Cut, cut, cut!
Actors and producers unite to press for a 50 per cent share of ticket sales at multiplexes. Multiplexes say they are ready to strike a deal only on the ‘performance’ of a movie, and would rather shut shop than do a losing deal on revenues. Shamni Pande & Anusha Subramanian report.
Aamir Khan, Shah Rukh Khan, Rakesh Roshan, Boney Kapoor, Karan Johar, Vidhu Vinod Chopra, Ronnie Screwvala, Sajid Nadiadwala… hold it! Was this early April gathering the launch of a super-Bollywood production? No, the actors and producers were just uniting under the The United Producers & Distributors Forum to press for a 50 per cent share of ticket sales at multiplexes.
Their grouse: multiplex chains Inox, PVR, Adlabs (Big), Fame, Cinemax, Fun and Movie Time give distributors a share that varies from movie to movie, depending on its cast, week of showing and performance, and this is loaded in favour of the chains from 52:48 to 70:30. “We are asking for 50:50 (after entertainment taxes) which is the most fair... if the film is super hit or otherwise, this should remain constant,” says Aamir. They have hence withheld new and old Bollywood movies till their demands are met.
Producers grumble that their earnings have been flat even though business has increased over the years. Aamir cites his movie Ghajini: all-India box office collection Rs 200 crore, distributor’s share Rs 59 crore. But Gaddar, released in 2001 before multiplexes sprouted, raked in Rs 120 crore and yielded the distributor a net Rs 60 crore. “With this example, I want to bust the myth that multiplexes have increased business for all,” Aamir says.
Ditto, SRK. His movie Rab Ne Bana Di Jodi reported an all-India box office collection of Rs 145 crore but the distributor got only Rs 43 crore whereas the premultiplex Dilwale Dulhaniya Le Jayenge grossed Rs 100 crore, of which the distributor got Rs 50 crore. Distributors get generous shares from independent halls, but lose out in the multiplexes. “The independent cinema halls … give up to 70 per cent to the distributor; …with the multiplex chains this works out to about 40 per cent,” says Siddharth Roy Kapur, CEO, UTV Motion Pictures.
Multiplexes say they are ready to strike a deal only on the ‘performance’ of a movie, and would rather shut shop than do a losing deal on revenues. “We cannot agree to 50:50 as …we operate on very low PAT margins,” says Atul Goel, MD, ECity Ventures, which runs the Fun Cinema multiplexes.
Shravan Shroff of Fame Cinemas adds: “A flat 50 per cent revenue sharing across four weeks and for all films is simply not feasible…. Our PAT margins are about 3-5 per cent. We would rather shut down than agree to this deal.” Fame has already shut down half its 74 screens.
A common defence of multiplex owners is that the market is developing and they have to keep improving facilities. So they use a sliding scale of revenue sharing, ranging from 48/38/30/25 basis across four weeks. Aamir has a ready response: “Agreed that they have huge investments, but we are not asking for the 70 or 80 per cent share that Hollywood exhibitors give for movies in the US. Please remember, they have been given a five-year tax holiday. And they have made bad business decisions.”
The dispute first reared its head in 2006, prompting producer Aditya Chopra to bypass multiplex chains and release Dhoom-2 successfully at individual halls and smaller multiplexes. Then everything was okay for some time—till the slowdown.
Rajesh Jain, Head, KPMG India’s head for Information, Communication & Entertainment, says: “Commercial sense has to prevail… there have been losses incurred and everyone is looking at sharing revenues. Analyst firm Angel Broking says multiplex occupancy levels have fallen by 35 per cent because of the slowdown as movie-goers cut down on visits to the theatre, but that is not the full story: content is equally important.
“…Ghajini, released in the midst of slowdown, managed to gross over Rs 100 crore domestically, a weak movie pipeline …was mainly responsible for lower occupancies,” Angel said in a report. Multiplexes also dismiss the producers’ claim that the prevalent revenue sharing formula in the US is 50:50 for the entire run of the movie. They say chains like Cinemark Cinemas and Regal Entertainment share revenue either on a sliding scale or on the basis of the movie’s performance.
Multiplexes say their entry has brought the crowds back to theatres. Jaane Tu Ya Jaane Na, the debut movie of Aamir’s nephew, grossed Rs 82 crore, with Rs 38 crore coming from multiplexes alone. The gross was 900 per cent more than Aamir’s own 1988 debut Qayamat Se Qayamat Tak—the credit goes to plexes. They say multiplexes accounted for 45 to 50 per cent of the box office take in 2005-06, and 65-70 per cent in 2007-08. In 2005-06, the distributor took 42 per cent of the box office take.
The silver lining for movie buffs: April is anyways a lean month because school exams keep away big releases. Add the Indian Premier League fever, and producers/distributors are unlikely to lose much. But, with both sides refusing to blink first, a trade analyst said, “It’s not a happy situation.” “…It is the multiplexes that will lose money as for them it is a matter of daily revenue. The single-screen option is always open to the distributors,” said trade analyst Taran Adarsh.
