Broadcasters are increasingly opting for non-exclusive rights of films this year.
With multiple broadcasters vying for satellite rights of the same Bollywood films, the average cost of acquisition of a Bollywood film in 2009 has fallen between 30 and 60 per cent as compared to the previous two-three years. The average acquisition cost has come down to Rs 1.5-2 crore per film as compared to Rs 4-5 crore in last few years.
For instance, satellite rights of around 50 films, according to industry estimates, were sold to over half a dozen broadcasters for a combined value of around Rs 200 crore for a period of five years — around 30 per cent lower than a comparative figure for 2008. The buyers of these films include general entertainment channels like Colors, NDTV Imagine and Zee TV. Movie channels like UTV Movies, Zee Cinema and SetMax also bought telecast rights to a number of films this year.
Analysts say the fall is due to the overall slowdown in the economy, stagnation in advertising spends, and rationality in cost of production of films. Besides, “...broadcasters are increasingly opting for non-exclusive rights this year which means no one broadcaster will have exclusive rights, as was the trend in the last few years. This, too, has brought down the average cost of acquisition of satellite rights in 2009,” explains an analyst with a leading brokerage firm who tracks the film sector.
Production houses concur with this line of reasoning. Sameer Ganapathy, business head of UTV Movies, says: “Acquisition models have been quite stable for the last one year, where many new films are being sold on syndication basis to multiple channels…Prices have seen some correction in the last year, because of the slowdown in the economy. However, exclusive selling of new films is now rare.”
Does this, however, imply that the business model is a gamble for broadcasters? “No, it is not. Most broadcasters tend to recover their acquisition cost within the initial few telecast of the films,” says Gaurav Gandhi, executive vice-president of business operations for NDTV Imagine. “These films are bought to generate certain ratings on a sustained basis depending on the star cast, repeat value and various other measurable parameters of a film,” adds Gandhi.
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Prominent movies whose satellite rights (broadcast rights for television) were sold this year include films like Kaminey, Wake Up Sid, Kurbaan, Dev D, Oye Lucky! Lucky Oye, Luck By Chance, Johnny Gaddar, among several others. Within 18 months of its launch, UTV Movies has now the rights to 250 movies, while the library of general entertainment channels, ranges from 150 to 250 movies, broadcast industry sources say.
“Certain films like Jab We Met, Welcome or Singh is Kinng have enormous repeat value on the small screen. Broadcasters always find a good number of advertisers for these films. Therefore, movie acquisitions contribute a good 15 per cent or more to the bottom-line of broadcasters,” says a media planner who buys airtime on a host of entertainment and movie channels.
Recently, UTV Motion Pictures signed a series of non-exclusive television rights syndication deals amounting to Rs. 95 crores. The deals are across the slate of 2008 and 2009 productions, from Oye Lucky! Lucky Oye! to recent hits like Wake Up Sid and Kurbaan.
As a part of the deal, Colors will telecast the premiere run of these movies in India, followed by NDTV Imagine. These channels will have the right to telecast a fixed number of runs of each movie. UTV has the right to further syndicate the television rights of these movies to any other channel in the same period. In other overseas syndication deals, B4U has acquired the non-exclusive rights to air UTV’s movies across its international beams; and Channel 4 has acquired the rights to air these movies in the UK market.
But what is making the broadcasters go for films as a bundle as opposed to going after big hits?
“Small budget films tend to do very well on television. For example a Bhootnath has got good returns on television as compared to its box office returns. For us, it is good to pitch a large portfolio of movies to the broadcasters as it gets a good price for the lot as opposed to selling the rights individually,” says Sanjay Ahire, COO of Percept Picture Company.
Percept Pictures, the producer of films like Jail and Jannat is now close to finalising the satellite rights deal for 15 films with multiple broadcasters. Sources indicate, the company may raise over Rs 50 crore from the sale of the five-year satellite rights. But are there enough takers? “Yes there are,” says Ahire, COO of Percept Picture Company. “Due to liquidity crunch there is hardly any channel that wants the exclusive rights for itself. So its better to find multiple channels as buyers as it becomes a win-win situation for both film studios and channels,” he says.
There are channels like Colors or STAR Plus who are still trying to go after exclusive rights or at least the first telecast rights. Recently, Colors acquired the world premiere rights for Ajab Prem ki Ghazab Kahani and Blue for a reported sum of around Rs 5 crore each for the two films.