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The television rights scam

In the process of researching this story and finding documentary evidence in support of our statements, we asked for and received, via Mr Arun Agarwal (whose report on the Stracon scam has been published in full elsewhere on the Internet) certain documents containing a blow by blow account of the negotiations for television rights for the tournament in question. We present the document, part of the Prasar Bharti official files, and signed by Deputy Director General Rakesh Bahadur, in full below. All extrapolations in italics are editorial comments included by us, and not part of the original document.

On this file we are considering the issue of bidding for the Nine Nations Cricket Tournament. During the past 2 days we have held extensive discussions with all concerned including the Chairman of ICC (The ICC chairman is Jagmohan Dalmiya, who now claims he never negotiated with any of the bidders), World Tel, TWI and the members of the marketing consortium. DDG(F) and CEO have been kept informed of these discussions. DDG(F) has also participated in some of the discussions. The following points are being recaptured:

a) It is becoming increasing clear that Doordarshan will have to make all out efforts to get the rights for showing this event in India in the interest of the viewing public since all the major cricketing nations are participating and the event is being held in Dhaka.

b) By the very nature of such bids a very high degree of confidentially is required so as to keep our bid figure unknown and at the same time be ready for a figure which will ensure that Doordarshan obtains these rights.

c) Because the exact days and time of the matches are not yet decided, expected revenue generation figures will be tentative and approximate and so will be our opportunity cost on the fact whether matches are played on week days/week ends and in day, day-night formats.

d) DD has agreed in principle to enter into an agreement with a marketing consortium which is being dealt on a separate file by the Sports Section. The three consortium members were asked to nominate one member for coordination purposes for convenience and also so that a certain degree of confidentiality can be kept. They have (on 17.2.98 in a meeting with both of us) nominated M/s Stracon as the coordinator. A letter is being separately issued by them in this regard.

e) Originally ICC had not stipulated any bank guaranteed to be attached with our bids (original bid document enclosed). However, on 18.2.98 we have received intimation from ICC (kept opposite) wherein 10% of the bid figure has to be given in the form of a bank guarantee/standby LC of a prime bank and is to be enclosed with the bid document. DDG(F) was consulted on this and he said that since Doordarshan/Prasar Bharti does not operate on a bank account at present the issue of bank guarantee etc. will have to be taken up at the level of the Ministry of I&B which will take time.

f) It is also a fact that since Doordarshan have created a marketing consortium and the primary purpose of this consortium is to secure major sporting events for Doordarshan and to market them on our behalf, therefore, it does not make any sense for Doordarshan to put up its own money upfront for securing such bids. In this regard therefore, a letter has been issued today after discussion with DDG(F) to M/S Stracon asking them to arrange for bank guarantees etc after complying with all necessary formalities and within due process provided under the relevant acts. Copy to letter is kept opposite.

g) It has been discussed in detail that if Doordarshan is not being exposed to any investment risk while bidding and the consortium is undertaking the risk the marketing of domestic and overseas rights should belong to the consortium. This is also being provided separately in the general terms and conditions for all sporting events in the next 2 years between Doordarshan and the consortium. However, it is important to note that the exact terms and conditions and particularly the financial terms and conditions cannot be decided at this stage because of the uncertainty of the cost on which the rights can be obtained by Doordarshan. This will only be decided partially at Monaco around the 27th of Feb., 1998 where DDG (C&S) will be representing Doordarshan and perhaps finally in the first week of March as indicated in the bid document. However, Doordarshan will strive to get the maximum beneficial commercial terms in case the bid is successful.

h) The amount to be quoted in the bid has also been discussed in great detail during the discussions with Chairman, ICC (In other words, Dalmiya was involved even in deciding how much DD would initially bid -- so much for his claim of not being involved at any stage) and also after the market (three words missed out here because the document is illegible)….well as the attempts made by other interested parties to the Sports.... When it is becoming increasing clear that some other satellite channels operating in India particularly Home TV and Sony TV are also likely to make all out efforts to obtain these rights. The logic here is that all advertising revenue on TV media will get diverted to this event. There is also the added attraction of selling overseas rights. On the basis of the revenues expected which have been discussed in detail in the separate plan approved by CEO on file as well as the compulsion of obtaining this event it is felt that at present the figure of US $ 8.5 million should be the basic figure quoted in the bid inclusive of production cost. Since the bid document provides for different permutations we can also give other options such as MG + revenue sharing etc close to this figure.

i) This figure of course is tentative and it is also suggested that DDG (C&S) should be given a flexibility of US $0.5 million to be decided while bidding and in case of need.

