Ambani’s consumer empire goes into cricket

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After consolidating his control of a $2 telecom carrier, the world’s seventh-richest man is seeking his next fortune in a $1 content delivery business.

In fact, the digital rights loot for Indian Premier League cricket, snatched by Viacom18 from billionaire Mukesh Ambani by dethroning Walt Disney & Co. for the next five years, has yet to even reach the $1 mark. Disney+ Hotstar, primarily a service for cricket-loving Indians which is also available in some other Asian markets, has 50 million subscribers and growing rapidly. But the average monthly revenue per user for the partly ad-supported app is just 76 cents, a drag on what Disney+ does from customers elsewhere who pay the full cost of entertainment.

The streaming rights for IPL, the Super Bowl of cricket, amounted to 205 billion rupees ($2.6 billion), according to media reports. Viacom18 Media Pvt., a joint venture between Reliance Industries Ltd. of Ambani and Paramount Global, pays that amount for 410 games over five years starting in 2023, or $6.4 million per game. There is a separate $3 billion TV deal for the Indian subcontinent, though it is unclear who grabbed it; the Financial Times says Disney could have retained him; other reports suggest that Sony Group Corp. is the winner. A formal announcement will come after small auctions – for non-exclusive digital content and overseas TV rights – which are expected to conclude on Tuesday.

The headline-grabbing figure is the value bidders place on the streaming package, which is now worth almost as much as IPL on TV. Much of the credit for this catch-up goes to Ambani. Its Jio 4G network has disrupted the Indian telecom market with cheap data, acquiring more than 410 million customers since its launch in 2016. As Jio subscribers burn their plans to watch cricket on their mobile devices, activity Ambani’s transport company will get an automatic lift from its investment in content. After a price increase, telecom users are finally paying just over $2 per month; if he can get an extra $1 – luring them with cricket and keeping them for other entertainment – his $38 billion-a-year consumer empire could grow even bigger.

Even so, it won’t be easy to make money on this new investment at a time when soaring inflation is squeezing discretionary spending. This is where former 21st Century Fox executive Uday Shankar comes in. The man behind the popular Indian app which was later acquired by Disney is now a key driver of Ambani’s media ambitions. Viacom18 recently received a $1.8 billion capital injection from Bodhi Tree Systems, an investment firm created by Shankar and his former boss, James Murdoch. Ambani will expect Shankar, who is known for his media consumption in small Indian towns, to do just as well beating Disney+ Hotstar as he is creating Hotstar for Murdoch and his father, Rupert.

Among other things, Shankar needs to keep viewers — and advertisers — interested in IPL. He helped lift the competition out of deep funk after a match-fixing scandal in 2012. The current situation isn’t as bad as it was then, but it’s not great either. TV audience is mediocre; Indian media quoted unnamed sources to report that some advertisers have asked Disney to compensate them for lower viewership in this year’s edition. While some of the public may have cut the TV cords and tuned in, the championship itself is in danger of becoming tedious.

Still, it was surprising that Inc., which was expected to largely compete with Viacom18, decided to stay away from IPL auctions at the last minute. The highly anticipated second round of the contest between Ambani and Amazon’s Jeff Bezos – Ambani recently outwitted his rival by taking control of a near-bankrupt Indian retailer – never materialized. Perhaps the Seattle-based giant is happy to broadcast English Premier League football live; perhaps he sees a safer (and cheaper) path for Prime to expand in India on the back of e-commerce, rather than e-cricket.

Amazon’s apathy should also give Ambani pause. It is India’s largest retailer. But can it leverage its sensational investment for additional business for JioMart, the online alliance of affiliated neighborhood stores bolstering its own network of more than 15,000 Reliance Retail stores? Could Meta Platforms Inc.’s popular WhatsApp messaging service help it collect payments for snacks ordered online while the Indians of Mumbai (belonging to the Ambani family) take on the Super Kings of Chennai? Trade aside, Ambani needs to invest in content as arch rival Gautam Adani is hot on his heels. The Coal Czar ventured into news programming by buying a stake in Quintillion Business Media Pvt., which was an Indian partner of Bloomberg LP. The world’s ninth-richest tycoon has also set up his own media subsidiary, which wants to be in everything from publishing to advertising. Adani has yet to show any interest in broadcasting cricket or family soaps. But he has just acquired the rights to own and operate a team in the UAE’s flagship T20 cricket league. So you never know.

However, staying ahead of Amazon and Adani are secondary considerations. The bottom line is this: Ambani decided to spend billions on content, and now he has to recoup it all in five years. Not just from advertisers, but through transportation and commerce. One dollar at a time.

More from this writer at Bloomberg Opinion:

• India’s sticky inflation savvy magic prices: Andy Mukherjee

• Second round of Bezos against Ambani in India: Andy Mukherjee

• Ambani’s $2 Chutzpah unlocks another fortune: Andy Mukherjee

(Adds details of Adani’s right to operate a UAE cricket team in penultimate graphic.)

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.

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