Film producers and exhibitors spar over revenue share

The reopening of cinemas in the country has not ended the troubles for Bollywood producers as a new flashpoint has emerged over sharing box office collections with theatre owners.

This first came to light when multiplex chains delayed opening bookings for Akshay Kumar’s Sooryavanshi as they were negotiating a revenue-share deal with the producers.

Top studios are now asking exhibitors for a 60% share of revenue in the initial weeks of a film’s release as uncertainty looms over whether audiences will return to cinemas in large numbers. Cinemas, on the other hand, argue that they are bleeding and deserve some respite. In pre-covid times, this revenue was equal at 50:50 between theatre owners and producers, at least for the opening week.

Delays in allowing bookings, as was the case during the Diwali weekend when multiplexes opened advances only the night before release, led to a 5-10% dent in the opening day business, said trade experts. Hence, there is an urgent need to find a balance between the interests of both parties, they added.

Independent analyst Sreedhar Pillai said revenue sharing is emerging as a major cause of concern. The one big difference post-covid is that theatres can no longer dictate terms, he said. While leeway has anyway been given to the first batch of releases in theatres, media experts said the terms are not likely to remain as stringent in the long term.

“We are cognizant of the fact that we are restarting the machinery after a year-and-a-half, and it will take some time for the bits and pieces to be oiled up to ensure smooth business. The idea is to find a sweet spot that is a win-win for both producers and theatre owners,” said Sanjeev Kumar Bijli, joint MD, PVR Ltd. While the multiplex chain would ideally want things to go back to the way they were pre-pandemic, Bijli said they are currently having individual conversations with each studio.

Rajendar Singh Jyala, chief programming officer at INOX Leisure Ltd, claimed the delay in starting bookings impacted only the first few morning shows for Sooryavanshi. All bookings will start on time, Jyala said, adding that exhibitors like Inox were negotiating terms based on seating capacities in individual states. If a state was still operating at 50% capacity, producers were being given a higher share of revenue, while those with 100% capacity would bring in the same terms as before.

Reliance Entertainment, co-producers of Sooryavanshi, did not respond to Mint’s queries on revenue-sharing deals with multiplex operators.

“It’s essentially a question of who blinks first,” said Yusuf Shaikh, business head, feature films at production and distribution company Percept Pictures. The arm-twisting tactics don’t work with Tamil and Telugu film producers for whom revenue terms are non-negotiable, he said. The Hindi film industry is far more fragmented, and while some may put up a fight, others often agree to terms to be able to release their film.

“These are healthy negotiations, not disagreements. The producers of Sooryavanshi held their film back for cinemas instead of taking the OTT route. They would also negotiate richer share terms given the risk they would carry if audiences stayed away,” said film producer Amar Butala. Live Mint