the really big picture-economic times coverage_may 1, 2010
TRANSCRIPT
BUSINESS OF BOLLYWOOD * THE ECONOMIC TIMES ON SATURDAY MUMBAI 1 MAY 2010 14
THERE was a huge surprise in store forAmitabh Bachchan, Abhishek, Aish-warya, Shahrukh Khan, Hrithik and al-most all of Bollywood who attended
Anil and Tina Ambani’s party last month at theGrand Hyatt — the guest list for that night includ-ed Steven Spielberg, Nicolas Cage and JuliaRoberts among other Hollywood hotties. Theonly difference was none of them really got to‘rub’ shoulders with their Western peers, becausethough Cage and Roberts joined Bachchan andhis colleagues in “wishing Anil and Tina all thebest” they could only convey their wishes via au-dio visuals played out on big screens. Hollywoodand Bollywood, two of the globe’s biggest film in-dustries sharing one stage, popping champagnetogether — it definitely doesn’t get bigger thanthis in the world of cinema.
The seeds of the success were sown five yearsago, when Anil Ambani bought a controllingstake (66%) in Manmohan Shetty’s blue-chipcompany, Adlabs. He shelled out big money—Rs 366 crore — unheard of in the Indian enter-tainment business till then. The aim was clearlyglobal and to gain a firm foothold across all verti-cals of this business while being language agnos-tic. Scale was important as was speed, so Re-liance Big Entertainment would do films, music,radio (since last year), digital, gaming, homevideo and home rentals, while the rest was allAdlabs business. The scale to this business came
when Anil Ambani acquired 50% in none otherthan Steven Spielberg’s Dreamworks and alsostruck a series of deals with stars including Holly-wood stars Brad Pitt, Jim Carrey, Julia Robertsand George Clooney for a first look at developingtheir company’s films.
On the other hand, Adlabs, Shetty’s blue-chip company had stood solid on its lab and pro-cessing business as well as some contributioncoming from the multiplex boom he pioneeredin Mumbai.
In five years, Adlabs has metamorphosed intoReliance Mediaworks, (RMW) and the onlything Shetty (who still has a 4.7% share in thecompany) would find familiar at his office inFilm City is the ‘Adlabs’ name embroidered intoeach red covered seat of the mini theatre at thelab. Nothing else is the same.
To begin with RMW, no longer makes films,though it does hold the IPRs of several films.From a Rs 98 crore turnoverand 494 employees in 2005, thecompany has scaled to Rs 511crore and 5,900 employees.
“Coming in from the world ofproject finance to films I had noclue that there is much method inthe chaos in this business, it’s veryentreperenural and scalable aswell,” says CEO, RMW, Anil Ar-jun, who was with Reliance Cap-ital and ICICI earlier.
Scale is something which was amust for Ambani junior — theyhad to be the “game changers” inthis business. The flip side wasgrowth brought along debt andan interest burden, pulling thebottomline down at RMW (theonly listed entertainment entity).Yet Arjun, for whom number-crunching comes easily, is notworried about the downward ar-rows on the share price or thelosses they have been posting fortwo years. He is confident thisyear things will change, with ra-dio demerged from this year andfilm production excluded as well, profits and for-tunes will turn.
“Income from operations, has grown in thelast quarter to over Rs 212 crore and it reflects inour EBIDTA. Since the company is in a growthphase, significant capital has been deployed overthe last three years in various businesses, the im-pact of which is reflected in the interest burden ofRs 92 crore,” he adds.
Arjun’s confidence stems from the fact thatcompetition, though present in almost all thesectors they are present in from labs to DI VFX,exhibiton and restoaration, will face entry barri-ers mainly of scale—the biggest differentiator forRMW. Add the speed with which they can scaleup, rope in talent, train them, collectively offer-ing a service few can match. Simutaneously, Ar-jun’s strategy has been to scale his global foot-print adding strength to his services. The idea isfor each deal to draw on each other’s strengthand work together, so Lowry in Burbank, which
has handled handled projects for leading studioslike Walt Disney, Paramount Pictures, MGM and20th Century Fox and entertainment leaderslike George Lucas, Steven Spielberg and JamesCameron, will work closely with Imagica inJapan which has restored parts of Akira Kuro-sawa’s Rashoman.
“Our foreign acquisitions and tie-ups havebeen good contributors and we see this at 20-25% of revenues,” adds Arjun.
Ready the revenue pie today and you see, thatthe labs business which made up for 80% of rev-enue in ’05, constitutes only 12% today, the ex-hibition business. which was 20% in ’05, is todaya 55% contributor with the 519 screens spreadacross India, US, Malaysia, Netherlands andNepal. “In fact, I see a growth potential for theexhibition industry of 8-10% and for plex busi-ness including us of 12-15%. As cinema advetis-ing gains mometum, as in other mature markets,
the margins will see sharperspikes,” adds Arjun. Even thoughmargins in this business arearound 8-10%, being a B2C busi-ness it adds a big chunk to theturnover. The industry opinionhowever is divided on the growthof the plex business, specially atthe current levels of ticket prices.
