Saturday, March 21, 2009

Who’s the real slim shady?

Companies snap up non-IIM B-school grads

Experts also opine that rather than critically affecting the industry, perchance the economic downturn has simply affected the unnecessary hype and hoopla that had previously surrounded Bollywood for the last few years. But Rakesh Sippy of Raksha Distributors provides a different spin altogether, saying films and actors in the current economic climate are in fact ‘right priced’ rather than being illogically overpriced, as they had been earlier. And he holds private corporations the accused for the previous overpricing. “Corporates were paying much more to actors than they actually deserved,” he puts forth, adding that when the going was good, the deals kept being signed, but when the going went bad, these corporations, for whom the movie business was ‘just another division in their company’, simply stopped investing to save money for their other divisions.

Interestingly, well entrenched film producer and director Mahesh Bhatt supports Sippy’s spin, “The recent architects of the new Bollywood, the corporate houses, relied more on share market funds to fund projects. Thus, the moment downturn struck – and markets went down – they are facing graver situation [than what traditional filmmakers are facing].” Due to this, industry veterans do forecast that some more projects could go on hold in coming few months. But another seasoned player, Shubho Shekhar Bhattacharjee, CEO of Planman Motion Pictures (producer of Mithya, The Last Lear...), disagrees and feels that most decisions to hold projects is not because of lack of funds. “It’s mostly panic driven. People have funds but because of the dampening of the mood in the industry, they are sitting on the funds and taking a cautious approach.”

It is a fact that theatrical revenues have taken a big hit in the past months. Statistically, here too one cannot plainly blame the slowdown, as a significant part of the downfall occurred during the weeks of the terror attacks (even during Raj Thackeray’s followers’ unlettered attacks or during other preceding blasts). As per Sanjay Mehta, arguably the biggest distributor in New Delhi, occupancies in the Delhi territory alone fell by 50% post each terror attack. In fact, even satellite revenues (which contribute up to 30% of gross collections) could be hit up to 50%. This is considerable given the fact that movies do consider satellite territories important. Consider this – Welcome got Rs. 12 crores and Singh is Kinng got Rs.16 crores by selling satellite rights. Moreover, satellite rights were sold pre-release for a lot of movies. The Aamir Khan starrer Ghajini’s satellite rights were sold in early 2008 for a whopping Rs. 22 crores. No such deals are happening now. Most of the recently released films like Dostana, Yuvraaj, Golmal Returns et al have not been able to bag a satellite deal yet. Planman Motion Pictures’ Bhattacharjee explains, “Even the satellite deals that are happening now are for very low prices. A movie, which would have earlier got a crore or two, is being sold for Rs.50-60 lakhs.” Renowned film producer Pritish Nandy adds, “The reason no satellite deal has happened for past two-three months is the absurdly low rates that the channels are putting up for the films. No filmmaker can afford to sell at those rates. The channels are going through a bad time with pressures on revenues from advertising.” And the result? Film producer Vipul Shah asserts to us, “I do feel that a family, which was watching almost five, even six films a month, will watch a maximum of only two now; and even that pretty selectively.”

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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