An increasing number of films are facing hiccups just before release. This year, the releases of close to a dozen Tamil films were delayed in many major markets. Uttama Villain ’s release got delayed worldwide by more than a day. Vaalu , after repeated release day announcements, is yet to hit the screens. Even Maari did not have an overseas premiere in many locations due to last-minute financial hassles that were sorted out only on the day of release.
A one-time leading producer explains: “My health has improved after I stopped producing. Traditional financiers are no longer funding risky big-star movies, leave alone small-budget films. Kollywood today is over-heated with the high remuneration of artists and technicians. Even production costs are going haywire. But these films are not sustainable, as collections are restricted to the opening weekend.”
The crisis facing the industry is that financiers are no longer interested in funding Tamil films. Some of them have closed shop and have moved on, while other financiers have turned producer to salvage bad debts. It is well-known that the industry functions on high interest rates taken from cash-rich private financiers for lack of corporate or bank financing. Recently, a saleable hero demanded 75 per cent of his salary as upfront advance payment. The producer borrowed at 42 per cent interest rate per year, and when the film released, it turned out to be a flop. In contrast, Hollywood and Bollywood works out a film’s budget without taking star salaries into consideration. The star normally takes a token amount as salary and the rest is taken on a profit sharing basis after release. Take the case of Shah Rukh Khan. He will be releasing three films in the next one year — Dilwale, Fan and Raees . His production company Red Chillies has worked out a deal, which includes profit-sharing with three different leading production companies, a win-win situation for all concerned.
In Tollywood, some stars take rights for entire markets as their share of profit. Prabhas, the star of the blockbuster Baahubali, is reported to have taken over the distribution rights of Tamil Nadu and the Malayalam dubbed version as his salary. The actor worked without a salary for nearly three years, and as per industry grapevine, he is said to have earned nearly Rs.25 crore as a result.
In Kollywood, all superstars other than Rajinikanth insist on a big upfront payment and settlement of all dues before release. This leads to a scenario where producers take loans with high interest rates to fund the hero’s payment. With hardly any money left for production, these films are bound to get stalled or delayed.
The producer is forced to slash budgets midway and he runs around for additional financing. He is forced to pledge all the rights — audio, satellite, overseas and Tamil Nadu theatrical area rights to multiple financiers to bring in the money. The deals are often unfair, and at the time of release, those who fund the film take legal action against the film.
Finally on the eve of the release, the producers find it difficult to settle outstanding payment. A leading financier pointed out: “Till recently, whopping budgets, big productions and skyrocketing star prices were the order of the day. But during release, financiers would often write off nearly 50 to 70 per cent of the loan due to external pressure. Some financiers even lost huge amounts of money due to this practice. Now most of us have decided to go slow on funding Tamil films.”
Producer and distributor P. Madan of Escape Artists said: “I would not call it a meltdown, but a correction is needed in Kollywood. The pay packets of artists and technicians will have to come down and big heroes have to take a profit-sharing model if the films have to be successful. Financiers should fund only production cost or 40 to 50 per cent of a big star film. The star should take a token amount before signing and the rest should be settled as part of profits.”
Meanwhile, many stars such as Suriya, Dhanush, Vishal, Arya and Sivakarthikeyan have floated their own production companies and are showing an inclination to co-produce films too. It looks like Kollywood has finally realised the importance of financial discipline.