It is however, their new mediaservices which includes DigitialIntermediary, VFX, the biggest2D to 3D conversion and restora-tion facility spread over 10,000 sqft in Airoli in Mumbai, with over800 employees in phase I, whichis Arjun’s pet project at the mo-ment. In fact, the restoration hasgot off to a flying start with the bidthey won for a 1,000-filmrestoration from the NationalFilm Archive of India (NFAI) withMrinal Sen’s Kandaharwhich un-derwent pristine restoration re-moving, dust, dirt and scratchesas well as flicker stabilisation andwill be shown at the prestigiousCannes Classic this year.
“The margins in restoration are 30-40%, plus itis a scalable model. As for competition, there areentry barriers as in ability to build scale, skill setsand intensive training — in aggregate we arespending as much as $ 35 million on the facility.Add, the advantage of our premier facilities inUS and alliance with Imagica, Japan so collec-tively, we have a 75% share in the high endrestoration space,” says Arjun.
So, will their expansionist strategy work? “Our vision is to provide next-generation film andmedia services for every story and the scale to tack-le any challenge. As a global player, we provideunique tools and the highest quality of service forcreatives in India, Europe and Hollywood, thus en-abling story tellers to realize their vision and con-nect them with the audiences,” ends Arjun.
The opportunities are definitely global andthey are in the process of matching their skill setsas well.
Scale comes naturally to Ambani Junior and his crack teamat Reliance MediaWorks. Their strategy is to build
a company that will dominate the global film and media services’ value chain. While searing growth has pulled down profits and increased the debt burden in
the past two years, the company is confident of making it to the big league,
reports Nandini Raghavendra
Back From Beyond: Shabana Azmi in Mrinal Sen’s Kandahar which has been restored by RMW. It will bescreened at the prestigious Cannes Classic segment to be held in May
I am hopeful that my father
will be able to attend the
Cannes festival in person. I
loved Kandahar because it
was so different from
everything else my father had
made in the past. It was
understated but intense
KUNAL SENM R I N A L S E N ’ S S O N
Cannes Classics is a
programme of the finest
restorations of world heritage
cinema. Mrinal Sen’s film has
undergone a detailed
restoration and we’re very
excited to reprogramme this
classic Indian film in Cannes
VAN PAPADOPOULOSP R O G R A M M E R , C A N N E S C L A S S I C S
CLASSICTAKE
A good quality print can
survive 50 years and if
maintained well, even 100
years. Different temperatures
in different cities, plus no ideal
storage conditions is where
degradation begins
VIJAY JADHAVD I R E C T O R N AT I O N A L F I L M A R C H I V E O F I N D I A
As a global player,we provide unique
tools and thehighest quality of
service for creativesin India, Europe and
Hollywood
ANIL ARJUNC E O R M W
Net Collection: 86.56Audience: 89792Occupancy(%): 11.83Week: 2
PAATHSHAALA
Net Collection: 66.98Audience: 45630
Occupancy(%): 15.87Week: 1
THE BOUNTY HUNTER
ET APRIL 23-29, 2010
Multiplex Tracker
Net Collection: 40.16Audience: 43122Occupancy(%): 9.47Week: 2
PHOONK 2
Net Collection: 30.51Audience: 23731Occupancy(%): 22.84Week: 2
HOW TO TRAIN YOUR...
Net Collection: 34.66Audience: 36208
Occupancy(%): 8.35Week: 1
APARTMENT
Source : Inox, PVR, Cinemax Fun Cinemas & Satyam Rs lakh
SPANKING NEW
Defects that can be removed through film restoration: Dirt,dust, scratches, flicker, stabilisation, fungus, tears (digs, rollermarks), emulsion cracking, image fading, color breathing,splice bumps, frame warps, water damage, chemical stains,noise & grain build-up
COST OF RESTORING A MOVIE
Domestic costs range from Rs 5 lakh-35 lakh dependingon length and quality sought
International high-end projects for clients like Disney range from Rs 50 lakh to Rs 3 crore, ($100,000 to $ 600,000)
GLOBAL RESTORATION COMPANIES
World reknowned restoration facilities: Lowry, Deluxe,Technicolor, Ascent, Imagica
WORK IN PROGRESS
Lowry is restoring Disney’s Fantasia & Alice In Wonderland
(1951)
World Cinema Foundation (started by Martin Scorsese)and NFAI are restoring Mrinal Sen’s films which havebeen damaged due to bad storage conditions
Cine Diner: A one of its kind, thirty -seater multiplex in Mumbai. Part of the 519 Big Cinemascreens across India, US, Malaysia, Netherlands and Nepal
The Really BIG Picture
Registration Number MAHENG/2007/24438
Volume No.4- Issue No. 18
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