UTV earmarks Rs 9 billion for movies over 2 years

By Indiantelevision.com Team(29 April 2009 10:30 pm)

MUMBAI: UTV Software Communications plans to pump in Rs 9 billion for a mix of Hollywood and Bollywood movies spread over two years while warning that its margins will be under some pressure.
Indian language movies will take away Rs 4.2 billion while the Hollywood slate will consume Rs 2.3 billion. Additionally, UTV will be investing Rs 2.5 billion in inventories/debtors of released movies plus unexploited rights of recent releases like TV rights and VoD/PPV rights of its 2008-2009 releases.
A roster of 35 movies are on the floors or nearing release or in production. The slate includes Kaminey, Main Aur Mrs Khanna, Agyat, What's your Rashee, Wake Up Sid, Hook Ya Crook, Delhi Belly, Jihaad, A Wednesday (remake in Tamil and Telugu), Yahoo, Film City, Arjun, Alibaba & 41 Thieves, Ex-Terminators, Rajniti, Hawai Dada, Five movies of UTV SpotBoy (Aage Se Right, Pan Singh Tomar, Seasons Greetings, Peter Gaya Kaam Se and Chillar Party), Sanjay Leela Bhansali's next with Hrithik Roshan and Aishwarya Rai, Anuraag Basu's next and Annees Bazmee directed comedy.
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UTV believes that it has bought the production cost under control. "We do admit that cost for producing movies had risen only due to market conditions and free flow of equity money and that hiked cost has also put pressure on our margins. UTV has not been immune to this industry-wide hike in costs but we believe we have brought this under control," UTV said in a release.
The benefits of total cost rationalization to pre 2007 days would, however, only be partly felt in 09-10 as many of its productions were already on the floor. But it said that they "fully realized and corrected from 10-11 onwards."
UTV will capture revenues of Namesake from the first quarter of 2009-10. "On The Happening, even though the theatrical release was only nine months back on 13 June'08, since it did well theatrically worldwide we have recognized part of the revenues in Q4 of 08-09 to the tune of Rs 306 million. We estimate that approximately 40 per cent of the cost invested in The Happening will flow in pre and of 09-10 and the balance in ensuing years," UTV said.
On The Happening, UTV estimates that on investments of approximately $34 million, the revenue flowing back to the company in its first cycle of exploitation would be between $39-42 million. Of course, a lot would depend on the TV exploitation which has just begun (for this year and may be into the next year there is a slowdown on TV syndication worldwide). The State of Pennsylvania has also given a tax rebate to The Happening of a little over $10 million.
"We believe co-owning the IPR and Negative Rights in perpetuity for 3 Hollywood Movies in our Balance Sheet will be a valuable asset and a source of regular annuity income, post its first exploitation cycle," UTV said.