Sony moves court as BCCI ends contract

Written by Corporate Bureau | Mumbai | Updated: Mar 18 2009, 04:57am hrs
BCCI
The plot for the second season of the Indian Premier League (IPL) thickened as Sony Entertainment dragged the Board of Control for Cricket in India (BCCI) to court seeking an injunction barring the T-20 tournament organiser from negotiating telecast rights for the upcoming sporting event with other television channels.

On Saturday, the IPL management terminated its agreements with global telecast rights-holder Singapore-based World Sports Group (WSG) India and Indian broadcaster Sony Entertainment (now known as Multiscreen Media), citing breach of contract, especially relating to payments, according to sources close to the development. IPL has terminated both the contracts, one with Sony and also the one with WSG India, an IPL spokesperson confirmed.

Efforts to reach the Sony management for its version proved futile. However, the company moved the Bombay High Court, as the IPL management was known to be in talks with WSG Mauritiusbelieved to be a sister concern of WSGfor fresh broadcast rights. Sony has alleged that BCCI terminated the original contract and signed a new one with WSG Mauritius without giving it proper notice. Hearings in the case will continue on Tuesday.

WSG India had won ten-year telecast rights to the IPL for around $1 billion. It then entered into a five-year agreement with Sony for broadcast rights in India. Meanwhile, Sony and IPL entered into a separate production agreement. It made sense having the firm broadcasting in India to also produce the event, hence the agreement, said the IPL spokesperson.

A termination of the contract could deal a severe blow to Sonys operations in India. Reports have surfaced that the broadcaster had already sold around half its advertising inventory for the second season for Rs 200 crore. In the first season, Sony was reported to have made Rs 300 crore from IPL advertisements alone, representing a large chunk of its profitability.

All this will dent Sonys profitability in India and also overseas, said a media sector analyst with a multinational broking house. Parent Sony Corp in January had warned that it would post a $2.9-billion operating loss in the current fiscal--the first operating loss in the past 14 years, say analysts.