Century Communication is one of India’s largest post-production companies, seller of airtime and now a serious broadcaster. Surprisingly, we’ve heard very little about it
In 1984, two college mates got together to make the critically-acclaimed film, New Delhi Times. While director Ramesh Sharma moved on, his friend and producer PK Tewari, was hooked on to the business of entertainment. Tewari, along with his son, set up an interesting albeit unknown media company based out of Noida, Mumbai and London.
The Rs 450-crore Century Communication has one of the largest post-production facilities in India under Pixion. The studio has worked on scores of Indian films (Jail and London Dreams among recent ones), Hollywood films and ad films. In 2008, it acquired two London-based studios — Molinare and Men-from-Mars. It is in the process of either acquiring or setting one up in Los Angeles.
The company is also the airtime seller on all of Sun Network’s channels. In 2008, it launched two Bhojpuri channels — Mahua and Mahua News. The bouquet of two will be expanded to five in the coming year with channels in Bangla and more in Bhojpuri. It currently owns 5 lakh square feet of space in Mumbai, Chennai, Kolkata, Delhi and London and has 2,000-odd employees. Anand Tewari, director, Century expects both post- production and broadcasting (including airtime sales) to double in size over the next two years.
Century’s journey into becoming a media company underlines many of the opportunities the $16-billion media and entertainment (M&E) industry offers in India.
After New Delhi Times
In the aftermath of the film, Tewari was asked to produce a couple of serials for Doordarshan. Since there were few independent TV producers and few studios, he bought the equipment needed. It became evident pretty soon that just two shows a week could not make optimum use of the equipment. To make it pay, he started renting it out. In the meanwhile, he also started buying large pieces of real estate in Delhi and Noida for studio space. In 2001, Anand, fresh out of college joined in. He expanded in Mumbai, buying real estate and studio equipment, and renting it out. Soon, “We realised that there wasn’t enough top line in services (rental) and it involved a lot of capex,” says Anand. To balance that, in 2004, Century got into airtime sales since it is a high top line, working- capital intensive business like retail.
The way it works is — Pearl Media (the Century airtime arm) buys a slot on Sun TV, say for a crore rupees and gets, say, five minutes of free commercial time on the show. It then produces a show for that time slot or commissions one. If it manages to sell airtime worth more than a crore plus the cost of production, it makes money on the show. This will happen only if the show is successful on the rating charts. Century’s top line from airtime sales: Rs 100 crore in March 2009.
Its success with airtime sales created the need to offer a fuller bouquet of channels to the advertiser. That is when Tewari, whose native language is Bhojpuri, turned to broadcasting. He started acquiring Bhojpuri films, and the company now sits on over 200 of them. In August 2008, Mahua was followed by Mahua News. Eventually, “We plan to be present in all regions,” says Anand.
The post-production puzzle
It is, however, the biggest piece of Century’s revenue pie that best showcases the opportunities on offer in M&E. Pixion has grown as the Indian M&E business grew. It got the big push when the company acquired two London-based studios, Molinare and Men-from-Mars, in 2008.
The logic is simple. India has the labour cost advantage in doing post-production work, typically visual effects, colour grading, special effects and so on, stuff that helps touch up a film or an ad and makes it look good. For one rupee spent in India, doing similar work in London or Los Angeles would cost Rs 8.
Most of the business, especially the big projects, originates from Los Angeles, home to the American film industry. Much of this routinely gets outsourced to firms in London. The time, distance and language factor means that, “LA is more comfortable dealing with London,” says Anand. So one part of the reason why many Indian post-production firms, Crest, Prime Focus or Pixion, acquire overseas studios is to establish their international credentials. Plus it brings skilled hands on board. Anand says much of the visual effects expertise in Pixion has come through acquisitions.
More importantly, if even half the work is qualified as having been done in the UK, there is a 25 per cent tax rebate. So, one half is done out of London and the other half is farmed out to India usually under the supervision of the English.
Now Century is scouting for a studio in LA, to ensure that more of the work Hollywood outsources to London, comes to Pixion. There is the possibility of listing the post- production and broadcasting businesses too, six months down the line.
Going forward, “Visual effects are a big part,” emphasises Anand. It is, of course, the business with the best margins. Of the Rs 250 crore revenues Century made in post-production work, more than Rs 100 crore came in as operating margins. On a percentage basis (40 per cent), that is exactly what its closest competitors in the business, such as Prime Focus, earn.
As it heads towards raising outside funds, Century’s business calls will probably come under closer scrutiny. It won’t have the luxuries of being unknown for too long.
