UTV Software: Movie biz may add 45-50% to FY09 sales

UTV Software Communications’ subsidiary UTV Motion Pictures has struck a Rs 95- crore deal with broadcasters in India and abroad to telecast its 18 movies on a non-exclusive television rights basis. The deal covers movies that its wholly-owned subsidiary produced in 2008 and 2009. These include recent films like Kaminey, Wake Up Sid and Kurbaan. As per the deal, Colors will premiere all these movies, followed by NDTV Imagine. B4U and Channel 4 are the overseas players which will broadcast the movies.

The company will gain around Rs 5.3 crore per movie, which is a lucrative number considering the fact that most of the films in the deal have been low-budget and revenue-generators at the box office.

The management expects a chunk of this deal revenue to come in this fiscal itself. It expects around Rs 80 crore to flow in this fiscal. With the increase in television viewership, broadcasters are comfortable with paying huge amounts to air the latest movies on their channels. Hence, producers, whose movies fetch mediocre business on the box office earn revenues from satellite rights. For instance, UTV will earn revenues by satellite rights of its movies like Main Aur Mrs Khanna and What’s your Rashee, which didn’t do good business at the box office.

More so, the strategy of giving rights for a specific number of runs works better than selling the telecast rights
outright to a broadcaster. The producer one gets an advantage of quoting a higher price after ending a deal of a specific number of runs with a broadcaster.

After a tough first quarter, UTV Software Communications has been looking out for different revenue streams to recover the losses incurred during the same period. Sale of satellite rights is one such method and the company earned around Rs 21.6 crore from the sale of satellite rights of its movies.

The company is also planning to merge its subsidiaries UTV Motion Pictures and UTV Motion Pictures (Mauritius) by March 2010. Through this merger the company expects its overall revenues to go up by 40%. For the September quarter, UTV Software Communications’ movies segment operating revenues were up by 107% to Rs 131 crore on a year-on-year basis. Its movie segment contributed around 55.8% to the total revenues as compared to 30.6% during June 2008 quarter. For the company, the remaining fiscal will see a good mix of small budget and big budget movies coming up. One can expect the movie segment to contribute around 45-50% to the total topline in current financial year.