Their grouse: multiplex chains Inox, PVR, Adlabs (Big), Fame, Cinemax, Fun and Movie Time give distributors a share that varies from movie to movie, depending on its cast, week of showing and performance, and this is loaded in favour of the chains from 52:48 to 70:30. “We are asking for 50:50 (after entertainment taxes) which is the most fair... if the film is super hit or otherwise, this should remain constant,” says Aamir. They have hence withheld new and old Bollywood movies till their demands are met.
Producers grumble that their earnings have been flat even though business has increased over the years. Aamir cites his movie Ghajini: all-India box office collection Rs 200 crore, distributor’s share Rs 59 crore. But Gaddar, released in 2001 before multiplexes sprouted, raked in Rs 120 crore and yielded the distributor a net Rs 60 crore. “With this example, I want to bust the myth that multiplexes have increased business for all,” Aamir says.
Ditto, SRK. His movie Rab Ne Bana Di Jodi reported an all-India box office collection of Rs 145 crore but the distributor got only Rs 43 crore whereas the premultiplex Dilwale Dulhaniya Le Jayenge grossed Rs 100 crore, of which the distributor got Rs 50 crore. Distributors get generous shares from independent halls, but lose out in the multiplexes. “The independent cinema halls … give up to 70 per cent to the distributor; …with the multiplex chains this works out to about 40 per cent,” says Siddharth Roy Kapur, CEO, UTV Motion Pictures.
Multiplexes say they are ready to strike a deal only on the ‘performance’ of a movie, and would rather shut shop than do a losing deal on revenues. “We cannot agree to 50:50 as …we operate on very low PAT margins,” says Atul Goel, MD, ECity Ventures, which runs the Fun Cinema multiplexes.
Shravan Shroff of Fame Cinemas adds: “A flat 50 per cent revenue sharing across four weeks and for all films is simply not feasible…. Our PAT margins are about 3-5 per cent. We would rather shut down than agree to this deal.” Fame has already shut down half its 74 screens.
A common defence of multiplex owners is that the market is developing and they have to keep improving facilities. So they use a sliding scale of revenue sharing, ranging from 48/38/30/25 basis across four weeks. Aamir has a ready response: “Agreed that they have huge investments, but we are not asking for the 70 or 80 per cent share that Hollywood exhibitors give for movies in the US. Please remember, they have been given a five-year tax holiday. And they have made bad business decisions.”
The dispute first reared its head in 2006, prompting producer Aditya Chopra to bypass multiplex chains and release Dhoom-2 successfully at individual halls and smaller multiplexes. Then everything was okay for some time—till the slowdown.
Rajesh Jain, Head, KPMG India’s head for Information, Communication & Entertainment, says: “Commercial sense has to prevail… there have been losses incurred and everyone is looking at sharing revenues. Analyst firm Angel Broking says multiplex occupancy levels have fallen by 35 per cent because of the slowdown as movie-goers cut down on visits to the theatre, but that is not the full story: content is equally important.
“…Ghajini, released in the midst of slowdown, managed to gross over Rs 100 crore domestically, a weak movie pipeline …was mainly responsible for lower occupancies,” Angel said in a report. Multiplexes also dismiss the producers’ claim that the prevalent revenue sharing formula in the US is 50:50 for the entire run of the movie. They say chains like Cinemark Cinemas and Regal Entertainment share revenue either on a sliding scale or on the basis of the movie’s performance.
Multiplexes say their entry has brought the crowds back to theatres. Jaane Tu Ya Jaane Na, the debut movie of Aamir’s nephew, grossed Rs 82 crore, with Rs 38 crore coming from multiplexes alone. The gross was 900 per cent more than Aamir’s own 1988 debut Qayamat Se Qayamat Tak—the credit goes to plexes. They say multiplexes accounted for 45 to 50 per cent of the box office take in 2005-06, and 65-70 per cent in 2007-08. In 2005-06, the distributor took 42 per cent of the box office take.
The silver lining for movie buffs: April is anyways a lean month because school exams keep away big releases. Add the Indian Premier League fever, and producers/distributors are unlikely to lose much. But, with both sides refusing to blink first, a trade analyst said, “It’s not a happy situation.” “…It is the multiplexes that will lose money as for them it is a matter of daily revenue. The single-screen option is always open to the distributors,” said trade analyst Taran Adarsh.
“…We are not asking for the 70 or 80 per cent share that Hollywood exhibitors give for movies in the US. What we are asking is equal share” Aamir Khan, Actor | “A flat 50 per cent revenue sharing across four weeks and for all films is simply not feasible for us... our profit margins are about 3-5 per cent” Shravan Shroff, Fame Cinemas |
Producers & Distributors say…
| Multiplexes retort
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