Public RelationsUTV Pictures keeps up profit with eye on costs
Despite a lukewarm year on the box office, UTV Motion Pictures (UMP) has managed to hold ground by reducing content acquisition costs, widening distribution in international markets and milking satellite & DTH rights to the fullest.
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Having released 31 movies and produced nearly 20 films since January last year, Chief Executive Siddharth Roy Kapur is gearing up to release another eight films in 2009-10. Being nimble and treating every film as a brand that needs to be marketed differently seem to have paid off well.
UMP’s action-packed film, Kaminey, which cost Rs 50 crore, got the production company more than Rs 80 crore (worldwide box office collections) within 24 days of its release. Wake Up Sid, acquired from Dharma Productions, brought in Rs 46 crore within 14 days.
Kapur credits the recent success in the domestic market to flexible marketing budgets and a decision to not overspend in acquiring movies from producers. “With domestic marketing budgets fluctuating between Rs 2 crore and Rs 7 crore, UMP will work with first-rate production houses like Karan Johar’s Dharma Productions to keep its content costs in check,” he said. He underlines that UMP’s focus is to produce films. “We have a capable development team and strong relationships with talent. Acquiring content is not part of our overall business plan. We are not looking at acquisitions to scale up,” he said.
Although the filmed entertainment business continues to be the parent company’s backbone, with 53 per cent revenue contribution, it is not without its share of box office disappointments. But UTV Motion Pictures is out to make the most of even its duds, like Main Aur Mrs Khanna and What’s Your Rashee?. “We will continue to explore TV and satellite revenues by releasing these movies on pay-per-view platform or for satellite premieres,” said Kapur.
Analysts believe UMP has been able to maintain operating margins of nearly 22 per cent (last quarter) and has deployed nearly Rs 100 crore in the movie business alone. Mihir Shah, media analyst at Prabhudas Liladhar, expects UMP to maintain this threshold.
He says, “In the second quarter, UMP managed Rs 25 crore revenues just from recurring film content shown on satellite channels and home video.” Shah expects this number to grow this year. The filmed entertainment segment of UTV reported an operating profit of Rs 29.9 crore for the quarter ended September, a 275 per cent year-on-year growth. This includes Rs 42.9 crore realised on account of The Happening, a film co-produced by UMP and Fox Studios.
Following the success of The Happening, says Kapur, “We have signed a foreign sales deal with a Madrid-based film sales company for UTV’s Heather Graham starrer, ExTerminators.” This movie, estimated to have cost about $2 million, is UTV’s first independent production in the US.
Through its foreign sales partner, it has already inked deals for Romania, Benulux and West Asian territories for the film.
Kapur believes holding rights for Hollywood films can be an advantage as the home video and DVD market is very strong in the UK and US.
Realising that international marketing and print budgets have to be raised to capitalise on Bollywood titles, UMP now invests between Rs 1 crore and Rs 2 crore on each film in international markets. It has also broadened revenue streams to include theatricals, home videos, online downloads, video-on-demand and IPTV distribution in overseas markets like the US, the UK and West Asia. “We are aware of the fact that Indian diaspora in Asian countries like Japan, Singapore, Malaysia and even Australia is a great bed for our films and we are actively looking to expand our theatrical releases and digital distribution,” said Kapur.