MUMBAI: Knocked down by a model that relied heavily on acquisitions, Network18 founder-promoter Raghav Bahl has reworked on the movie production business that he has moved to a joint venture company with Viacom as a partner.
Having snapped up The Indian Film Company that was listed on London‘s Alternative Investment Market (AIM), Bahl will now have movies rolled out from Viacom18, the company that also houses Hindi general entertainment channel Colors, MTV India, Nick and Vh1.
A cautious spender this time, Bahl has earmarked Rs 1.20 billion for a seven-movie slate that will run through early 2012. The peak funding requirement in a three-year horizon will be Rs 2.50 billion, sources familiar with the business plan say.
The early adventure has left the man who has built a television news and entertainment empire in quick time. But Bahl realises deep within that movies, however risky in nature, will have to constitute an important piece of the growth story, feeding content to Colors, the upcoming movie channel, a repositioned MTV and a growing Nick while pursuing the box office fortunes independently.
“We are in no hurry to deploy capital. We are in no hurry to produce the costliest movie. We are in a hurry to get it right,” says Viacom18 Motion Pictures chief operating officer Vikram Malhotra.
For two years in a row, Bahl had got it right as The Indian Film Company got engaged in movies like Ghajini, Singh is Kinng, Jab We Met, Welcome and Golmaal Returns. But then came the downturn, capital became scarce and the studio churned out more flops than hits.
“The high-risk acquisition model suited the initial years when capital was easily available. Then came the bad years and the entire business environment for the film industry went through a turbulent change. TIFC lost more in value than the sector and there was need for a restructuring,” admits Malhotra.
TIFC posted a net loss of ?4.56 million for the fiscal ended 31 March 2010 compared to a net profit of ?3.89 million a year ago. Revenue fell to ?19.88 million, as against ?40.90 million in FY‘09.
Nine films were released during FY‘10, all of which bombed at the box office. These included Shortkut – The Con is On, Luck, Life Partner, Fruit ‘N‘ Nut, London Dreams, Rann, Striker, Road, Movie and Hum Tum Aur Ghost.
The hard lesson learnt, Viacom18 Motion Pictures (rebranded) has decided to do away with buying “ready off the shelf” movies. The focus will be on own productions and co-productions where the company will be involved at every stage of the production process.
“We will not make first copy ready film acquisitions. The task is to build sustainability and capability with a strong focus on profitability. We are building the business brick-by-brick,” says Malhotra.
Bahl‘s revival plan couldn‘t have come at a better time. The costs, gone beserk in the last few years, have corrected to a large extent. Also, the price of satellite TV telecast rights for movies is at a new high due to competition from the broadcasters, offering film producers a strong revenue opportunity outside the box office overhang. The worry is the marketing expense, which still remains high, but Viacom18 Motion Pictures is in a competitive advantageous position where it can leverage on its broadcasting power to shave off the flab.
“Our marketing costs will be 10-15 per cent lower due to the wide reach of our channels like Colors, MTV and Nick. There is a need for further correction in star costs but we will spend our pennies very carefully,” says Malhotra, the new guard head Bahl is betting on to turnaround the movie business.
Viacom18 Motion Pictures will kick off its slate with a rom-com titled ‘Tanu Weds Manu‘ that will hit the screens on 25 February. This will be followed by two films that are co-productions with Anurag Kashyap – Michael (Working Title) & Shaitan. These films are set for release in the first quarter of the next fiscal year.
The most expensive movie in the slate is the Abbas Mustan-directed Players which is built on a budget of over Rs 400 million.
The roster also includes Gang of Waseeypur (2 Series), Buddah (starring Amitabh Bachchan) by Puri Jaganathan, and David Dhawan‘s Chashme Baddoor.
“We will weigh the financial success of each movie. The first two years will be a crucial build-up. In the third year, we will review the business and change track accordingly,” says Malhotra.
The scale-up plan will involve creating franchise properties that will have a sliding cost model while upping box office revenues. “Players is positioned as a franchise property. We plan to have 2-3 properties in 2012. We are also going to have a minimum threshold of six movie releases a year,” says Malhotra.
An important part of the gameplan is to produce movies in the urban-youth genre under the brand of ‘Tipping Point Films‘. This kind of targeted movies will also be content for MTV.
“We have projects in the urban-youth genre in co-production with Irock Media,” says Malhotra.
Viacom18 Motion Pictures will distribute its own movies and has outfits in Mumbai, Delhi and UP territories. The distribution network is being expanded to the South markets, Rajasthan and the North.
“We have several advantages as we are part of a broadcasting network and Colors currently happens to be the leading acquirer of motion pictures content.We aim to be among the top three studios in the country within three years,” says Malhotra.
In the highly unpredictable movie industry, Bahl has to get it right this time to reach the top of the ladder.