Dec 16, 2008

Business - Bollywood Blues

Shuchi Bansal & Abhilasha Ojha

Bollywood is at a standstill. Shuchi Bansal and Abhilasha Ojha tell you why the industry has lost its sheen — despite Rab Ne Bana Di Jodi and other big releases this season

A few months ago, when Business Standard Weekend interviewed Vipul Amrutlal Shah, the man behind such super-hit films as Singh is Kinng and Namaste London, he was shooting in London for his new film, London Dreams. A buoyant Shah talked to Business Standard at length about himself, the success of Singh is Kinng and his future project. Clearly, Shah and London Dreams (which stars Salman Khan, Ajay Devgan and the south Indian beauty Asin) were in the news for all the right reasons. The Indian Film Company, promoted by the TV18 group, had reportedly promised to acquire the film, even before its shooting had commenced, for a staggering Rs 100 crore.

But that was then.

Today, Shah sounds edgy on the phone and says he’d rather not comment on any of his film deals. A source in the film industry says that Shah could be in a bit of a soup as The Indian Film Company, which probably hadn’t signed on the dotted line to buy the film, is no longer keen to buy the film at that price. “The buzz is that it may have even asked him to look for another buyer,” says a film trade analyst.

To be sure, Shah is probably not the only filmmaker in a tight corner. “Currently, every film deal in the industry is at a standstill. No filmmaker, informs Shah, “will tell you anything about his deals. The film industry is living in times where everyone is very, very nervous.”

Bollywood’s anxiety has been triggered by the sudden slowdown in the economy that’s affecting the filmmaking business. Talk of recession pervades film and music studios, scripting and editing rooms, sets, and even the vanity vans of stars. Clearly, like other industries, tinsel town has been badly hit. “The dreaded ‘R’ word has crept even into our parties and is a favourite topic of conversation,” sniggers actor Vinay Pathak, whose film Dasvadania released a few weeks ago.

“Even seasoned actors like Akshay Kumar and Salman Khan will have to renegotiate deals and take price cuts,” observes Komal Nahata, a leading trade analyst in Mumbai. According to Nahata, recession may not have affected the nature of “film viewing” but it will drastically alter the manner in which films will be made. “Corporates are pulling out of films, producers are shying away from spending lavishly, actors and technicians from the industry are forced to take pay cuts… it’s all happening in a big way,” he says.

It is difficult to get corporate houses and independent producers to admit that they are shelving projects, but news of ventures being put on hold is trickling in. The buzz on Himesh Reshammiya’s Gujju Bhai getting shelved is strong. Rumour has it that Freeze, a film starring Neil Nitin Mukesh and Bipasha Basu, has been shelved too. An industry source claims that UTV’s Hook Ya Crook, starring John Abraham, may also be in trouble. “The actor has taken a 60 per cent price cut and even the film’s director David Dhawan, has been asked to reduce his fee,” the source says.

With all its aborted ventures, untouched scripts and unsold satellite TV rights of new films, Bollywood has lost some of its sheen. Raj Kumar Gupta, the director behind Aamir, one of the hits of 2008, quips, “Basically, sabka band baja hai (everyone is in trouble).” The question then is what’s gone wrong with the industry which, till recently, was said to be booming?

Plenty, if experts are to be believed. For a start, a host of corporate houses made a beeline for the industry, probably based on its growth projections. According to the FICCI-PricewaterhouseCoopers report on the entertainment and media industry, in 2007, it grew at 17 per cent, higher than the projected 15 per cent growth rate. It was estimated to grow at a cumulative 18 per cent for the next five years.

Such euphoric projections caught the fancy of a host of new companies. “Money was on tap,” says A P Parigi, who heads the Times group’s entertainment business, which runs a film company called Mirchi Movies. Several new players such as Reliance ADAG, The Indian Film Company, UTV, Eros and others raised money.

Flush with funds — critics say Rs 1,000 crore was pumped into the Rs 3,000 crore industry — too many people jumped into the movie-making business.

Trouble began soon when these companies tried to emulate the Hollywood studio model by planning 20 films a year, as opposed to, say, the three films that a typical film production house in India used to make. Experts say that Bollywood tried to achieve in two years what Hollywood studios took 30-40 years to establish: the factory-like model for film production.

That’s not all. It didn’t help, either, that everybody was chasing the same talent (read stars/directors). In fact, the new companies that came in started acquiring projects that were under way as it would have taken them several years to sign up the bigger stars for their own films.

To accomplish that, they allegedly started signing up actors and directors for multiple film deals with price tags ranging from Rs 30-90 crore. “The so-called corporate houses came in and disturbed the cost structure of the industry,” says filmmaker Mukesh Bhatt. Directors who charged Rs 2.5 crore a film were apparently snapped up for Rs 10 crore for the same work.

Actors with a Rs 20 lakh fee got Rs 1 crore for an assignment. Clearly, demand outstripped supply on the talent side. Says Rajesh Sawhney, president of Reliance Entertainment: “In some cases, the talent cost escalated to 50- 0 per cent of the total cost, making the project unviable. The international norm on talent cost is 15-20 per cent.” Reliance ADAG is in the filmmaking, distribution and exhibition business.

Manmohan Shetty, former promoter of Adlabs and a film industry veteran, says that the current poor health of the film industry has nothing to do with recession. “It has to do with the competition that came in with the corporate houses.” Studio 18 and The Indian Film Company CEO Sandeep Bhargava is incensed at the charges hurled at the corporate houses. He says: “Independent producers do not understand recession. It is corporate houses like ours that came in and fuelled growth. Why are they blaming us, we are only two years old in the business, if they cannot handle recession?”

