Saregama India inks four-film deal involving collaterlisation

Papiya De & Subhadip Sircar

Mumbai, Jan 3: 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 rightsacquisition 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, Mr Mitra said.

“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”, Mr 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 renogotiating the deal amount with Mr 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 Mr 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, Mr Mitra said.