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Bollywood under stress as producers, plexes fight over revenue share
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The corporatisation of Bollywood helped clean 'underworld' connections to a certain extent but it also created two new power centers - the producers and the multiplex owners.
While both the moviegoer and the industry welcomed the advent of the multiplex, the euphoria didn't last for long. With the amount of business the multiplexes were doing, big-time producers wanted a raise in the revenue-share. The revenue-sharing topic has always been a matter of attention every time a Yash Raj banner film or one from a reputed banner came up for release.

Till then multiplexes were passing on only 48 per cent to distributors when it should have been more, given the tax break. The Chopras, with some alleged arm-twisting, managed to get 2 per cent more even pre-Fanaa but this still left multiplex owners with a much higher profit margin than single-screen theatres.

Recent revenue-sharing story

The recent tiff between the producers and multiplexes started as early as February. While the producers were insisting on a 50 per cent revenue share for the first three weeks, the multiplexes were offering 50, 40 and 30 per cent revenue share for the same.

After several failed discussions, the producers decided to go on strike and from 4 April they stopped giving release rights of new big-budget movies to multiplexes.

After a month-long silence, both parties met on 5 May but nothing fruitful came out of the meeting.

Not seeing any chance of the ice thawing, producers decided to release films in single-screens and independent multiplexes from 29 May. One of the films that were to be released was Vashu Bhagnani's Kal Kissne Dekha, the debut film of his son Jaccky.

Later at a meeting held on 18 May, there was an underlying feeling that things would be sorted out at the meeting with the presence of multiplex owners like PVR's Ajay Bijli and Cinemax's Rashesh Kanakia along with Adlabs' Anil Arjun who have, prior to this, never attended any meeting besides Fame India's Shravan Shroff, Inox Leisure's Deepak Ashar and Fun Cinemas' Atul Goel. Representing the United Producers and Distributors Forum (UPDF) were Mukesh Bhatt, UTV's Ronnie Screwvala, Yash Raj Films' Sahdev Ghei, Eros International's Nandu Ahuja and Studio 18's Aman Gill.

While the 50:50 revenue sharing terms for the first week were agreed upon, the bone of contention was the second and third week. The UPDF wanted terms which were a notch higher than the 42.5 and 32.5 per cent respectively. This meeting too didn't yield any result.
On 23 May, the core committee of the UPDF met at the Yash Raj Studios where Yash Chopra, Vidhu Vinod Chopra, Aditya Chopra, Aamir Khan and Shah Rukh Khan met the rest of their fraternity to reach a consensus on the situation. The outcome was that they should not succumb to the multiplexes' demands, if any. The situation looks grim and to say the least has resulted in a deadlock. It was this day when Bhagnani backed out from releasing his film in single-screens fearing loss.

On May 26 both parties met again. Just when they were getting closer to agreeing on the revenue-sharing terms, the issue of distribution strategy reared its head.

Multiplexes want the content for all their properties, thus increasing the burden of print cost on the producers and in turn hampering the success of smaller films. Producers are now on course to chalk out their own distribution strategy for films which is the norm worldwide.

"Giving the multiplexes the right to distribute films will kill the distribution business. If multiplexes think they can do distribution, then they should pay minimum guarantees. Moreover a big budget movie and a small budget movie cannot have the same distribution strategy," says producer Harry Baweja of the Producers and Distributors Forum.


Overview

The disagreement between the two parties is being skeptically looked upon by industry professionals in the chain.

Says 24 Karat Multiplex CEO Padam Sacheti, " The strike period is a bane for us. It is loss all the way. I suggest both parties should keep their egos aside and work towards resolving the issue."

Though producers do not face any immediate financial losses, the release dates for several big budget projects have been disrupted. These include UTV's Main aur Mrs Khanna and Kaminey, Kal Kissne Dekha, Boney Kapoor's Wanted, Eros International's Aladin and Sajid Nadiadwala's Kambakkth Ishq. Almost Rs 2.5 billion has been blocked due to the delay in the release of these films.

Says UTV Motion Pictures CEO Siddharth Roy Kapur, "Well I think films will release at some point or the other, hence for the producers there isn't really any loss technically. Delay doesn't hamper big films. It is only that the money gets blocked. The real time to worry would be when a lot of films will have to be released in rapid succession once the strike is lifted. Till that time there isn't any loss that the producers are incurring, I think the loss is primarily with the multiplexes, because every week that they lose, is a week lost in revenue."

The losses are indeed hurting multiplexes hard. "I would assume the loss to be to the tune of Rs 150,000 to Rs 200,000 a day per cinema," says Fun Cinemas COO Vishal Kapur. "Talking about the occupancies, if earlier we would do 35 to 40 per cent of the available capacity, we are currently doing about 15 per cent," he adds.

The upcoming T20 world cup is also likely to hamper new releases and even if the strike is called off, big films will release July onwards.
"It has been our stand for some time now. If there is no resolution soon, UTV will start releasing its big and small films in single theatres and non-national multiplexes from July onwards. We are working on the dates of releases of these films and they would be announced shortly," says Siddharth Roy Kapur.

Multiplex owners are mum on their losses due to the content blackout. But according to Indiantelevision.com estimates, the losses are close to Rs 2 billion. It is difficult to put a figure to the losses incurred by film producers due to the deference of their releases, some of whom have borrowed at exorbitant rates. The industry has also to figure out a smooth release window after the row between the producers and plex owners end.

"A fatigue element seems to be building up. Both the parties are under financial stress and an amicable settlement would ease some of this pain. But there are structural issues that have to be sorted out on a long-term basis so that the revenue pie grows for all the stakeholders," says an analyst who has been tracking the sector.
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