Bhargava says that filmmakers are lashing out at the big companies as “we are no longer buying their films for huge sums. We are accused of spoiling the market. But can a buyer dictate the prices? They were the ones putting fancy tags on their films,” he says.

Critics argue that corporate executives can’t be blamed for pumping in money as they were probably under pressure to deploy the funds they had raised. Plus, the market was good so it did not matter. Agrees Sawhney: “Just a year ago, cash was a commodity. Now cash is king. Companies that raised funds are not in the best of shapes as all their funds are tied up and excess liquidity in the market has dried up.”

Clearly, many of the films that were bought at exorbitant rates by companies were not able to recover their cost from theatrical releases. Entertainment industry sources say that even a major film, deemed hugely successful, bought by a new company for Rs 65 crore this year, was not able to recover its full investment as it spent another Rs 10-15 crore on marketing and on the prints of the film.

“While the money that went into the business grew by, say, 200 per cent, the recovery mechanism, that is, revenue from theatres, home video and satellite TV rights, did not obviously grow at the same rate,” says Gaurav Gandhi, business head at the Hindi entertainment channel NDTV Imagine. Gandhi’s understanding of the film business comes from his experience in buying films for TV channels including Star where he worked earlier. He says that in the US, films recover 40 per cent of their costs from home video rights.

Interestingly, the slowdown in the TV media business has also affected Mumbai’s film industry. Reeling under high programming and distribution costs, coupled with a slowdown in advertising, Hindi film channels as well as general entertainment channels are shying away from paying high prices for satellite TV rights for films. Till some months ago, the same channels were vying with one another to grab these rights for as much as Rs 15 crore, compared to Rs 5 crore a couple of years ago.

“It became not only costly to buy films but also to recover the investment from advertising,” says Gandhi. Today, in a slowdown, it makes more sense for TV channels to conserve their resources rather than spend crores on film.

With the industry in the grip of recession, remuneration for its stars is also dwindling — Kareena Kapoor, Priyanka Chopra and Katrina Kaif, who were commanding Rs 3.5 crore a film, are now said to be taking home Rs 1.5 crore. Male stars have also taken a 50 per cent salary hit. The total number of films (roughly, 110 a year) that the industry produces may also drop by 15 per.

But in true Bollywood style, the tear-jerker must have a “feel-good”, if not exactly happy, end. Film industry folks are hoping for a speedy recovery. At T-Series, the projects are going according to plan. The company is working on four films, of which two are with Himesh Reshammiya and one with Salman Khan. T- Series’ Bhushan Kumar, promoter of India’s largest music company, refutes rumours that he has cut down the budget for his film Kajra Re being directed by Pooja Bhatt. “I have given strict instructions that the film should not overshoot its budget. It is normal for a film to exceed its budget by 15 to 20 per cent. In such times we can’t afford such luxury.”

ADAG promises to make 22 films next year. “Three of them, including Hrithik Roshan and Farhan Akhtar’s Luck By Chance, will be released in the first three months of 2009,” says Sawhney. The David Dhawan and Mani Ratnam film will be released after the IPL, he insists. Filmmaker Raj Kumar Gupta also spots a silver lining: “Production houses will finally pay more attention to scripts and not just go with ‘stars’ simply because they can’t afford them any longer,” he says. Sums up Gaurav Gandhi: “The Hindi film industry is not collapsing. Only a correction is taking place.”

'Actors will have to renegotiate pay, release dates will be pushed back'
With the BO yet to give its verdict on SRK-starrer Rab Ne Bana Di Jodi (just a day old at the time of writing) and Aamir Khan’s Ghajini, set to release on December 25, trade analysts, exhibitors and filmmakers alike are keeping their fingers crossed. The two films, along with Akshay Kumar-starrer Chandni Chowk to China, which will release in early 2009, may end the dry run of 2008, or so the industry hopes.

But even if these films make money, future projects and those still underway still face tough times. According to analysts, films under the Yash Raj Films (YRF) banner, for instance, should not be compared to projects undertaken by corporate houses — simply because YRF is a family-owned business, with its own distribution set-up, directors and seasoned cast and crew members, who don’t go by numbers floating around in the market. Superstar Shah Rukh Khan, for example, has always reiterated that his remuneration for Yash Raj-produced films is based on goodwill alone.

Trade analyst Komal Nahata says, “Films that were in the scripting stage or in the process of signing will probably be affected the most. You’ll find that all actors, barring Shah Rukh Khan and Aamir Khan, will renegotiate their prices, and have their films releasing at a later date,” predicts Nahata.

While most multiplexes hope that the big attractions will help audiences flock to cinema halls once again, experts point out that these films were already in the process of completion before the economic meltdown. Ghajini’s satellite rights, for instance, were bought by Indian Films for Rs 22 crore in July 2008. “Today, there will be films that will struggle to get that sort of money for satellite rights,” explains trade analyst, Taran Aadarsh. Says PVR’s CEO Amitabh Vardhan, who claims that there have been 60 per cent advance ticket sales all over India for Rab Ne Bana Di Jodi, “Good projects will still get released, but the release dates might get pushed back by a few months because, obviously, Bollywood is hit by recession.” Let’s wait and watch. — AO

No comments: