Film distribution witnesses musical chairs

MUMBAI: Film distribution has been attracting many a companies lately. As more and more corporates join the race with an aim to have 360 degree umbrella offerings under one roof, the individual and smaller distributors are slowly but steadily fading away from the scene. What’s more, the monies that are being spent by corporates to acquire distribution rights of movies are skyrocketing by the day.


Sample this: As UTV Motion Pictures’ home productions Jodhaa Akbar and Dhan Dhana Dhan Goal are being readied for release, news floating in the trade circle is that UTV is open to selling the distribution rights of these two films to a third party. And this despite the fact that UTV has the necessary infrastructure to distribute their own films.


Jodhaa Akbar and Goal have been made on a budget of approximately Rs 40 crore and Rs 20-25 crore respectively. UTV Motion Pictures CEO Siddharth Roy Kapur says, “To sell these movies we are looking for double the cost of production, that is, Rs 80 crore for Jodhaa Akbar and approximately Rs 45 crore for Goal.”


If Jodhaa Akbar starring Hrithik Roshan and Aishwarya Rai is bought for Rs 80 crore, this would be the most expensive industry transaction by far, after the Shah Rukh Khan starrer Om Shanti Om, which was reportedly sold for Rs 75 crore to Eros.< Page Break >


Recently, Adlabs too sold the distribution rights of their home productions like Sarkar Raj, Ram Gopal Varma Ki Aag and Namastey London to Balaji Motion Pictures, Bharat Shah’s VIP and Eros International respectively. Adlabs has also been aggressive on this front by setting up distribution offices overseas and in India since 2006.


In April, Percept Picture Company bought the distribution rights of Sony Pictures’ much touted release – Spider-Man 3 for approximately Rs 10.5 crores. In the last one year, the Indian film industry has witnessed many corporates plunging into the film distribution space, which includes companies like UTV Motion Pictures, Adlabs, Balaji Motion Pictures, Percept Picture Company, Studio 18, PVR Pictures, Shemaroo Entertainment, Zee, and Nimbus.


Most of these companies produce movies in-house, hence it’s logical for them to expand and step into distribution, in order to become a one-stop shop for the correct exploitation of content produced by them. The two fold objective is to rake in moolah and also to bring transparency into the system, which is otherwise missing with third parties being involved.


Veterans in the Indian film industry – Yash Raj Films successfully adopted the studio model. The powerhouse produces and exploits its content on all platforms by themselves. A similar model has also been implemented by AIM listed Eros International. The company acquires produces and distributes their content thus forming a strong distribution network. < Page Break >


“The reason for YRF’s success is that they give surety to multiplexes in terms of great content most of the time and guarantees high level of occupancy every year. They have mastered the distribution game, which is based on the strength of content. This is also a reason why they manage to get better terms than most people with exhibitors. That’s the crux of their ball game,” says an industry observer.


Keeping this in mind, one thought the new entrants (read corporates) too would follow the model that Yash Raj Films operates on, i.e.: to produce content in-house and distribute it themselves. Whether it was Dhoom 2, Jhoom Barabar Jhoom or Chak De! India, the company bears the profits and / or losses.


While on the one hand, UTV Motion Pictures is open to selling the distribution rights of Jodhaa Akbar and Dhan Dhana Dhan Goal, on the other it has acquired Welcome for Rs 500 million (Rs 50 crores). “If they sell their movies for an X amount, the fact is that at the exhibition level, they might lose credibility. Why sell your own movie and buy someone else’s?” says an industry veteran.


Explains the head of a media company, “The production and distribution departments of corporate companies are recognized as separate profit-making entities, so after a movie production is complete, it first goes to the in-house distribution department and a price for the movie is quoted. Post this, if the producer still thinks that the movie has a potential of getting a better price, he speaks to other outside distributors.”< Page Break >


Seconding this, UTV Motion Pictures’ Siddharth Roy Kapur says, “We look at each film on a case to case basis. If for Jodhaa Akbar and Goal we are offered a price that we think we may not be able to make and if we trust the bidder to do justice to the content, we will sell it.”


If sources are to be believed, Vipul Shah and Adlabs’ home production Namaste London was offered a price of Rs 28 crore by the Adlabs distribution department whereas Eros offered Rs 32 crore for the film. Hence the film landed in Eros’ kitty. On the other hand, Ram Gopal Varma’s Sarkar Raj is budgeted at approximately Rs 25 crore and was sold to Balaji for Rs 36- 38 crore.


While distributors are getting into top gear, the movie acquisition costs too are rising steeply. Tips’ Race, which stars Saif Ali Khan, Anil Kapoor, Akshaye Khanna, Katrina Kaif, Bipasha Basu and Sameera Reddy, will release in December. Reportedly the price being quoted by Tips for the distribution rights of the film is Rs 70 crores. The movie has been made on a budget of Rs 30 crores. However, Tips managing director Kumar Taurani justifies his stand. “We had planned Race almost one and a half year back and had signed actors at that time. Today if any company will make this film it will cost them the same money that I am quoting. So why shouldn’t I ask for what the project is worth at this point in time?”


Adds another source on condition of anonymity, “The on-going bidding rates for movies are just too high. There is a dearth of quality content, so whatever seemingly good content comes up, is grabbed up at higher rates out of desperation. But this is actually spoiling industry economics.”< Page Break >


So why are the corporates trading for content at such high rates then? It is because most of them are listed on the BSE, NSE or AIM and have approximately Rs 500 crore of public money to invest, which they do so by buying outside content? The game is such that while one listed company makes an investment (by buying), the other makes a profit (by selling).


Throwing light on how companies recover the high investment costs, a source explains, “If a company does not make enough money in the theatrical distribution, they bank on the satellite and home video rights.”


The source further adds, “That is why more and more corporates are bidding for universal rights (includes theatrical, music, home video, satellite and digital) and that too for a period of 10 years, and not just three or five years. This may result in other means of content exploitation to work in the company’s favour. So we need to wait and watch if at all they end up recovering their monies.”


With more and more players plunging into distribution of movies it’s a ‘wait ‘n watch’ and ‘play it right’ time for movie distribution.