Minimum guarantee is the rough estimate of how much a film is expected to make, given various nebulous parameters including the reach of its stars. When films are purchased by distributors on a minimum guarantee (MG), the understanding is that no payment needs to be made to the producers till a certain amount has been collected, following which payments will be made to them as agreed. But now, the Tamil Nadu Distributors’ Association has announced that only outright purchases will be allowed, a decision some producers aren’t really happy with, as they believe it increases the risk they get exposed to. Producer RK Suresh, who has made films like Dharmadurai, is furious. “Risk is a part of cinema, and our industry survives on delicate equations. Now, it appears that there are parties who would rather not share any risk. MG is a long-upheld tradition and trying to change it isn’t a healthy sign at all.”
He believes that many families, dependent on cinema for their survival, will be affected. Elaborating further, he says, “A distributor, through MG, can ensure that small-medium films get a decent run, at least so he gets to recover the minimum guarantee. In its absence, there’s the option to discontinue such films, say, just after a week, in place of a movie that may have better scope for box office success.”
Suresh adds that this will have a two-fold effect on the industry. “Producers will now begin getting into distribution, and cut deals with exhibitors directly. More importantly, the number of films made will reduce dramatically. Right now, we are making around 200 films. Don’t be surprised if this comes down to 50!”
Influential distributor Tiruppur Subramaniam explains the new decision. “The agreement now will be that in the case of loss, distributors will have to bear 20 per cent. In the case of profits, this figure rises to 50 per cent. This new decision ensure that distributors won’t get pushed out of the industry, owing to the disastrous financial repercussions of a loss,” he says.
Producer KE Gnanavel Raja is believed to have been instrumental in the negotiations. “With MG being scrapped, producers will now be more cautious about the prodution costs. The exorbitant salary of some actors will be cut. Unnecessary costs will be minimised, and this will lead to a healthy environment where the money of producers won’t be thrown around. Finally, all of this leads to a reduction in the sales price, which consequently will reduce the ticket price,” explains Subramaniam. With the Goods and Services Tax set to be implemented shortly, “it is crucial that ticket prices become affordable. This will bring more people to the theatres. Occupancy will increase; producers will make better films.”
Ask him what he thinks about Suresh’s belief that small-budget films will be affected by this decision, and he says, “We have placed requests to convert small single-screen theatres into multiplexes. With more screens, small films will find a space too. This will also ensure films of other languages get more visibility.”
Rakesh Gowthaman, who owns Vettri Theatres, is more guarded about the change. “There are many sides to this,” he says. “Perhaps we will end up becoming like Kerala, where quality films are made regularly. The other side to this is that smaller, unrecognised participants could get ignored.”
While Subramaniam says that star salaries will come down, Rakesh thinks that the salaries of lightmen and other production staff will take a hit first. “As it is, they aren’t too well paid. Distributors also should know that producers often try to oversell their films as it is a part of their job. I’d rather that the distributors be more cautious when deciding on the price of a film’s rights, without getting carried away by the presence of stars. If this had happened, this entire situation could have been avoided.”
Source: The New Indian Express