Advertising Agencies:
    • Increased ad spends by global brands on IPL might benefit international agencies managing their campaigns.

Global Companies Potentially Losing:

  • Global Companies Reliant on Traditional Indian Media:
    • Increased focus on IPL advertising might lead to reduced ad spending on other traditional media channels, potentially impacting global companies relying on those platforms.

Disclaimer: This analysis is based on limited information and should not be considered financial advice. Please consult a qualified financial professional before making any investment decisions.

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