Signed on 20-2-98 by Rakesh Bahadur, DDG (C&S) and counter-signed by K Kunhikrishnan, DDG-Sports and SS Gill, CEO, Prasar Bharti.

The document reproduced above pertains to discussions within DD before actually bidding for the rights, and among other things very clearly indicates that even before DD had placed its first bid on record, Dalmiya was part of the discussions and negotiations. Reproduced below, is the second document, an extensive report on how the negotiations were actually conducted

As per directions/decisions on page 2/3 I had submitted the bid document in a sealed cover at Monaco to IDI on 25th February, 1998.

2. It may be recalled that vide his letter dated 20.2.98 (S No 13) DDG (Sports) had directed M/s Stracon India Ltd to obtain clearance from MOF/RBI for the foreign exchange dealing as required for the bid guarantee. This clearance in the meanwhile was obtained vide RBI's letter dated 24th February, 1998 (S No 26/cor). The LC copy is at S No 27-28/cor submitted along with the bid document.

3. I was called for discussions on 27th February, 1998 when Mr D L Richards, MD, ICC (Development) International Ltd and Mr Ehsan Mani (representing ICC Finance Committee) were present. A communication has now been received which details the opening of the bid documents by ICC which is kept on the file (S No 29-37/cor). Mr Richards went over the bid document clause by clause and sought clarifications wherever required. He then suggested that I should follow up the negotiations with President, ICC Mr Jagmohan Dalmia, at Calcutta. (Editor's note: It will be recalled that Richards is the man who said Dalmiya was not involved in any negotiations -- when here, it is clearly seen that far from being unaware, Richards was the man who directed one of the bidders to negotiate with Dalmiya himself). Two points emerged very clearly in my meeting:

a) Doordarshan's bid, while being substantial was certainly not the highest. (Editor's note: Clearly, therefore, Richards and Ehsan Mani informed DD that it had not placed the highest bid, when the facts are that DD had bid US $8.5 million as opposed to the next highest bid of US $8.2 million tabled by TWI. Thus, by deliberately falsifying facts, DD was forced to bid a higher amount, thus causing loss).

b) Subject to the final bid figure, other issues such as payment etc. were sorted out in my meeting. I agreed with the suggestion of Mr Richards that the payment term should be in consonance with the requirements of ICC.

4. After reaching back I apprised the CEO/DDG(KK)/DDG(Finance) about the outcome and then proceeded to Calcutta where I and Mr Siddharth Ray of M/s Stracon (acting on behalf of the Consortium) had detailed discussions with Mr Dalmia on 3/4/5th March, 1998.

5. In the meeting held among Doordarshan officers and subsequently with Doordarshan sports Consortiums there was unanimous opinion that it is important for Doordarshan to get the rights. It was also felt that TWI, the highest bidder in the first round (Editor's Note: Clearly, Doordarshan was given the impression, by Richards and Ehsan Mani, that TWI was the highest bidder in the first round -- when it is clearly shown, above, that this was false; DD had in fact bid higher than TWI), was fronting ESPN/Star Sports and if Doordarshan failed to bag the event, the event would have been gone to competing broadcasting channels. The Consortium also apprised Doordarshan of the fact that TWI had declined to participate in a pro bid arrangement with Doordarshan and this was ample proof of the fact that ESPN/Star Sports would have blocked out Doordarshan from the event.

