Bollywood heads into limbo

Battle between producers, multiplex owners threatens release skeds

Indian cinemas might not see any new releases after April 4 if talks between producers and multiplex owners fail to result in an agreement on the split of boxoffice revenue.

With several big-budget films lined up for the second quarter, industry estimates figure that about 3 billion rupees ($60 million) is at stake if releases are delayed.

The United Producers Forum, which represents such top banners as Yash Raj Films, UTV Motion Pictures and the Indian arms of Sony Pictures and Warner Bros., demanded this week that revenue be split evenly between producers and exhibitors for all films, regardless of budget or cast.

In response, leading multiplex players including India's largest chain, Big Cinemas, rejected a standard equal revenue-sharing arrangement and issued a joint statement suggesting that discussions stick to "performance-linked revenue sharing, which would be a win-win situation for the entire industry."

The exhibitors' statement points out that multiplexes accounted for 65%-70% of total boxoffice revenue in 2007-08, up from 50% in 2005-06.

Traditionally, distribution terms here have entailed a fixed rent paid to theater owners by distributors, which meant producers would bear the complete risk of a film's performance. After the launch of India's first multiplex in 1997, distribution terms began to be renegotiated to share revenue between producers and multiplex owners on a per-film basis.

The new split was determined by a film's budget and star power, which has sometimes led to producers demanding a higher share.

UTV Motion Pictures CEO Siddharth Roy Kapur said "there has to be a standard revenue- sharing agreement."

Shravan Shroff, CEO of Mumbai-based Shringar Cinemas, countered that "revenue sharing has to be on the basis of a film's performance." (partialdiff)