Decoding star-led satellite TV film deals

New Delhi: The satellite rights of Salman Khan-starrer Sultan, by right, should have gone to Star India as part of the ₹ 500 crore deal the actor has with the channel and which is valid until December 2017. However, Khan, who recently renegotiated his contract with the network for ₹ 1,000 crore, couldn’t convince producer Aditya Chopra to sell the rights as Yash Raj Films studio has never sold a film to any network other than Sony Entertainment Television, according to people in the film distribution business.

However, for his forthcoming films, 10 to be precise, and for making appearances on the channel, the actor has struck a multicrore deal with Star India network.

Khan started the trend of negotiating satellite rights of his films in 2013; others followed suit. Actors Ajay Devgn and Varun Dhawan also signed contracts worth ₹ 400 crore and ₹ 300 crore, respectively, with Star India network. The newest entrant to the club is Hrithik Roshan, who is reported to have signed a ₹ 550 crore deal with the network last month.

Star India declined comment on its deals with the actors or on the trend.

Most trade experts say actual figures for these deals are hard to come by, and a 10-20% inflation in reported figures is quite likely. To be sure, Star India is the only television network to have initiated such deals. Most channels still either buy individual movies or sign up with studios and production houses.

In such deals, the channel signs a contract with the star for the satellite rights of a specific number of his forthcoming movies for a certain period. The reason the deal can be struck with the actor instead of his producers, who would be expected to hold the copyright of the film, is that the actor agrees to coordinate the supply of movies to the channel by reducing his remuneration for the film with the producer, who would otherwise sell the satellite rights himself.

Such deals work for everyone, says Jayantilal Gada, chairman of film-producing and presenting company Pen India, which acquires worldwide rights to Hindi films and supplies them to channels such as Zee, Sony, Sahara One and Star. The channels usually pick a big star and know his (or her) track record, in terms of delivering hits. And the deals ensure that “other channels are out of the race—the particular star’s product will only come to one channel”.

The biggest advantage of these deals to broadcasters such as Star is an assured flow of movies. And by striking deals now, it is probably hedging against any inflation in the cost of satellite rights.

“The primary objective is a regular flow of movies to the particular channel. If Star signs Hrithik Roshan for a deal on his next five films at a certain price and for a specific period, it is then Hrithik’s responsibility to supply these rights to that channel,” says Sanjay Bhandari, a financial adviser to the film industry.

Plus, having all the forthcoming films of a superstar ensures the channel better positioning while negotiating with brands and advertisers.

The agreed price is only paid to the star in instalments, though.

“Say, one film costs the channel ₹ 50 crore, so that translates into ₹ 250 crore for a five-film deal,” says Bhandari. “Generally a certain percentage, about 20%, is given as signing amount and 80% on the delivery of content. For a ₹ 50 crore film, the star gets about ₹ 10 crore upfront and the remaining ₹ 40 crore when the film reaches the channel. As each film comes out, he will be paid the balance.”

For producers, such deals help lower the cost of production. For instance, for his recent thriller Te3n, actor Amitabh Bachchan charged no fee but secured the satellite rights entirely.

And for actors, such deals present a way to monetize part of their future earnings.

Indeed, such deals only serve to highlight how business savvy actors have become. Many actors, people in the entertainment business say, are well-versed with box-office numbers, production budgets and story requirements. And most actors, they add, have enough power to get the producers to do what they want them to.

Cases like Sultan are rare and not every filmmaker can put his foot down in an industry where, according to Gada, films do not get made unless the actor approves of the director.

“99% of the time, the producers have to give the film (to the concerned channel). It (the Sultan case) is not true for every film. If it were, why would the channel sign the deal with the artiste?” asks Bhandari.