Foreign studios tighten grip on Bollywood

Foreign studios tighten grip on Bollywood

By MM Online Bureau

The entertainment industry is usually considered recession-proof. But the current economic slowdown is testing all such previously held tenets. The economic slump has turned many big Bollywood banners, which had opted for a corporate structure to get easier access to funds and partners, into easy pickings for foreign studios. A tight cash crunch is also forcing many Indian film companies to sign desperate deals with foreign studios.

Most Bollywood film corporations, are in various stages, scouting for a foreign partner. But unfortunately for them, the market meltdown has eroded valuations and jeopardised their plans. As a result, all the big Bollywood names-whether it's Sahara Motion Pictures, Eros International, Tips, UTV Motion Pictures, Big Films (Adlabs), Percept Picture Company, Ashtavinayak Cine Corporation, Indian Films, Pritish Nandy Communications or Mukta Arts-are "going slow'' with their overseas alliances at this juncture. Rumours have it that one such Bollywood film company is valued at just Rs 17 crore on paper and may be purchased outright by a foreign studio.

"Projects sanctioned earlier are definitely being reviewed,'' says trade analyst Amod Mehra. "Budgets for all prior commitments are being renegotiated.''

As the correction process takes place in the Bollywood film corporate scenario, foreign studios, which till October 2008 had already put out Rs 700 crore in the Indian film market, are now increasing their foothold in Bollywood through share acquisitions and joint ventures.

Trade sources say that Walt Disney Studios has just picked an additional 20% stake in UTV; bringing their total in the company to 52%. Jyotika Ahuja, head of corporate communications at UTV says: "Disney took their stake up from 14.9% to 32.1% in May 2008. The promoters (Ronnie Screwvala and his associates) currently own 23% and have warrants for another 10%, of which a portion is paid; that should take them (promoters) to 32-33%.''

The rumour mills started buzzing when Disney picked up another 20% from the open market, which took their stake to slightly over 52%, a majority stake.

So, has Disney bought out UTV? Ahuja clarifies: "The 20% stake bought from the open market is currently owned by Disney and the promoters have the right to buy all 20% from the company in four years. This 20% will have zero voting rights for these four years and so while Disney holds 52% today, the 20% has zero voting rights and is available for the promoter group to buy back from the company within four years.''

The foreign studios are believed to have pumped in another Rs 400 crore in the past two months, over the Rs 700 crore they had invested till October, taking the total to Rs 1,100 crore. While this additional flow must have come as a lifeline, Bollywood insiders see it as Hollywood slowly tightening its grip over Bollywood. Ironically, three years ago, the same Bollywood corporates had edged out independent producers. Now, the Hollywood guys are doing the same to them.

via:mumbaimirror