Indian cinemas face possible strike

Producers, theaters can't yet agree on revenue splits

NEW DELHI -- Indian cinemas may not see any new releases after April 4 if ongoing talks between producers and multiplex owners fail to reach agreement on the split of boxoffice revenue.

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

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 earlier this week that revenue be split evenly between producers and exhibitors for all films, regardless of budget or star cast.

In response, leading multiplex players including India's largest cinema chain, Big Cinemas, Inox and Shringar, 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 the 50% they took in 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.

Following the launch of India's first multiplex in 1997, by New Delhi-based PVR Cinemas, 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 its marquee star power, which could sometimes lead to producers demanding a higher share. When talks with multiplexes failed, some films, and their producers, suffered.

UTV Motion Pictures CEO Siddharth Roy Kapur said in an interview that "there has to be a standard revenue-sharing agreement. What we are asking for is justified. Films are changing and as we saw last year, some of the biggest successes came with small budget films without any major stars, such as 'A Wednesday' and 'DevD,' which proves you can't pre-judge films and hence negotiate terms."

Shravan Shroff, CEO of Mumbai-based Shringar Cinemas, countered that "revenue sharing has to be on the basis of a film's performance. As of now, talks with the producers are still ongoing but inconclusive as they are demanding an equal share."