Film producers tout big budget films with superstars as the proverbial golden goose. No wonder then, the exhibitors and distributors are more than willing to offer advance payments based on the star clout. Big names guarantee big money, mostly. And if there comes along a Baahubali, it turns the fortunes of everyone associated with it, creating cinematic history.
But what if a film fails to create box office magic? Who bears the brunt of a big budget movie that flops? The Non-Recoverable Advance clause (NRA) is the game changer.
Most producers are secure when they make films with stars like Pawan Kalyan, Mahesh Babu, Allu Arjun, Prabhas, Jr NTR, Ram Charan, Nagarjuna, Balakrishna, Venkatesh, Ravi Teja and others. They recover their money before the film’s release itself via advance payments on the distribution deals. And, in the event of a movie not doing well, the producer is not required to refund the distributor due to the NRA clause. So, the onus lies solely on the exhibitors and distributors.
Recent examples include Pawan Kalyan’s Katamarayudu and Sardaar Gabbar Singh, Mahesh Babu’s Brahmotsavam and Ram Charan’s Bruce Lee, which all tanked at the box office. Even then, there has been no decline in the area-wise distribution rights.
Mahesh Babu
“Brahmotsavam failed miserably, and it was a huge loss for all the distributors, but the producer pacified them with his upcoming films. Similarly, with the box office duds Sardaar Gabbar Singh and Katamarayudu, the producer raked in '85 crore and '95 crore respectively before the movie’s release, thus leaving the distributors to cope with their losses, thanks to the NRA. Even though the previous film was a flop, we go with a positive attitude, hoping the next film will be a superhit, thereby at least expecting to recover our earlier losses,” explains Sunil Narang of Asian Films. “It’s all about demand and supply where everyone wants to put their money on movies with a big star cast. The exhibitor feels the star power will draw people to the theatres and hence, shells out huge advances”, says Sudhakar Reddy, president of the Telugu Film Distributors Association.
The NRA clause, a producer’s safety net
“The producer is free to quote his price, and if regular distributors do not show any interest, there are plenty of fish in the sea. We do have our associations, but the problem is that we are not united and everyone is looking out for themselves”, he says.
“No rule makes a producer liable to refund the advance money to the distributor if a film flops. It’s more of a goodwill gesture on humanitarian grounds. Films with big star cast are crossing the Rs 100 crore business threshold, so many distributors are investing heavily. Unfortunately, these transactions are not under the control of any film association,” adds Sudhakar Reddy.
Allu Arjun
It’s a numbers game that perhaps needs some framework. Baahubali collections amounted to nearly Rs 1,500 crore and counting. The upcoming movie Robo 2 has been made on a Rs 450 crore budget with Akshay Kumar in a negative role to woo the Hindi audience. The producers are now in a dilemma whether to sell the film to the distributors or release it on their own on a percentage basis,” says a reliable source.
Another biggie causing ripples is DJ: Duvvada Jagannatham produced by Dil Raju and directed by Harish Shankar with Allu Arjun in the lead role. Also, the Mahesh Babu-starrer SPYder has already sold its satellite rights and is negotiating big numbers for overseas and other areas of distribution. Pawan Kalyan and Trivikram Srinivas’ film is also in the limelight. Prabhas is basking in the success of Baahubali while his upcoming movie Saaho is already causing a furore with rumours of it being bought over by a big Bollywood production house for close to Rs 350 crore.
“Baahubali has set a new benchmark. It drew audiences to the theatres. Filmmakers are confident about Rs 200 to Rs 300 crore targets if A-listers star in it, and so the stakes are higher. With the NRA clause, the producer has not much to lose,” says Thammareddy Bharadwaj.
Interestingly, Tollywood is tight-lipped about the exact business figures generated by a box office hit. Speculation is high, so are the revenues. Will film distribution never be regulated to minimise the risks involved for all parties?
