BROADCASTER COULD INCUR A LOSS OF ₹100-120 CRORE in ad revenues if India decides to boycott its league match with Pakistan on June 16
Star India, the media rights holder of the upcoming ICC World Cup, will have to pay the biggest price if the Indian government and the Board of Control for Cricket in India (BCCI) agree to boycott the match with their arch-rivals Pakistan. Star India can, however, protect itself from the possible losses due to the boycott by buying other insurance policies.
It is for the first time that in the cricket-crazy nation fans want a boycott of the Pakistan match in the wake of the killings of 40 CRPF jawans in Pulwama, Kashmir. But in a scenario where India decides to forfeit its league match with Pakistan on June 16, Star India will incur a loss of at least ₹100-120 crore in terms of ad revenues.
While Star India may not have to pay the licence fee for one particular match, losses incurred due to boycott will have to be borne by Star India as the insurance policy, as of now, does not cover cancellation of a match due to withdrawals. The broadcaster has taken close to ₹1,500 crore insurance for the World Cup from New India Assurance, United and SBI General Insurance.
“New India Assurance is the lead insurer for Star India,” said a source close to the development. “The policy is for ₹1,457 crore covering advertisement loss due to cancellation of a match.”
The policy covers all matches played at the World Cup. However, the broadcaster will have to buy a separate policy for terrorism risk. A senior New India Assurance executive confirmed the development. United India is the co-insurer along with SBI General Insurance Company.
At the last World Cup in 2015, the estimated ad revenue from the India-Pakistan match on February 15 was ₹100-110 crore from 93 brands that used the platform to advertise, and that match clocked a historic 288 million viewers.
The noise over boycotting Pakistan in the World Cup has risen since the terrorist attack in Pulwama. Last week, in a letter to the ICC and the England Cricket Board, Rahul Johri, CEO, BCCI, urged the cricketing community to sever ties with countries from where terrorism emanates.
The policy is designed in a way that will cover cancellation due to weather conditions and teams not attending due to catastrophes, but so far, the risk of boycott is not woven into the policy. Experts said with three months to go, Star India could buy a terrorism policy to cover the risk of boycotts.
The Indian cricket board first took a policy for the Indian team in 1993. It first started taking policies for World Cup in 1996.
Over the last few years BCCI is buying a large cover for Indian Premier League, insuring the players against injuries, loss of fees for players due to injuries among others.
The key players are insured for as high as ₹10-12 crore.
Source:- The Economic Times- Mumbai