Is Karan Johar Planning To Sell Dharma?

Much
of
the
discussion
is
happening
at
a
“family
level,
not
a
corporate
level”.
That
means
it
is
an
Ambani
or
a
Goenka
in
direct
talks
with
Johar.

There
is
no
confirmation
that
the
RP-Sanjiv
Goenka
Group’s
Saregama
is
acquiring
a
majority
stake
in
Karan
Johar’s
Dharma
Productions.

The
stock
has
been
steadily
rising
since
the
rumours
first
broke
in
August.

In
a
letter
to
BSE
on
October
8,
the
company
said,
‘At
this
stage,
there
is
no
material
event/information
that
requires
disclosure.’

Reliance
Industries
Jio
Studios
and
the
Adani
Group,
also
reported
contenders
for
Dharma,
have
not
made
any
statements.
WhatsApp
messages
to
senior
executives
in
these
firms
elicited
no
response.

With
Rs
1,044
crore
(Rs
10.44
billion)
in
revenues
for
the
year
ending
March
2023,
Dharma
is
among
the
top
three
studios
in
India.
Aditya
Chopra’s
Yash
Raj
Films,
with
Rs
1,523
crore
(Rs
15.23
billion),
and
Bhushan
Kumar’s
T-Series,
with
Rs
909
crore
(Rs
9.09
billion),
from
the
film
business
alone,
are
the
others.

Saregama,
which
recorded
Rs
803
crore
(Rs
8.03
billion)
in
revenue
for
the
year
ending
March
2024,
derives
84
per
cent
of
its
top
line
and
a
bulk
of
its
profits
from
music.

Films
drive
70
per
cent
of
that
business
in
India.

However,
they
are
increasingly
tied
to
studios
like
T-Series
and
Yash
Raj
Films,
which
are
not
selling
their
music
rights.

In
recent
years,
streaming
and
its
portable
music
player
Carvaan,
launched
in
2017,
have
driven
Saregama’s
revival
and
growth.
In
its
search
for
new
growth
avenues,
it
acquired
digital
entertainment
firm
Pocket
Aces
last
year.

Analysts
say
Dharma
would
provide
Saregama
with
a
steady
pipeline
of
big
films
and
their
music,
pushing
it
up
the
value
chain.
It
also
fits
with
the
$4.3
billion
RP-Sanjiv
Goenka
Group’s
recent
penchant
for
glamorous
businesses,
quips
an
industry
insider.

The
group
has
interests
in
information
technology,
power,
and
retail,
among
other
sectors.
It
recently
launched

The
Hollywood
Reporter
in
India,
publishes

Open,

Fortune
and

Hello!
magazines
and
is
set
to
launch

Esquire.

The
group
also
holds
a
majority
stake
in
Vikram
Chandra’s
news
aggregator,

Editorji.

For
Johar,
“the
deal
is
not
about
working
capital.
It
is
a
stage-of-life
thing”,
says
one
observer.

While
the
valuation
is
anyone’s
guess,
even
at
1x
top
line,
a
50
per
cent
stake
sale
would
net
Johar
a
cool
Rs
500
crore
(Rs
5
billion).
This
allows
him
to
encash
his
equity.

He
is
the
creative
nerve
centre
of
Dharma.
He
has
directed
some
of
India’s
biggest
hits,
from

Kabhi
Khushi
Kabhie
Gham
(2001)
to

Rocky
Aur
Rani
Kii
Prem
Kahaani
last
year.
His
talk
show

Koffee
with
Karan
has
run
for
eight
seasons
on
Star
TV.

Some
specifics
of
this
analysis
may
change
if
the
buyer
is
RIL
or
the
Adani
group.

Business
Standard
has
learnt
that
much
of
the
discussion
is
happening
at
a
“family
level,
not
a
corporate
level”,
as
one
insider
puts
it.
That
means
it
is
an
Ambani
or
a
Goenka
in
direct
talks
with
Johar.

Does
this
mean
that
the
Rs
19,700
crore
(Rs
197
billion)
film
business
is
in
distress?

“There
is
no
question
of
distress;
this
is
a
cyclical
business
and
sometimes
cycles
are
longer,”
says
Siddharth
Roy
Kapur,
founder
and
managing
director,
Roy
Kapur
Films.

He
points
to
the
hit
horror-comedy

Stree
2:
“It
has
crossed
the
business
that

Pathaan
and

Jawan
did
in
2023
without
a
Khan,
Kumar
or
Kapoor.
The
numbers
are
telling
us
that
people
are
coming
back
to
the
theatres
in
even
larger
numbers
than
pre-COVID
for
content
that
is
compelling,”
he
says.

The
consumption
side
is
not
an
issue.

“Netflix,
Amazon
Prime
Video,
none
of
the
large
global
platforms
can
enter
China.
India
is
where
it
will
all
play
out
in
the
years
to
come,”
he
says.

On
the
supply
side,
“there
is
a
structural
change
underway”,
says
Ajit
Andhare,
chief
operating
officer
of
Viacom18
Studios.

A
film’s
profit-and-loss
account
factors
in
revenues
from
three
key
sources:
Indian
and
overseas
theatrical
(60
to
70
per
cent),
television
and
over-the-top
(OTT)
rights.

While
TV
and
OTT
help
cover
costs,
theatrical
brings
in
the
profit.
The
pandemic
temporarily
knocked
theatrical
revenues.
Then,
with
TV
reeling
from
slowing
advertising
growth,
the
price
it
pays
for
film
rights
dropped
by
anywhere
from
30
to
50
per
cent.
For
some
time,
this
didn’t
matter,
as
OTTs
were
pouring
money
into
films.

In
2023,
just
as
the
box
office
came
to
life,
nearly
all
the
major
streaming
platforms
pulled
back
on
content
costs.
The
fact
is,
the
buying
end
is
getting
consolidated,
with
mergers
like
PVR
Pictures-Inox
Leisure
and
RIL-Walt
Disney.
But
the
production
end
is
not.

“A
studio
must
have
four
to
five
production
engines.
In
the
West,
studios
fully
or
partially
own
boutique
firms,
giving
them
a
pipeline,”
says
Andhare.
“Disney
has
Lucasfilm,
Pixar,
and
Marvel,
among
others.
Consolidation
is
a
natural
step
in
the
evolution
of
this
business.”