Home / Industry / Actors come up with winning formula, box office be damned

Mumbai: Their films are bombing at the box office and the plots lack fizz, but stars of the silver screen are raking in more money than ever—and getting smarter about making sure it stays that way.

e45c2946-2bf9-11dd-9218-000b5dabf613.flvPayment models favouring actors taking equity stakes in their productions have become commonplace, known as “profit-sharing" or, more intriguingly, “intellectual property". That’s a significant change in an industry marked by cash-stuffed envelopes and dirty-money trail which is moving further down the path of corporatization and transparency. Such arrangements are intended to share risk among the various stakeholders in a film, but it hasn’t quite worked out that way.

With listed production houses and independent operators set to spend about Rs3,000 crore over the next 15 months on making films, the big names of the day have been looking to capitalize on talent crunch and make the figures stack up, as they stake greater claim on property they see as rightfully theirs. But contracts are not boiling down to rights and revenue. Only, more often than not, the performer’s rights and the production house’s profits end up on opposite sides of the equation.

Still, the trickle-around effect of the phenomenon is enormous, with music directors also saying they want to retain rights on songs (and ringtones, and commercial use). Meanwhile, shareholders of publicly-listed production houses such as Eros International Plc., UTV Software Communications Ltd and Indian Film Co. Ltd, are, at once, demanding big names, big projects, and big profits too. Akshay Kumar, the latest in-demand actor, who starred in the recent much-hyped flop Tashan, is reportedly being paid up to Rs30 crore to play the lead in a Venus Films Pvt. Ltd-funded project directed by Priyadarshan.

In addition to the sum, which represents the entire production budget for a medium-sized film, trade magazines report that the actor is also said to have 54% ownership over the project, which could reap a further Rs11 crore for him when the film is sold.

This is the latest in a string of eye-popping deals by actors, who find themselves hot property, and are able to demand an even larger slice of the pie in return for the star cachet and box office guarantee they claim to deliver for the all-important opening weekend.

“Stars have always been commanding figures and more so now," says Komal Nahata, trade analyst and editor of the Film Street Journal. “They think it’s not enough to act and get paid for the role. They think they are selling their names, so it makes sense for them to get more. Their argument is that the profitability of a film is going up because of their brand."

The problem, though, is when the movies at the box office just don’t do well. Except, if you are a hit-machine like Akshay Kumar. The action hero of Bollywood has starred in a series of box-office hits over the past year, including Namastey London, Heyy Baby and Bhool Bhulaiya, which have propelled him to the top of every director’s wish list. The only recent blot on his copysheet is Tashan.

“There is a lot of money chasing little talent and the kind of exploitation avenues opening up, such as video on demand, means the focus is also on rights now, and not just revenues," says Rakesh Jariwala, associate director, audit and consulting firm Ernst and Young, who tracks entertainment. Performance-related deals encourage responsibility: “But it’s a double-edged sword. If actors get paid as a percentage of the success of the film, it’ll hit them if the film doesn’t do well."

Some leading filmmakers such as Vidhu Vinod Chopra have dispensed with the traditional contract model, and instead hire actors on a performance-related basis. And veterans, including Rajnikanth, the south Indian megastar, have traditionally sought a share of the profits a film earns, in addition to their wages as actor.

The stakes are even greater today with multiple future revenue streams, such as pay per view and ringtones, up for grabs. Also, with the advent of electronic ticketing, multiplexes and the transparency that has accompanied corporatization, musicians, lyricists and directors are also demanding increased returns.

Directors will continue to operate on incentive-based contracts, says Jariwala, and although certain functions such as music direction are paid fixed sums, the top tier of talent including A.R. Rehman has some clout to negotiate ownership over music rights, marking another break with traditional Bollywood model.

However, Ehsaan Noorani— of the Shankar-Ehsaan-Loy music composer trio—describes his role as “bonded labour". “It’s all perfect for the producers and actors, and it is great that they get to keep their property rights," says Noorani, “but music directors are not considered. We have no choice but to sell the rights to producers, and the attitude producers take is still that they think they are doing us a favour by giving us the film to do."

He, however, concedes that there are signs of a gradual change in that mindset, especially with smaller-budget films such as Johnny Gaddar, where the trio negotiated ownership of over 50% of the audio rights of the film.

Amid benchmark contracts such as Rajnikanth’s, who took home a reported 40% share of total takings of his latest film Sivaji, estimated at about Rs350 crore, which comes in on top of a fixed payment of Rs16 crore, actors have been starting their production houses that guarantee them a key part of future profits: ownership. Saif Ali Khan, who also starred in Tashan, is reportedly planning to produce Thagi, the next film he acts in, under the banner of his production house Illuminati Films, while Shah Rukh Khan’s Red Chillies Entertainment co-produced blockbuster Om Shanti Om last year.

Akshay Kumar joined the gold rush two months ago with the launch of his production house Hari Om Productions.

“Earlier in Bollywood, no one used to bother with who owns the rights," explains Jariwala. “But intellectual property in the buzzword of the day and everyone wants to retain control over their films and ownership of the intellectual property."

He says publicly-listed production houses are also under pressure to prove to shareholders that they are proactively investing funds and controlling the pool of talent, further driving up the figures. The Bollywood model is also paving the way for similar wholescale changes in regional cinema, such as in the South, where film sets are more disciplined with stars sticking to tight schedules, says Jariwala.

Kunal Kohli, director and co-producer of Thoda Pyaar Thoda Magic, starring Saif Ali Khan and Rani Mukherjee, to be released by Yash Raj Films next month, says the top money commanded by actors reflects the pulling power stars have to fill out auditoriums on a film’s opening weekend.

“There is no harm in profit sharing," says Kohli. “There are certain actors who bring in a certain value, and they want their slice of the pie."

Ultimately, it is the shortage of top-rated talent that will continue to influence the economics and power dynamics of the contracts, say industry insiders. The negotiating power of the top actors and the scale of the deals being struck, is “a function of supply and demand," says Sandeep Bhargava, chief executive of Indian Film Co. “There are just a handful of actors doing well, and the ones at the top want a share," he says.

“Any deal has to be fair; it cannot be a one-sided deal."

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