Balaji Telefilms returns to television for profit

Balaji Telefilms, the production house of Shobha and Ekta Kapoor, with interests in films, television, events and talent management, will focus on its core business of television production in order to return to profit. Shobha Kapoor, managing director of Balaji Telefilms, had said in an interview with Business Standard last year the company planned to concentrate on films. Margins in television have decreased considerably over the past five years and films allow production houses to retain the intellectual property rights of any content they produce.

This strategy led to losses in 2013-14 as Balaji Telefilms' television programming declined and its films did not do well at the box office. Its television business reported a profit after tax of Rs 10 crore in 2013-14, but Balaji Telefilms' bottom line was affected by the movie business with a net loss of Rs 17 crore.

ANTICLIMAX

• Margins in television have decreased considerably over the past five years and films allow production houses to retain the intellectual property rights of any content they produce
• This strategy led to losses in 2013-14 as Balaji Telefilms’ television programming declined and its films did not perfrom well at the box office
• Balaji Telefilms is exploring opportunities with Sab TV and Multi Screen Media’s new general entertainment channel, Sony Pal

Sanjay Dwivedi, chief financial officer of Balaji Telefilms, said, "In films, we adopted an accounting policy in 2013-14 wherein all the costs incurred for projects in a year would be accounted for in the same year. So we wrote off around Rs 13 crore for previous projects. Second, the performance of our big-budget movies, Once Upon a Time in Mumbai Dobara and Shaadi Ke Side Effects, was below par. This caused the losses to widen." Having realised the risks in making movies, Balaji Telefilms will be scaling up on the small screen this year. Dwivedi said the production house would have nine large format shows on air by September. He declined to give estimates, but industry sources peg Balaji Telefilms' television turnover at around Rs 200 crore for April-September 2014.

The production house has seven large format shows across channels, including Doordarshan. Of these, Bade Acche Lagte Hain on Sony Entertainment Television will go off air in July. The production house will, however, retain its presence on the channel with a new show. Balaji Telefilms is exploring opportunities with Sab TV and Multi Screen Media's new general entertainment channel, Sony Pal, as well. Its long-running show on ZEE TV, Pavitra Rishta, continues to be on air.

An incentive-based commission model has helped Balaji Telefilms improve its realisation, the total revenue that a production house makes, including sponsorships and commissions, per hour by eight per cent from a year ago. Balaji Telefilms had earlier said it wanted to exit the regional markets, but it is now considering programming in Bengali, Marathi and the south Indian languages. With regional intellectual property resting with it, the production house is open to collaborating with regional broadcasters. Balaji Telefilms was waiting for the market to become more conducive for profitable ventures, Dwivedi said.

The company has a show on Doordarshan, and is in talks with the public broadcaster for another one. Creating content for Doordarshan is cheaper than programming for private channels, which coupled with a revenue sharing model offers scope to expand margins. However, programming for Doordarshan will not be a major chunk of the company's business.

"We will focus on Rs 40-50 crore movies for now. If at all we see potential in a big-budget film, we will undertake a project once in two years. We are currently putting the movie infrastructure in place," Dwivedi added. Balaji Telefilms' latest film Ek Villain set the cash registers ringing and this has nudged the company into sticking to cheaper films that provide bigger returns on investment. The company is also strengthening its distribution network. "To make money in films you have got to have strong distribution. Balaji Telefilms has not been able to scale up in films because it has not yet found distribution strength," said a producer who did not wish to be named.