After summoning reigns at the company around two years back, Bhargava has a lot to talk about now. In his first ever exclusive interview to the media, he talks about everything, from his tryst with the movie biz, his vision of this space, growth plans of The Indian Film Company (TIFC) and candidly also admits that Eros International has been the fastest growing company.
Excerpts:
How did Studio 18 happen to you?
When I was in Sahara looking into the motion picture business, TV18 Group managing director Raghav Bahl wanted to enter the motion picture business. At that time a lot of companies were looking at this business, and there were several opportunities. I chose TV18 over the rest because of the credentials of this group.
How has the journey been so far? What strategy and targets had the company chalked out and how far have they been met?
This company started from ground zero, it did not even have a name. From June 2006 till March 2008, I can say with fair amount of confidence that Studio 18 is among the top three brands.
With other corporates also stepping up their activities in the film space, the challenge for us was to create a niche in a competitive market. Raghav Bahl and I realized that while so many players exist, there is still opportunity for a company with capital and professional team to garner 20-25 per cent business share.
We started with a capital of Rs 50 crores. The team at Studio 18 was experienced but the company did not have credentials. In order to establish this, we delved into co-productions and not productions. In distribution we could not pay for world rights of movies, so we dabbled into smaller territory rights initially.
Simultaneously we started setting up the creative, production, marketing and syndication teams. The distribution office started in Bombay, Delhi and Amravati to ensure 65 per cent domestic revenues. International offices in London and New York, and rest of the world operational from India started off. We set up home video and music labels. At the same time work started on AIM listing. In June ’07 we listed the first film fund company out of India – The Indian Film Company.
Studio 18 being a new company we would have to wait for three years to list it and in the bargain we would miss the boat. So we could either grow on the balance sheet of TV18 or raise money internationally and take 25 per cent market share in India in the next 12 months. So we raised 55 million pounds on AIM.
How much out of the 55 million pounds raised at AIM has been deployed and for what?
We have committed almost 60 per cent funds in our own productions, co-production and acquisition. The year 2007 has seen allocation towards acquisition. In 2008, a large extent of the allocation will be for big movie acquisitions and our own production of 10 – 12 small and mid size films. The directors we signed in 2007 for big budgeted movies will release in 2009.
So this year why are you investing smaller monies in your home production?
Our initial focus is Bollywood cinema, but being a studio model we cannot ignore small and mid size films. We are looking at making international films, which may be shot in India but are meant for a global audience. We are also going to dabble in regional cinema because Tamil and Telugu are fairly big in their own spaces. TIFC being a film fund company, we will use a portfolio approach and de-risk. The idea is to build a library and own IPR to the extent possible.
Until now Studio 18’s most highlighted activities are related to trading in movies (Jab We Met, Welcome, Singh is Kinng, Halla Bol). Comment.
Honestly, we are not at all traders. We would take the position of being a distributor. Trading is defined as picking a film from one place and selling it off.
Aren’t Welcome, Jab We Met and Halla Bol all examples of content trading?
Halla Bol was a co-production in which we had a choice to acquire the distribution rights, but we had a big film Welcome releasing on 21 December. Halla Bol was also a fairly big film, so I did not have the wherewithal to release both films two weeks apart. Hence it was a business call to sell off the movie. Also when you have 25-30 productions, co production and distribution films in a year, it is a huge task for any one studio to distribute so many films. So we take risk on certain films and de-risk certain films. With Halla Bol I had an opportunity to make money on the table, because I was taking a huge risk on Welcome.
I was in the bid for Welcome and left it for the huge price. I picked it up again from UTV because of the films’ genre, it is a family entertainer and was releasing during holiday season. So I was willing to take the risk. Then again, UTV was already distributing Taare Zameen Par in the overseas, and as I said earlier it gets tough for any company to handle two releases.
Since market dynamics are changing everyday, chances are that if I acquire a movie right now, I may sell it at a much higher rate three or six months later. I see this happening for the next two years till the industry stabilizes. I also see at least two to four more players coming in.
Studio 18’s dealings for Jab We Met satellite rights is a fresh model. What was the idea behind this? Will this be followed with all your movies? Will rights then be sold permanently to the Viacom 18 channel?
I don’t believe in selling movies to a channel for 5-7 years. The content belongs to us and the onus is on us to keep it as fresh as possible. In a per screening model we control the exposure of the content, otherwise if you give it to a channel for five years, the content does not remain fresh when it comes back to you. Also what channels need to understand is that they are buying the rights for themselves and not to resell them. I will continue to do this with almost all films. Even after Viacom 18’s channels are launched the movies will continue to be sold to them also on a per screening basis.
With so many companies plunging into movie distribution and each trying to outbid the other, the cost of movie acquisition has increased tremendously. What is your opinion on this trend?
The acquisition cost is going up for two reasons. Firstly, very apparent is the fact that loads of corporates are chasing too little good content. Secondly, the cost of making movies has also gone up due to director, actor and technician costs.
But for movies like Welcome which were made earlier, Akshay wasn’t signed at Rs 20 crore or Anees Bazmee wasn’t signed for Rs 7 crores!
I agree, the movie was not put on floor at that price, but the movie is being released today. The producers have also become smart and realize the potential of the movie.
Unlike individual producers, corporates are bringing in better understanding of exploitation. Movie business is about three things – making movies, marketing and distribution. If you get any one of them wrong you are dead. Today marketing and positioning a movie is as important as selecting the right release date.
In the last one year, which company according to you has been the fastest and most successfully growing company?
Eros International and TIFC. Eros has been an aggressive player and has grown fast. It was earlier only into overseas distribution, now they have not only got into production but have also become worldwide distributors.
With a big industrialist like Anil Ambani stepping into the entertainment field and attracting more eyeballs to the entertainment business, does it benefit other existing players or not?
I am sure Anil Ambani is seeing something that many others have not been able to see. This industry is poised to grow and it has enough space for all these players to co-exist.
TIFC had targeted around 30 – 40 films for a year. Considering the dearth of talent and the spur of corporates, do you think this target is likely to be achieved? How?
When we listed last year, the size of movies we anticipated to do was quite different. But today most movies are being acquired at a fairly high price. We would now put the figure at 25 – 30 movies. We had said that we will be doing those numbers of films when 100 per cent of the funds are deployed. Also 100 per cent of the funds will be deployed in next 18 months. In 2009, we would like to be associated with 25-30 films.
Is a movie likely to be announced under the Viacom 18 partnership?
Viacom themselves will not get into the motion picture business. Viacom owns Paramount, so there are long term synergies that we could try with Paramount. One year down the line, we could be distributing Paramount’s movies. If Paramount Vintage likes our film Little Zizou, it could be distributed by them. Since Studio 18 is under Viacom 18 now, a lot of synergies can be worked upon.
The stock price of TIFC has been below its listing price. When do you except your shareholder’s value to be unlocked?
That is because we haven’t announced our results. We didn’t have any releases for the first quarter after the listing. Our investors keep comparing us to Eros, but they need to know that Eros has listed its current operating company and came with a library, they were into the business from day one. UTV had been in the business for five to seven years and had loads of films to release.
What are the areas of operation, growth and expansion for 2008?
2008 will be more about consolidation in Bollywood and entering into regional cinema and announcement of a couple of more international projects. Regional cinema will be restricted to Tamil and Telugu.
For the next couple of years our focus will be to put films on floor, acquire and distribute. At this point content syndication will give us more moolah. For our music and home video to survive we need a catalogue and today I don’t have one and am not even ready to acquire a catalogue.
