The global credit squeeze has been taking it?s toll on Asia?s film industry. In China, the future of IPOs lined up for the Bona Group, the China Film Group, and Huayi Brothers is now suspect. In South Korea, companies like Taewon Entertainment have been exiting the stock market. India seems to offer a sharp contrast in this murky scenario, with the ADAG bid to finance an independent avatar of Steven Spielberg?s DreamWorks studio appearing as a coup d??tat on India?s entertainment frontier.
This is the latest installment in an ongoing success story that has seen Bollywood films regularly positioned on the top 10 charts in UK, which now accounts for 25% of Bollywood?s total collections according to some reports. Bollywood film companies have also found London?s Alternate Investment Market pretty friendly, with Eros, UTV and Indian Films collecting good monies on the exchange. The last picked up ?55 million here last year, thanks to big grossers like Jab We Met.
But the symbolic value of the Dreamworks deal puts it in a different league and offers a great contrast to how Hollywood received a similar covenant almost two decades ago. At that time, when Sony paid up around $3.4 bn to pick up the Columbia Pictures empire, it faced some savage criticism. Nationalists saw this as yet another in a series of wily Japanese manoeuvres to raid the US crown jewels one by one. After all, Columbia was associated with the heydays of classic Hollywood, when it produced archetypically American sagas like Mr Smith Goes to Washington.
Then, there were sniggers that Sony had been conned into shelling out too much for Columbia. But more savvy commentaters recognised that a Japanese takeover of Hollywood would inject new life into a business that had been losing money and that had become too entrenched into its traditional mechanisms. Time would prove this group right, both as the Japanese pumped in much-needed money into an entertainment industry badly burnt by a withdrawal of Wall Street interests, and as Sony spun off its Hollywood investments into hardware sales of everything from 8 mm videocassette recorders to high-definition television sets.
It looks like a different world today as ADAG makes a bid for Dreamworks. Steven Spielberg is as golden a Hollywood boy as ever made, but nobody is crying themselves hoarse about a native taking over a pucca establishment this time around. There are, however, certain similarities. Hollywood is once again going through a credit squeeze. From Merrill Lynch to Lehman Brothers, from Deutsche Bank to Dresdner Kleinwort, a bunch of banks have either dropped out of Hollywood or are demanding more bang for their bucks. And, as was the case with Sony, ADAG is expected to be a creatively passive partner in this deal.
A Variety pundit has opined that, ?What may ultimately make the Indian story more sustainable than the Chinese one is the way that Indian companies have not only been on the receiving end of finance, they have been actively building infrastructure beyond their region.? As far as ADAG is concerned, this includes buying everything from 225 film theatres in the US (spread across 28 cities like New York and Los
Angeles, which boast large subcontinental audiences for both Bollywood and regional films) to the US-based Willow TV, a pioneer in live streaming of cricket that already has more than a million registered users worldwide, mostly in developed countries.
But to put a pich of salt into a too sweet-seeming concoction, there is a tricky financial side to the DreamWorks-ADAG deal. After shelling out $550 million in equity funding, ADAG is supposed to raise a similar sum or more via debt financing with JP Morgan. With Wall Street having turned enormously stingy about extending credit, this is proving more difficult than anticipated. Which is why a deal that has been months in the offing still hasn?t gone through, strictly speaking.
renuka.bisht@expressindia.com
