ICC in trouble as JioStar seeks to exit media-rights deal
What's the story
The International Cricket Council (ICC) is facing a major setback as JioStar, a Reliance Industries-controlled company, has expressed its inability to continue with the remaining two years of its four-year India media-rights deal. The decision comes due to severe financial losses incurred by JioStar. The development has forced the ICC to look for new partners for future tournaments.
New strategy
ICC initiates fresh sale process for media rights
The ICC has launched a new sale process for India media rights from 2026 to 2029, with an asking price of $2.4 billion. This comes after JioStar's withdrawal from the deal that was supposed to run until 2027. The ICC has approached Sony Pictures Networks India (SPNI), Netflix, and Amazon Prime Video to take over these rights, but none have shown serious interest due to pricing concerns.
Financial woes
JioStar's financial struggles and industry impact
JioStar has more than doubled its provisions for expected losses on onerous sports contracts in 2024-25 to ₹25,760 crore from ₹12,319 crore a year earlier. The company's standalone net loss for the year ending March 31, 2024, was largely driven by a provision of ₹12,319 crore for an onerous contract linked to its ICC media-rights deal. Despite these challenges, the ICC posted a $474-million surplus in 2024.
Market reliance
ICC's revenue dependency on India and future challenges
India contributes nearly 80% of ICC's revenue, highlighting its dominance and the sport's dependence on a single market. However, potential bidders for the new media rights are wary due to limited monetization opportunities amid weak advertising demand and continued pressure on linear TV profitability. The merger of Star India and Viacom18 into JioStar has also created a duopoly in sports broadcasting, leaving only JioStar and SPNI as serious contenders for rights holders like the ICC.
Rights acquisition
JioStar's inherited ICC rights and market valuation concerns
JioStar inherited the $3 billion ICC India rights from Disney's Star India, which later merged with Viacom18. However, several senior executives have viewed the $3 billion ICC rights valuation as anomalous and materially disconnected from prevailing market benchmarks. SPNI had bid about $1.4 billion for combined TV and digital rights while Viacom18 was understood to have bid around $1 billion.
Increased pressure
JioStar's burden increases after Zee Entertainment's withdrawal
JioStar's burden increased further after Zee Entertainment backed out of its commitment to take the ICC TV rights for roughly $1.5 billion when the proposed Zee SPNI merger collapsed. This led JioStar to file arbitration against Zee at the London International Arbitration Centre, claiming damages close to $1 billion according to regulatory filings. Rising dollar rates and rupee depreciation have also added pressure as ICC payments are dollar-denominated.