Producers vs distributors

Think of producers as project managers. They herd the team together, take care of the logistics, keep the money supply going and ensure that the film is completed on schedule. Cost overruns can prove to be fatal in an industry where prime interest rates are pegged between four and eight per cent a month.

What makes them kingpins today is that they hold the Intellectual Property Rights to the film. That means that they can sell the same film with as many permutations as they can think of.

In almost all the allied revenue streams of the filmmaking industry --- music rights, theatrical rights, video rights or satellite rights --- the producer is on top of the value chain.

Contrast this with distributors. These low-profile constituents of the film industry's ecosystem are the critical link between the audience and producers. They are the ones who finally bring the film to the theatres.

In the filmmaking chain, distributors can come in at any stage. "It depends on who the producer is. For a big banner film, the distribution rights are normally presold. For other films, distributors may come in towards the completion of the film or may not come at all," says Shyam Shroff, managing director, Shringar films.

Distributors sell to exhibitors or theatre owners. For distributors negotiating with producers, there are several options:
*Outright purchase of the rights for a certain area.
*A minimum guarantee plus royalty
*Distribution may be commission-based (in which case the risk is borne by the production house).

Through the sixties and the seventies, widely considered as the golden age for box-office collections, successful films ran for years at the cinema halls. "There were not too many forms of entertainment then. Television was still new and so films lasted longer at the theatres. Money from the repeat audience was a big part of the collections," says Indu Mirani, editor of the fortnightly film trade magazine Box Office.

Distributors were powerful then because they held the pursestrings to the box-office incomes. The advent of the video in the eighties saw the beginning of their decline. When cable television peaked in the mid-nineties, filmgoing audiences had nearly halved.

With fewer people turning up at theatres and proportionately lower number of hit films, the ability of the distributors to squeeze producers too dropped drastically. "Only a few overseas distributors today make windfall profits by buying theatrical rights up front. Compared to the 25 per cent return that a distributor typically makes in the domestic market, overseas distributors make close to 100 per cent on their investment," says a media analyst who refused to be named.

However, Shroff is unwilling to concede that the distributors are the overall losers today. "It depends on the terms of the contract. If a minimum guarantee amount is paid to the producer, the producer is covered to the extent of that amount. If the terms are pure commission basis or refundable deposits, the loss would be the producers," he says.

Despite Shroff's bravado, local distributors are in a more vulnerable position than ever. Powerful producers leave them with little bargaining power and they have no say in the making of a film. "Very rarely you find storyboards being discussed with the distributors," concedes Shroff.

The creation of giant production houses spells greater doom for medium sized distributors. Music companies like TIPS and Venus have a strong say in the filmmaking business. Beginning as companies that battled for just music rights, they have grown into octopuses with tentacles in almost every major part of the filmmaking pie.

And these companies are in no mood to defer to distributors. "In the future, you will have big producers distributing their own films. And as producers if you are spending a lot of money you have to do everything you can recover it. The distributors then need to realistically decide what business they can get out a film after six months," says Ratan Jain, managing director, Venus.

In a way, it all boils down to economics. If filmmaking were not so expensive, producers would not be forced to explore every option for return on their investment and if producers didn't have to do that, distributors wouldn't suffer. "The industry is passing through one of the worst ever crises. Because of high budgets and poor content, films do not sustain at the box-office and so there has been a chain reaction where everyone is getting burnt," says Film Information editor Komal Nahta.

But how did the economics in the 70-year-old industry get so skewered?