Sun TV’s management is confident of breaking even on its purchase of the Hyderabad Sun Risers, a cricket team that plays in the IPL. While the last team to be sold before this (Pune Warriors) was bought for Rs1,700m/year, Sun TV is committed to pay only Rs850m/year for the first five years.
Management pointed out that Sun TV has committed to paying Rs850m/year for the first five years to own the Hyderabad IPL team. From the sixth year onwards, the company would need to pay a 20% share of revenue (the rights to this team are perpetual). While team costs are pegged at a maximum of US$11m, Sun TV’s team is likely to cost US$8.5m. Sun TV gets a share of television broadcast revenue, titles and other sponsorships in addition to gate sales, in-stadia advertising and various forms of advertising on jerseys, pants, shoes and helmets (among others).
Management pointed out that following its purchase of the IPL team, the title sponsorship rights for the IPL has increased from Rs790m/year. DLF, the previous title sponsor, paid Rs400m/year, indicating that its revenue share
will also increase.
Management believes that from year 6 onwards, the IPL cricket team is likely to make after-tax free cash flow of Rs600m annually.
Sun TV Management also discussed its Strategy for Content in Regional Language Channels.