Even as sectoral analysts are skeptical about SUN TV Network Ltd's decision to acquire an Indian Premier League (IPL) team at an outlay of Rs.425 crore, a senior official of the media group is confident that the company would break even in the first year itself.
City based SUN TV Network has won the IPL Hyderabad franchise Thursday for a sum of Rs.85.05 crore a year. The total outlay for the next five seasons will be Rs.425 crore.
In addition, the company has to bid for the players to form a team involving another sizeable outgo.
The IPL governing council met in Mumbai Thursday to open the bids for the new franchise, where SUN TV Network's bid was substantially higher than the second bid of PVP Ventures, which was Rs.69.03 crore.
The announcement makes SUN TV the ninth IPL franchisee.
"We are in the entertainment business. Cricket is the number one game in the country and IPL has changed the pattern of viewership. With the bouquet of satellite channels and FM radio stations we can certainly break even in the first year itself," V.C. Unnikrishnan, chief financial officer of SUN TV Network, told IANS.
He said the group's Telugu channel Gemini and other channels, radio stations are there in Andhra Pradesh.
According to him, the company will fund the IPL team investment through internal accruals.
"We are a profit making company. Last year we made a profit of around Rs.700 crore," he said.
Queried about the total outlay the company is planning for building the IPL team, he said: "That has to be seen. We have to bid for the players."
When asked about the views of analysts that no IPL team has turned profitable or contributing to the top or bottomline of the owning company, Unnikrishnan said: "We have proved different in our other ventures when contrary views were expressed. We will again prove that we are different."
"Ours is an entertainment industry. We will devise programmes in such a way so as to earn revenue. You will have to wait and see."
Speaking to IANS, a Mumbai based analyst not wanting to be named said: "IPL will give higher visibility to SUN TV group and may result in higher revenue."
Giving thumbs down to SUN TV Network's foray into the IPL arena, another analyst with a broking firm told IANS on the condition of anonymity: "Major IPL teams are not making any profit. We can't say when the teams would break even."
According to him on valuations, the IPL will be a drag on an owning company though it is true that brand visibility will go up.
"Perhaps owning an IPL team is a status symbol now," he said.
Countering that, Unnikrishnan said: "If that is the case, we would have entered the arena three years back."
Meanwhile, at the National Stock Exchange the Kalanithi Maran promoted SUN TV's scrip closed at Rs.343.45 after opening at Rs.356. The scrip touched an intra-day high of Rs.358.