6. In the first round of meetings with Mr Dalmia he laid down the rules of negotiations as under:

a) ICC will go for the highest bid, all other conditions being equal.

b) If Doordarshan can come up with the highest bid ICC will be more than happy to give the event to Doordarshan in spite of the fact that Doordarshan in past never participated in a global bidding. Mr Dalmia also advised me on various conditions that Doordarshan needs to conform to bring their offer in line with the tender requirements of ICC. I had a separate meeting with Mr Siddharth Ray representing Doordarshan sports marketing Consortium to ensure that the Consortium comes up with necessary additional funding for acquiring this event. A letter to this effect was also given by the Consortium on 3rd March, 1998 (S.No. 38/cor.)

7. It had become very clear in Calcutta that TWI were also going to increase their bid amount (Editor's note: Interestingly, TWI were told that DD's bid was higher, DD was told that TWI's bid was higher -- a clear case of trying to play one against the other and hike up the bids -- a process that ended in DD paying more than required, and thus losing money on the deal) and Mr Bill Sindrich of TWI, London, was constantly in touch with Mr Dalmia. In the meanwhile they also went back to their sponsors, i.e. ESPN and Star Sports, since TWI would have to sell the event to a broadcaster. Ultimately a deadline was set up Mr Dalmia for final receiving of revised offers by 6.00 PM IST on 4th March, 1998.

8. Doordarshan headquarters were kept informed about the position. After consulting Mr Siddharth Ray a revised bid was submitted to President, ICC which is on the file at S No 39-41/cor. The final bid amount was arrived at after careful consideration of the likely strategy of TWI to come up with their bid amount. While being backed for the full amount by the Consortium, the offer also takes considerable advantages/concessions from ICC for the event. It may be noted, for instance, that the radio rights worldwide also form a part of our final bid offer which was not included in our original bid. This in itself ensures that AIR will have these rights plus additional revenue from Prasar Bharti. The revenue sharing formula was arrived at after consultations with Mr Dalmia and as per his advice (Editor's note: Even granting that Dalmiya was acting within his brief in negotiating with DD, the revenue sharing agreement pertains to business between DD and the sports consortium, and was no business of the ICC -- why then was Dalmiya the one who was fine-tuning this aspect of the deal?. This revised bid offer was acceptable to the ICC and communication to this effect was given by Mr Dalmia on 5th March, 1998 which is kept on the file at S No 42/cor.

9. It may be pointed out here that for the past few events Doordarshan has been calculating the opportunity cost of its carriage. It is felt by both the commercial and the Sports Wing that opportunity cost should only be one of the components while evaluating a sports event. As a public broadcaster …our mandate to bring popular sports events to the viewers free of cost and also ensure a wider reach. Since ESPN and Star Sports are also confined to Cable homes and ESPN is now a pay channel (with Star Sports also becoming a pay channel in two months time), it becomes the primary responsibility of Doordarshan to carry such events. This event is being held in neighbouring Bangladesh and Doordarshan would have been open to severe criticism by viewers if the most important cricketing tournament of this calendar year was not carried. In such situations, Doordarshan has two options, to acquire India rights, and two, to participate in a bid to acquire global rights, thereby ensuring that India rights are on Doordarshan. Since the bid document talked only about global rights, the first option was foreclosed. It is in this context that Doordarshan's offer was made.

For information.

Signed on 10.3.98 by Rakesh Bahadur, DDG (C&S) and countersigned by Prasar Bharti CEO SS Gill on 11.3.98.

Editor's note: So there it is, the story, from the government's own files, of how the negotiations were carried out. We are indebted to Mr Arun Agarwal for providing this document to us. A large part of these documents do not form part of the Arun Agarwal report, but are supplementary to it. In passing, Sidharth Ray of Stracon, in a recent newspaper article, alleged that Arun Agarwal was a blackmailer and a man on the take, and that was why he was raking up the issue of the telecast scam, and further that there was nothing wrong with it. We wonder if Mr Ray will have the same opinion of the Additional Solicitor General of India, and the Bombay High Court, both of whom ruled that the deal was malafide and deserved a CBI inquiry.

Related links:

Minutes from the BCCI meeting relating to Dalmiya's bid to be ICC chairman -- dated May 9, 2000

Sound and fury -- David Richards springs to Dalmiya's defence -- dated May 3, 2000

Why is the ICC lying? -- May 4, 2000

Prem Panicker