Viacom 18 will spend Rs 450 crore over two years on satellite rights for about 60 Hindi films. The buy has already started from this fiscal and will continue till FY12. It hopes to build a library of close to 400 films ahead of launching a movie channel. Viacom 18 houses Colors.
Colors CEO Rajesh Kamat said although the cost of acquiring new titles may be high, it is imperative to air films for attracting viewership in the weekends. Films can be syndicated to other channels to maximise revenues, he added.
?We have started purchasing the rights for first airing whereas earlier we could only afford to buy second or third airings and so we can monetise the cost by syndicating the films,? he said.
Colors earned an operating profit of Rs 25-30 crore during the June 2010 quarter and occupies the number two slot in the Hindi GEC genre. Besides launching a film channel, Colors will explore opportunities in the regional entertainment space in Maharashtra, Bihar and West Bengal. Kamat is bullish about the regional space. ?We are evaluating these markets because they would be synergistic to our business,? he said.
Colors, launched in July 2008, notched up net revenues of close to Rs 650 crore in FY10. Colors, which entered the US and UK markets earlier this year, is expected to earn around Rs 50 crore from these markets in the current year.
Another move that could help Colors with its movie channel is the proposed transfer of the business of The Indian Film Company (TIFC), to Viacom 18, for a consideration of $80-90 million. TIFC is a film fund listed on AIM, in which Network18 has a majority stake of close to 80%. The transfer of TIFC?s business would help Colors as it would have a production platform. Analysts say the estimated consideration of $90 million, for TIFC, is almost three times the current value of IFC and that the valuation should be linked to the monetisation potential for the library, rather than the capital employed.