Zee Entertainment Enterprises Ltd (ZEEL) and Multi Screen Media (MSM) have forked out over Rs 450 crore to pick up all the leading blockbuster films this year. That is virtually equivalent to the cost of producing six to seven big budgte movies.
The year is turning out to be an amazing one for Bollywood with movies like Yeh Jawani Hai Diwani, Chennai Express and Bhaag Milkha Bhaag crossing the Rs 100-crore mark. It is no doubt then that broadcast networks have been scrambling for satellite rights for movies and most deals have been sealed even before the movie was released.
MSM, which runs Sony Entertainment Television and SET Max, bought over the slate from Balaji Motion Pictures Ltd and Yash Raj Films. Apart from this, the network also has movies like Yeh Jawani Hai Diwani and Aashiqui 2, which have had a fabulous run at the box office. The estimated spends on movie acquisition by MSM are in Rs 200 to Rs 250 crore.
ZEEL bought the satellite right for this year's biggest movie Chennai Express for a reported Rs 48 crore, apart from Besharam, Ghanchakkar and Zanjeer. In January this year, the company also struck a 35-film deal with Subhash Ghai's Mukta Arts for Rs 25 crore. Industry sources estimate ZEEL, too, has spent Rs 200 to Rs 250 crore in all. Viacom18's Colors has movies such as Ranjhana and Boss (yet to be released). The high acquisition rates mean more money for the producers, but put the broadcasters in a difficult position as far as recovering costs is concerned. Bharat Ranga, chief creative and content officer, ZEEL, concedes recovering costs on such high cost movies is not easy.
“Such movies are acquired with the intention of creating or raising the brand image of the channel. Recovering the cost over time is very difficult, but on the whole, the channel's image gets a boost and this positively affects the revenues.” Chennai Express will be premiered on ZEEL's new Hindi movie channel &pictures.
Niraj Vyas, executive vice-president and business head, SET Max, says, “The acquisition rates are very high. But one cannot acquire movies. After GECs, movie channels command maximum reach and one has to invest in movie library. Yes, it takes a long to recover the costs, but then that is part of the game.”
Media sources reveal movie channels end up spending up to 30 to 40 per cent of their budgets on acquiring movies, which can be brought down if the players come to a consensus.
With the Telecom Regulatory Authority of India’s (Trai) ad cap coming into effect from October, the channels will see a massive cut in ad inventory. Currently, the movie channels run anywhere between 16 to 20 minutes of advertisements in one hour of programming, which will come down to 12 minutes, of which, only 10 will be for commercial purposes. The ad rates for a 10-second slot will be ramped only to an extent with advertisers tightening their purse strings as the economy continues to be in a bad shape. This implies that it could take significantly longer to recover the cost of acquiring movies.
Currently, rates for a 10-second spot on a movie channel for a big ticket premier range from Rs 30 to 40 lakh, while regular prime time rates are below Rs 10,000 for 10 seconds. This could be go up significantly with the ad cap coming in play, but the catch here is that the advertisers should be willing to pay that much higher, which they do not seem to be. In this case, says a media industry executive, the channels may be forced to revisit the movie deals or look for ways to increase the number of airings.