Siddharth Roy Kapur thinks PVR-INOX merger is good for the movie business; here’s why

Anything that helps an under-screened India grow its movie screen count from the current 8,000-odd to match China’s 30,000 should be encouraged, prominent film producer Siddharth Roy Kapur said recently referring to the nearing completion PVR-INOX merger, despite concerns that the coming together of the two leading exhibitors may shrink producers’ share of box office revenues.

“We are such an under-screened market. If this (PVR-INOX merger) is going to help them to expand and move into other cities and increase the number of screens from the 8,000 we are languishing at, anything that helps the overall industry should actually be encouraged,” Kapur, Founder and MD of Roy Kapur Films, told Business Today on the sidelines of the India International Film Tourism Conclave on Friday.

The former president of the Producer’s Guild of India pointed out that it is in no one’s interest in the value chain to try to slice the pie any differently. “We need to work on making that pie much bigger and we are aligned on that now,” he said.

On March 27, the country’s top two multiplex chains – PVR Limited and INOX Leisure – announced a surprise merger to create the largest film exhibition company in India, after the pandemic decimated their revenues due to multiple lockdowns. The combined entity, to be called PVR INOX Limited, will operate 1,546 screens across 341 properties in 109 cities. Both the companies have received their respective shareholders and creditors approval for the proposed amalgamation. We expect that the NCLT process will complete in the next 3-4 months, PVR said in its note with Q2 results on Monday.

But news of the merger had not gone down well with producers who worried that it would seriously affect their bargaining power. During the first week of a release, the money is equally divided between the producer and exhibitor. The equation starts to change from the second week – it is 42.5 per cent for the producer and 57.5 per cent for the exhibitor; in the third week, it is 37.5 per cent and 62.5 per cent, respectively. Once the film enters the fourth week (most releases do not get that far) and till it is pulled off the theatres, only 30 per cent goes to the producer, with the larger 70 per cent in the exhibitor’s pocket.

In the wake of the merger announcement, producers had told Business Today that it spells trouble for them even if the combine decides to hike its proportion by 2 per cent in the first week, when collections are normally the highest.

Kapur, however, does not agree that will happen because all stakeholders are focused on value creation, which is what will help everyone in the future. “I believe every player is looking at value creation rather than slicing and dicing revenue in different ways…If we are going to be squabbling about 2 per cent here or there, we are not going to be growing our screens from 8,000 to 30,000, which is what China has and which is what we need to do. I have a feeling everyone in the industry is aligned to it.” 

Also read: PVR reports Rs 71 cr loss in Q2 as Bollywood’s underperformance continues to hit margins

Also read: Rs 2,300 or Rs 1,700, where is PVR headed after Q2 loss?