The controversy over the telecast of Indo-Pak Cricket series has opened up an
interesting debate on the right over the Sports event.
The entire fight between Ten Sports and DD is for telecast signals which
are worth Rs 208 crores according to Ten Sports. This asset is being created
because the Indian National Cricket Team is playing against Pakistan despite the
perceptible risk to the lives of the players. The Governments are spending huge
money to safeguard the players because this is expected to improve the
relationship between the two countries. Hence the so called Rs 208 crore asset
has been created by the two Governments at an enormous cost to themselves
without the commercial considerations which has directed Ten Sports to bid for
the event several years back.
Door Darshan, the Indian Government body will, after the SC verdict, buy the
signals for RS 50 crores and show it free to Indian audience. It is therefore
spending this money purely in the interest of improving the relationship between
the two countries. This therefore will be a further investment by the Government
for the cause.
In this process of DD telecasting the signals in its network, the value of the
telecast in the hands of Ten Sports will increase and they can charge higher
rates for the ads. Thus the entire value for the transaction is created first by
the match itself and then by the number of viewers. Ten Sports is only an
intermediary broker. The distribution of income therefore has to be equitable
between all the parties.
If BCCI has created the match in the first place and parted with its rights to
PCB, then the question of its rights to alienate the asset created by the Indian
Sportsmen without the country's economic interest being taken care of also comes
into question. SC is therefore right in questioning the BCCI's role in not
considering the DD's requirements though this might have been unintentional.
This entire episode along with the controversies raised earlier by the ICC
during the last Cricket World Cup has raised a fundamental question on the
process of sharing the revenue of the telecast rights of such events. While the
need to promote enterprise and freedom of international business is important,
it is equally important for the system to provide for equitable distribution of
rewards to all the stake holders.
This can be achieved only through an appropriate legislation which incidentally
will apply even for the Internet world.
The main principle to be considered here is "Who Creates the Assets?". The Asset
in its primary form is the event itself and without the event there is no asset
at all. Once the asset is available, its value gets added with each new
broadcaster who distributes the signals to a set of audiences. If DD adds a few
crore viewers, then the value enhancement to the basic product has occurred
because of the DD network. It therefore has to get a fair compensation for the
same. This could be by earning an ad revenue of which a part may be shared with
the earlier asset creator. If no advertisement is carried by DD, then it is
possible to argue that it is entitled for a fee from the earlier asset creator
for having enhanced the value of the asset.
The problem at present is that the existing system provides for people marketing
a right over an asset which never existed in the first place. (When PCB marketed
the rights to Ten Sports, the event did not exist at all. Hence the right
created was purely speculative). Hence there is confusion all round.
If this confusion has to be removed in future, there has to be some
clarification on the legal ownership of the assets. The match itself may be
owned by BCCI jointly with PCB with ICC being a broker. The telecast rights are
owned by the last mile broadcaster with Ten Sports like buyer being the
intermediary. The brokers should be entitled only to a fraction of the rewards
commensurate with their value addition. They should neither be allowed to
"hoard" the signals and claim unfair reward not allowed to charge a rate which
is unequitable.
The change in the law if contemplated therefore has to take into account the
"Rights of the Sovereign Government on Assets Created out of Sports Events
either held in India or in which the Indian Sports persons participate".Such a
law may provide for "Compulsory Exhibition" in the territory of the national
broadcaster. (Similar to Compulsory License in respect of Patents).
In the absence of an agreement to the contrary, the revenue has to be shared on
the basis of "Value Addition" due to the enlargement of the viewer ship and a
royalty not exceeding 5 % should be payable to the broker.
If however DD agrees to be only the distributor of the signals from Ten Sports,
Ten Sports can retain the ad revenue and pay a brokerage of 5 % on ads to DD.
In the first option, it means that if DD can make a revenue of 100 crores, Ten
Sports is entitled only to a brokerage of RS 5 crores. This may look unfair in
the present context where Ten Sports has already paid money to PCB. It is
however recommended as a general rule in future in which case Ten Sports need
not bid an astronomical sum in the first place.
In the second option, if Ten Sports earns Rs 100 crores out of ads, it pays only
Rs 5 crores to DD. This means that Ten Sports can bid any amount based on its
own ability to market the ads and it can use the services of DD at
negotiated rates within the maximum permitted brokerage.
A third option could be where Ten Sports is not able to market ads fully. It can
then allow DD to carry its own ads by selling the blank adspace to DD with
permission to re-sell. This would be similar to the current arrangement and
offer continuity of the existing system but should not be the only option. This
should be an option available only if either of the first two options are not
accepted. Also the payment can be linked to the actual ad sales made by DD and
the revenue sharing can be on transparent basis.
If a consensus is built on this system, this principle would also apply to
Internet advertising and can enable Indian ISPs to have a share of the revenue
generated by international portals out of the ICT development in India.
