Not A Box-Office Hit

In a busy bylane in the heart of Mumbai, is Naaz Cinema building, a crumbling relic from the 1950s which looks as old as the city itself. Inside, a rickety and smelly stairway leads to rows of tiny rooms that are offices to companies like Alankar Films, Sippy Films, Shringar Films, VIP Films. These are firms that make and sell over 200 films a year. With nearly 100 such film companies housed in it, Naaz is a sort of business centre to the Rs 3,000 crore Indian film industry. In many ways, it also symbolises the state of the Indian entertainment business struggling to corporatise even as it stays largely unorganised.

 

The trend has been mostly spurred by companies like Amitabh Bachchan Corporation Ltd (ABCL), Plus Films and a smattering of small event management firms and production houses that have come into being over the past couple of years, following the boom in the domestic entertainment industry.

These companies aim to become one-stop entertainment shops in the country, with access to institutional and public finance for their ventures. But as they attempt to change the way the Rs 5,550-crore entertainment business is done in the country, the ways and whims of the more than 100-year old film industry is proving to be a stumbling block.

The newly formed entertainment companies are into areas such as film production and distribution, music, television production and marketing of software, events, celebrity management and merchandising, media buying and print features syndication. Despite the diverse portfolio, films and television software make up the bulk of the business. In both these areas, the companies are up against lack of transparent means of film finance, unorganised distribution, indiscipline among its players and technological illiteracy. At the same time, the companies are struggling to set up hierarchical and organisational structures that mark a professional environment. Says M Suku, vice-president, ABCL, There has been an encouraging beginning (towards corporatising the business) but there still is a long way to go.

In India, the process is going to be difficult given the structure of the entertainment business. Says Sunil Doshi, vice-president, strategic planning and new business development with Plus Channel, I dont think corporatisation is happening at all. According to him, when Hollywood corporatised, it used the model set by the Standard Oil Company, which went about organising the various businesses that made up the oil industry. The Indian entertainment industry would find it tough to duplicate the same because of the size of its various components like music, television and film businesses. The first mistake that companies are making is clubbing these together to create conglomerates.

Although many disagree with his views, they do believe that the companies underestimated the problems involved in organising the entertainment business. This is why companies like ABCL and Plus have reportedly had to scale down their initial projections. Both had projected turnovers of over Rs 100 crore in 1995-96. ABCL managed only Rs 58 crore and Plus notched up Rs 65 crore. All this has turned investors wary and companies sceptical about the business.

To a large extent, industry analysts say, the problems of corporatisation are because the business is personality driven. This makes betting on an entertainment company a double risk; you end up betting on the future of the business which is uncertain and on the personality of the chief executive or the promoter whose popularity is also uncertain. Also, as a corollary, one wrong move by these companies or the people who run them turns investors wary. That is why many markets are downbeat on entertainment start-ups. For instance, when Seagram, a Canadian liquor company ventured into the entertainment business in 1995, the news drove the companys stock down by nearly 18 per cent.

Employees at ABCL, the company that is most affected by the personality issue, say they are aware that the Amitabh Bachchan name has its downsides. For one, the company has to be used to the constant glare of publicity and controversy and hence, the need to expand the scope of the company. Says Suku, Eventually we are looking at a balanced business portfolio. To all those who accuse ABCL of being an extension of one man, he points out, that of the 12-15 films that the company is making, only a couple star Amitabh Bachchan. Of the 20-25 audio tracks in the pipeline, less than five feature him or his films and the celebrity management department has signed on two new stars, Aamir Khan and Sunil Shetty. All this shows that the company is not dependent on just one person. And then look at Walt Disney Entertainment, which is also derived from the name of one person but who doubts its status as an entertainment conglomerate today, says Suku.

He may be right. But creating such a perception is going to be tough as the Indian industry associates the company with the Bachchans, Amitabh and his wife Jaya. Says N N Sippy, film producer and president of the Indian Motion Pictures Producers Association (IMPPA), The company has a lot of goodwill because of them. He has his reservations about the impact the company will make on the business. ABCL has worked with relatively unknown actors and actresses for its films and has hence, been able to stick to a time schedule and budgets. It is extremely difficult to do that with the more established players in the industry who are basically an indisciplined lot, he says.

Even more important is the lack of discipline in the financial dealings of the industry. Most agree that the large cash element involved in paying actors, musicians and other people involved with the making of a film or serial leads to problems of accounting. Says one director who is making her first television serial, everyone demands payment in black. And since the amounts involved run into lakhs, accounting for this kind of money involves large-scale fudging. Unless corporate entities like ABCL and Plus can find a way out of this, the entire process of corporatisation could get stuck.

This is not the only area where inaccuracies creep in. Companies find it difficult to even estimate the final amount that a movie makes. Says Suku, the distributors lose control over a movie once it moves into small towns. The theatre where the movie is shown may have a capacity for seating 1,200 people but the owner may seat a couple of hundred more by placing extra chairs or letting them squat on the floor. The money he makes thus, is unaccounted and the information relayed back to the distributor incomplete. One way out of this is automated ticketing systems. Says Sascha Sippy, grandson of G P Sippy, an experienced film producer, A couple of years ago there was a man who came to talk to us about the possibility of setting up such a system here. The possibilities this opens up are mindboggling but that was the last we heard of him. N N Sippy says that the costs of computerising theatres is prohibitive and none is willing to invest in technology in this industry.

All this makes it difficult to set up organisational and even hierarchial structures in the business a must if companies want institutional support and public money. According to sources, ABCL is reportedly talking to private consultants for setting systems in place. Suku, however, denies this saying that an entertainment company cant be run like any other industry and hence, there is no need to consult outsiders. True, but, as Doshi points out, there are no trained professionals in the entertainment business. Hence, any attempt to corporatise must depend on outside help.

Also, unless the entertainment business looks outside for professionals, companies will find it impossible to change the mindset that has held back corporatisation of the business for so long. As one film producer points out, the industry is feudal in its structure and the decision making process is often autocratic. In fact, this is a problem that film companies are already facing. One television serial maker remembers how he went to ABCL to show his pilot episode for approval. The person in-charge of vetting such programmes said the serial had been approved by the company but he still could not give the go ahead without showing it to Jayaji.

This has to change if film companies are to break the mould and if the playersare serious about corporatising and globalising the business. Says Suku, whose company is talking to UK-based media conglomerate WPP for an alliance, Strategic alliances and tie-ups represent a quicker and efficient way of meeting business objectives. But only a professional approach in the first place would attract global alliances in the first place.