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In the first
deal of its kind in the Indian music industry, RPG group company,
Saregama India has entered into a four-film deal involving collateralisation.
The company has bought the international music rights for a set
of four Tamil films produced by NIC Arts. The first film in the
series is ‘Red’. While the four-film deal is not very
huge in terms of music rights acquisition costs, music industry
officials believe, may prove a trendsetter in the industry. The
collateralisation is in line with global consultancy major McKinsey’s
recommendation to the company whereby Saregama can hedge its acquisition
costs.
"We are
also looking at collateralisation for Hindi film music rights. In
future, block deals will invariably have the collateralisation clause
built into it," said Saregama India managing director Abhik
Mitra. The whole idea behind going in for a block-deal with the
collateralisation clause is that if one loses money on the first
film, the music company can make up the loss subsequently in the
other films, Mitra aid. "We will also own the international
audio-visual rights for the song sequences. We intend to own the
DVD, VCD rights of the music rights we acquire in future,"
Mitra added. The Indian music industry has been hit with the acquisition
costs of Hindi film music rights touching all time highs. But, this
has not been subsequently justified as music companies have lost
money even on major releases.
Saregama was
the first music company which had entered into a five-film deal
with leading Hindi film producer Vashu Bhagnani, whereby it acquired
the music rights for a whopping Rs 25 crore. But subsequently the
music of the first two releases Rehna Hai Terre Dil Mein and Paagalpan
did not match the expected figures in terms of sales. Saregama is
currently re-negotiating the deal amount with Bhagnani in view of
the losses incurred in the first two releases. Of late, Hindi film
music acquisition costs have started to come down, said Mitra. McKinsey,
which was roped in by the company to undertake a complete business
restructuring, has suggested some major initiatives to streamline
the business. The recommendations pertaining to catalogue management,
cost reduction and new product development specific to international
markets has already been put in place, Mitra said.
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