Why are Bollywood hits making their distributors bleed?
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New Delhi: Last month, Arjun Kapoor and Shraddha Kapoor’s romantic drama Half Girlfriend made a decent mark at the box office with net collections of more than Rs40 crore. But the film, directed by Mohit Suri and based on Chetan Bhagat’s bestseller of the same name, didn’t exactly leave its distributors with reason to rejoice.
People in the film trade say producer Ekta Kapoor sold the all-India theatrical rights to distribution company NH Studioz for about Rs41-42 crore and signed sizeable satellite rights and music deals. Kapoor’s ALT Entertainment will not be left with a loss, unlike the distribution company, two people said, on the condition of anonymity. That underscores the plight of distributors who have lately suffered losses even on films that made money for their producers, who sold them for exorbitant prices for domestic screening.
Also, apart from music, satellite and digital rights, overseas theatricals have emerged as an important avenue for producers, giving them an additional safety net. That is of no consolation to distributors.
Last year, Ajay Devgn’s Shivaay, sold for about Rs70 crore for distribution, ended up making only Rs84 crore at the box office, leaving a small margin. Filmmaker Rakesh Roshan too nearly tripled his investment on action thriller Kaabil, starring son Hrithik, which earned Rs86 crore in ticket sales but failed to make any profit for the distributors. Roshan sold it for around Rs120-125 crore, said the people mentioned earlier.
“It’s a question of the producer’s pricing,” said Narendra Hirawat of NH Studioz, which distributed Half Girlfriend. “Which in turn boils down to the inflated cost of making a film. If the cost is controlled and the content is good, everybody will benefit.”
Hirawat, whose company has now bought the all-India rights of Salman Khan-starrer Tubelight and Shah Rukh Khan’s Imtiaz Ali directorial Jab Harry Met Sejal for Rs135 crore and Rs120 crore, respectively, cited the example of Amitabh Bachchan-starrer Pink, which was sold at Rs13 crore to distributors last year and made more than Rs65 crore in the long run.
“The way a producer’s brain works is that he must double his basic investment on the film through the sale to distributors itself,” explained Atul Mohan, editor of trade magazine Complete Cinema. “If he’s spent Rs25 crore, he must ask for Rs50 crore at the very outset.”
To be sure, such outright sale is one way of acquiring films, and not the safest. The other way is through minimum guarantee (MG) or commission basis where distributors get 10-20% of the net box office collections made by a film in an agreement pre-decided with the producers; anything over and above that is regarded as overflow. Even a blockbuster like Baahubali 2: The Conclusion was sold on the latter principle with both Dharma Productions, distribution partners in the north, and multiple south India collaborators, taking about 5% of the net box office earnings.
Many trade experts say the direct sale principle is fundamentally flawed and responsible for distributors’ woes.
“Distributors should not buy the film outright, they should work on certain commission,” said distributor Brijesh Tandon, who primarily operates in the Delhi-Uttar Pradesh circuit and only works on a commission basis. “A new film is an unpredictable case, producers can make money from alternate streams of revenue but there are distribution offices that have closed down thanks to a couple of films flopping.”
All figures have been sourced from movie website Box Office India