King Khan has an early Diwali

Seven months before it is due for release, Shah Rukh Khan’s latest home production, Ra.One, has started setting new records. In the biggest such deal in the Indian entertainment industry, Star India has snapped up the satellite rights of the movie for Rs 40 crore.

In the process, Ra.One has gone past the milestone set by another Khan. Multi-Screen Media (MSM), which runs Sony Entertainment and SET Max, had paid Rs 36 crore for the satellite rights of the Aamir Khan-starrer, 3 Idiots.

Ra.One is said to be one of the most ambitious Bollywood projects, featuring famous Hollywood technicians and visual effect artistes. The music has been composed by Academy award winner Hans Zimmer.

According to Shah Rukh Khan, the idea is to take Bollywood to a new level with “daredevil action sequences and world-class special effects”. Khan is believed to be playing the role of a superhero in the film.

This science fiction flick also stars Kareena Kapoor and Arjun Rampal. It will be part of Shah Rukh Khan’s production banner, Red Chillies Entertainment.

A spokesperson of Eros International Media confirmed the satellite rights had been sold but declined to comment on the price and the television channel.

According to industry sources, the deal with Eros not only includes outright distribution and marketing but also part-funding the movie. Eros is expected to shell out around Rs 170 crore for the movie.

Television industry officials say movies with established stars are a good acquisition. The TV screening of a big Bollywood film can trigger a spike of 30-40 gross rating points for the channel during the week it is aired. This has often helped channels displace competition in viewership rankings.

According to data with TAM, which tracks TV viewership, 3 Idiots had a television rating of 10.1 in the six metros during its first screening on July 25 on Sony Entertainment Television. As many as 16.8 million people watched Sony during the premiere. A senior executive said MSM made around Rs 16 crore from advertising. Sony had roped in 12 associate sponsors, including Life Insurance Corporation of India, Cadbury, Airtel, Raymonds, Tata Motors, Tata Sky and Lux.

From the production house’s point of view, pre-selling various rights like satellite and home video helps de-risk the effort by reducing the dependence on revenues from theatres. For instance, last year, UTV had sold Guzaarish and Tees Maar Khan to Colors. Dabangg was also pre-sold to Colors by Shree Asthavinayak Cinevision.

Analysts say such deals also help production houses tie up with broadcasters and plan their marketing, promotion and advertising strategy months ahead of the release. Industry sources say satellite and other rights of films slated for release in 2012-2013 are already under negotiation.

Kamal Jain, CFO, Eros, said the Indian film industry was gradually de-risking the model. “We are trying to pre-sell the maximum rights pre-release, from satellite to merchandising,” he added.

In Hollywood, 70 per cent revenues are secured before the film’s release, and the dependence on the response in theatres is only 30 per cent. Film trade analysts said there had been a huge shift in India as well over the past six months, with the dependence on theatres coming down to 45 per cent, and the rest from satellite (30 per cent) overseas (20 per cent ) and others (5 per cent).