Will Poonawalla Let Karan Johar Thrive?

A
non-strategic
investor
like
Adar
Poonawalla
brings
in
not
only
capital
but
also
creative
freedom.
Indian
cinema
needs
more
investors
like
him,
reports
Vanita
Kohli
Khandekar.

A
new
story
is
unfolding
on
Indian
cinema
screens.

In
the
early
1990s,
Karan
Johar
topped
the
Maharashtra
state
board
exams
for
commerce.

Since
he
already
held
a

diplome
superieur,
he
decided
to
go
to
Paris
and
do
an
additional
course
in
French.
However,
Johar,
a
South
Bombay
lad,
was
also
a
closet
Hindi
film
buff.
He
had
been
helping
his
childhood
friend,
Aditya
Chopra,
write
his
first
film.

Three
days
before
he
was
scheduled
to
board
his
flight,
Chopra
called
him
and
said,
‘You
are
meant
for
the
movies.
You
will
be
a
film-maker
one
day.
Why
can’t
you
see
it?’

He
urged
Johar
to
assist
him
on
the
project.
Much
of
this
is
captured
in

An
Unsuitable
Boy
(Penguin,
2017),
Johar’s
autobiography.

Dilwale
Dulhania
Le
Jaayenge
(1995)
went
on
to
become
one
of
Indian
cinema’s
biggest
successes
after

Sholay,
a
cult
classic
that
ran
theatrically
for
over
25
years.

Together
with
Sooraj
Barjatya’s

Hum
Aapke
Hain
Koun
(1994),
it
opened
the
overseas
market
for
Indian
films.

Chopra,
Johar
and
Barjatya
were
among
the
first
to
tap
into
the
changing
needs
of
the
audience
that
a
liberalising
India
was
creating
in
the
early
’90s.

Last
month,
Johar
tapped
into
another
long-pending
‘business’
need
and
set
a
trend.

Johar,
now
52,
will
be
selling
half
his
stake
in
Dharma
Productions,
the
company
he
owns
and
runs
as
executive
chairperson,
to
Adar
Poonawalla’s
Serene
Productions
for
Rs
1,000
crore
(Rs
10
billion).

Dharma
has
become
the
first
family-owned
production
house
to
seek
outside
capital;
expect
many
more
to
follow.
One
report
suggests
that
Excel
Entertainment,
owned
by
Ritesh
Sidhwani
and
Farhan
Akhtar
(Don,
Dil
Chahta
Hai,
Gully
Boy),
might
be
raising
funds
through
a
deal
with
Comcast’s
Universal
Studios.

This
is
where
the
story
moves
to
the
future.

Dharma,
set
up
in
1976
by
Johar’s
father,
had
some
hits
like

Dostana
(1980)
but
never
made
it
to
the
big
league.
Johar
revived
it
with
his
directorial
venture

Kuch
Kuch
Hota
Hai
(1998).

He’s
gone
on
to
become
an
influential
figure
in
Indian
cinema,
a
model
and
a
TV
host
(Koffee
with
Karan).

Dharma
has
nurtured
talented
young
directors
such
as
Shakun
Batra
and
Ayan
Mukerji.
Its
repertoire
of
45
films
include

Kal
Ho
Naa
Ho
(2003),

Kapoor
&
Sons
(2016),

Two
States
(2014)
and

Shershah
(2021).

However,
growth
has
been
inconsistent.
Dharma
recorded
revenues
of
Rs
278
crore
(Rs
2.78
billion)
in
FY22,
surged
to
Rs
1,044
crore
(Rs
10.44
billion)
in
FY23,
but
dropped
to
Rs
520
crore
(Rs
5.2
billion)
this
year.

This
is
true
for
most
of
India’s
one-man
or
one-woman
production
houses.

While
Yash
Raj
Films,
T-Series,
and
Excel
Entertainment
produce
high-quality
work
and
deliver
some
of
the
most
successful
films
and
OTT
(over-the-top)
shows,
sustaining
steady
growth
is
challenging.

Unless
a
part
of
a
bigger
company
like
Jio
Studios,
the
hit
and
miss
nature
of
the
movie
business
makes
it
impossible
to
hold
steady.
More
so
in
a
market
that
is
transitioning.

Films
(total
revenue:
Rs
19,700
crore/Rs
197
billion),
streaming
(Rs
31,000
crore/
Rs
310
billion)
and
television
(Rs
70,000
crore/
Rs
700
billion)
continue
to
see
growing
consumption.
However,
consolidation
has
reduced
the
number
of
buyers
for
professionally
generated
shows
and
series.

Major
buyers
now
include
PVR-Inox,
Reliance-Disney,
Netflix
and
Amazon
Prime
Video.
The
other
big
players,
YouTube
and
Meta
don’t
need
production
houses;
they
use
billions
of
hours
of
user-generated
content.

This
consolidation
at
the
buying
ends
means
a
pressure
on
costs,
creative
freedom,
and
a
lack
of
choice
on
where
a
show
or
a
movie
could
sell.
That
is
why
scale
is
critical.
It
acts
as
a
buffer
against
the
vagaries
of
the
business.
It
also
puts
a
production
house
in
a
better
position
to
negotiate.

But
scaling
up
in
a
creative
business
is
tough
globally
and
so
is
getting
the
money
to
do
it.
A
non-strategic
investor
like
Poonawalla
brings
in
not
only
capital
but
also
creative
freedom.
Indian
cinema
needs
more
investors
like
him.

In
the
old
days
when
kings
and
queens
ruled
us,
performing
and
other
arts
were
about
patronage.

Over
time,
this
changed.

The
Indian
film
business
once
had
a
well-oiled
studio
system
but
it
imploded
in
the
aftermath
of
the
Second
World
War.
Since
then,
film-makers
have
struggled
to
secure
funding.

Parallel
cinema
found
its
patron
in
institutions
like
the
National
Film
Development
Corporation
and
in
people
like
Manmohan
Shetty.
The
founder
of
Adlabs,
Shetty
supported
parallel
cinema
by
producing
films
like

Chakra
(1981),

Ardh
Satya
(1983),
and

Hip
Hip
Hurray
(1984),
among
others.

Others
turned
to
builders
and
businessmen.
And
during
a
particularly
bad
phase
in
the
1980s,
underworld
money
came
into
cinema.

Much
of
this
changed
after
films
were
granted
industry
status
in
2000.
The
raising
of
money
through
public
listing
(Adlabs,
Balaji,
Mukta),
through
private
equity
and
venture
capital,
or
banks,
all
became
possible.
In
2008,
a
wave
of
foreign
studios
such
as
Fox,
Eros
and
Disney
entered
India.

While
the
retail
side
(multiplexes)
continued
to
absorb
capital
and
grow,
much
of
the
capital
chasing
the
content
side
struggled
due
to
the
infancy
of
the
business.
Nevertheless,
this
phase
helped
put
in
systems
that
ensured
production
houses
were
ready
when
the
OTT
boom
happened
post-2016.

This
round
of
capital
raising,
then,
is
a
healthy
sign
of
looking
for
growth
to
handle
the
challenges
of
the
business.
There
might
even
be
a
case
for
a
private
equity-backed
company
aggregating,
say,
half
a
dozen
production
houses
into
one.

Candle
Media,
a
Blackstone-backed,
Los-Angeles-based
firm
founded
and
run
by
Disney
veteran
Kevin
Mayer
does
that.
An
investor
like
Poonawalla
could
similarly
aggregate
everything
from
Excel
and
Roy-Kapur
Films
to
Applause
and
Arka
Media
Works,
bringing
much-needed
scale
and
negotiating
power
to
smaller
production
firms.