Satellite Rights... And The Wrongs!

By Anant Mathur (May 25, 2012)

Most people are unaware of what Satellite Rights are or how they are calculated for films. In this post, I will discuss how satellite rights affect TV Channels, Producers, Distributors and Advertisers. 

Satellite Rights are an agreement between a TV Channel and a Distributor/Producer. For a fee, TV Channels obtain the rights to telecast a film for a number of years and/or a set number of telecasts as agreed to by both parties.

Today, in India, film-making is drastically different than 10-15 years ago. In the past, distributors only purchased films after they had seen it. Today, possibly due to lack of content, distributors are not show the film by the producer(s) - instead they sign agreements based on the Star cast, Music Director and the Director attached to a project. The script is NOT the priority. Producers are given 50, 60, sometimes even 100+ crores by distributor(s) for a film whose content they have no knowledge of or have any control over.

There's only one thing that dictates the price of a films satellite rights… Star Power. The greater the number of 'A' Listers in the film the higher the amount the distributor and/or producer will receive from a TV channel. With stars like Shahrukh Khan, Salman Khan, Aamir Khan and Hrithik Roshan, you're almost guaranteed 35-40 crores for satellite rights even before a single frame has been shot.

So before the film is in production the producer knows he will have 60 crores from the distributor and 40 crores from satellite rights and he plans his budget accordingly. Most films that producers claim have budgets of 80-90 crores can easily be made for 5-10 crores if you take away the salaries/compensation of the 'A' List star(s), the director and producer(s).

At the time of its release, it was claimed that Action Replayy cost 65 crores. In Action Replayy there are no sets, location, costumes or special effects which require lavish amounts of money to be spent. At most Action Replayy cost 4-5 crores to make without the cost of the 'A' listers - so unless the director/producer and stars were paid 15 crores each, there's no reason for Action Replayy to cost 65 crores. Since the distributors didn't see the film 'till the premiere they had no idea how bad the film was. The Hollywood film Back to the Future, which was the "inspiration" for Action Replayy, cost $19 million dollars to produce but you can see exactly where the money went when you watch that film.

Advertisers pay TV channels for broadcasting their commercial during the broadcast of a film because they are trying to target the same audience the film is made for. Based on the star power of the film, advertisers are charged a particular amount for a 30 second spot. Obviously, an 'A' list stars film would fetch far more than a B or C grade star.

Reliance Big Pictures released Kites and Raavan one month apart in 2010. Prior to their release Reliance had agreed to a deal worth 45 crores for satellite rights of these two films along with some 20 other old films from their library. But when both these films flopped, Colors TV channel forced Reliance Big Pictures to re-negotiate the deal and ended up paying 30 crores instead - the reason is simple, Colors knew they couldn't generate enough advertising revenue to cover the 45 crores cost.

At the end of the day, films are made for the BIG SCREEN, and although satellite rights have started to play a part in recouping the cost of a film, if a film flops at the box office it also affects the price of the satellite rights. So, unless a film can hold an audience on the BIG SCREEN the chances that it will recover its cost are dismal.

© Anant Mathur. All Rights Reserved.