distributor’s share will go to the producer. For instance, if a producer sold a particular film in one territory, say for Rs. 1 crore, he may give the distributor a minimum guarantee of that amount. After a week, if the sum total of the net box-office collection of the film in that distributor’s territory equals Rs. 1 crore, then he breaks even. If he made Rs.1.20 crore, then he’ll keep Rs. 20 lakhs as his profit. But, if he earns Rs. 1.5 crore, then that’s called commission mode, since he earned Rs. 30 lakhs more after his share of profit. That amount shall be shared by the producer and distributor again,” explains Johar.
But many big studios retain the distribution rights of their films. For instance, Disney UTV retained the distribution rights for Barfi! for all the territories. In such cases where the production house distributes the film, the entire net collection, after the exhibitor’s deduction, goes to them. Disney UTV even retained the distribution rights for Chennai Express for most territories.
However, there are exceptions. Some territories in which distributors have a better reach than the studios, the film is sold to the distributor for those few territories. A source from a leading studio says, “In some states like Uttar Pradesh or Madhya Pradesh, where we think the collections may not be very good, we sell the film to the sub-distributors and make our profit. Later, it depends on them as to how they want to sell it to the exhibitors.” Something of this sort may also happen if the production house feels that selling the distribution rights would be more profitable than retaining it. For instance, Teri Meri Kahaani was co-produced by Eros International, who later decided not to retain the distribution of the film. They were getting a decent amount from a distributor, which seemed a profitable deal than taking the risk of self-distribution. Though Teri Meri Kahaani was declared a flop at the box-office, the production house made a profit of about Rs.20 crore from the film.
While more often than not, the producer doesn’t suffer losses