Paid reviews up to Rs 60k per tweet behind the slow death of Karan Johar's Dharma Productions?

Mumbai: In a move that could significantly reshape the landscape of Bollywood film production, Reliance Industries Ltd (RIL) is reportedly in discussions to acquire a stake in Karan Johar's Dharma Productions. This development comes hot on the heels of earlier reports suggesting that Saregama was eyeing a majority stake in the renowned production house. The potential deal, as reported by The Economic Times, would further solidify the oil-to-telecom giant's position in India's content production sector.

While the exact size of the stake under negotiation remains undisclosed, industry insiders suggest that Karan Johar has been actively seeking to monetize his stake in Dharma Productions for some time. Previous attempts at striking deals reportedly fell through due to disagreements over valuation. Currently, Johar holds a commanding 90.7% stake in the company, with his mother, Hiroo Johar, owning the remaining 9.24%.

Dharma Productions' Track Record and Financial Performance

Dharma Productions has long been a powerhouse in the Bollywood film industry, boasting a strong track record of producing numerous box office hits. The company's financial performance in recent years further underscores its significance in the market. In fiscal year 2023, Dharma Productions saw a remarkable surge in revenue, nearly quadrupling to Rs 1,040 crore from Rs 276 crore the previous year.

However, despite this impressive top-line growth, the company's net profit experienced a 59% decline to Rs 11 crore. This drop was primarily attributed to a sharp increase in expenses, which escalated 4.5 times to reach Rs 1,028 crore. A breakdown of Dharma's revenue streams for FY23 reveals diverse income sources: Rs 656 crore from distribution rights, Rs 140 crore from digital platforms, Rs 83 crore from satellite rights, and Rs 75 crore from music. These figures represent significant growth compared to the previous year's earnings across all categories.

The Bollywood film industry has long been plagued by rumors of manipulated reviews and inflated box office numbers. Recent reports suggest that the practice of paid reviews has reached new heights, with some influencers and critics allegedly receiving up to Rs 60,000 per tweet to promote films. This revelation sheds light on the possible reasons behind Dharma Productions' recent "no press screening" policy and may contribute to a broader decline in the industry's credibility and financial performance.

Paid Reviews

Paid reviews have become increasingly prevalent in the age of social media, where a single tweet from a popular influencer can significantly impact a film's opening weekend performance. Production houses and marketing teams, desperate for positive buzz, have reportedly resorted to paying hefty sums for favorable reviews and social media posts. This practice not only misleads audiences but also undermines the integrity of film criticism and word-of-mouth marketing.

Dharma Productions, one of Bollywood's most prominent production houses, has recently implemented a "no press screening" policy for some of its releases. This decision could be seen as a defensive move against the potential negative impact of early reviews, both genuine and paid. By controlling the flow of information and delaying reviews until the film's release, Dharma may be attempting to mitigate the influence of both overly critical reviews and suspiciously glowing praise.

However, this strategy could backfire in several ways:

Lack of trust: Audiences may become skeptical of films that don't allow early reviews, assuming the producers have something to hide.

Reduced buzz: Positive early reviews can generate excitement and drive opening weekend attendance. By foregoing press screenings, Dharma may be missing out on valuable pre-release publicity.

Critical backlash: Film critics and journalists may resent being shut out, potentially leading to harsher reviews once the film is released.

The prevalence of paid reviews and the resulting defensive strategies adopted by production houses like Dharma could contribute to a broader decline in the Bollywood industry. As audiences become more aware of these practices, they may lose faith in the review system altogether, relying instead on personal recommendations or waiting for word-of-mouth to spread after a film's release. This shift could lead to:

Decreased opening weekend revenues

Shorter theatrical runs for films

Increased pressure on filmmakers to deliver genuinely good content

A potential shift in audience preferences towards more transparent international or independent cinema

Reliance's Growing Media and Content Portfolio

If the acquisition moves forward, it would mark a significant expansion of Reliance's already substantial media and content portfolio. The conglomerate's existing assets in this space include Jio Studios, Viacom18 Studios, Colosceum Media, and a minority stake in Balaji Telefilms. Notably, Jio Studios has emerged as India's largest film studio, reporting impressive box office collections of Rs 700 crore in FY24.

The studio's recent co-production with Maddock Films, "Stree 2," has achieved the distinction of becoming the highest-grossing Hindi film of all time. This track record of success in the entertainment industry positions Reliance as a formidable player in the content production sector, with the potential Dharma acquisition further cementing its dominance.

Saregama's Earlier Interest and Market Response

Earlier reports had indicated that Dharma Productions was in talks with Saregama, a part of the RP Sanjiv Goenka Group, to sell a majority stake. However, in an October 8 filing to the Bombay Stock Exchange (BSE), Saregama stated that there were no substantial updates on the matter at that time.

In response to these reports, Saregama India issued a statement to the stock exchange, clarifying its position. The company acknowledged that it regularly evaluates strategic opportunities for growth but emphasized that there were no material developments to report at that juncture. Saregama also affirmed its commitment to making necessary disclosures in compliance with applicable regulations, should any significant progress occur in the future.

Implications for the Indian Entertainment Industry

The potential acquisition of a stake in Dharma Productions by Reliance Industries could have far-reaching implications for the Indian entertainment industry. It would not only strengthen Reliance's already formidable presence in the content production sector but also potentially lead to synergies between Dharma's creative expertise and Reliance's vast resources and distribution networks.

Such a deal could pave the way for more ambitious projects, increased production budgets, and potentially wider global distribution for Bollywood films. Moreover, it might trigger further consolidation in the industry, as other major players seek to bolster their positions through strategic acquisitions and partnerships.

As negotiations continue, industry observers and Bollywood enthusiasts alike will be keenly watching for any official announcements. The outcome of these talks could very well set the stage for the next chapter in Indian cinema's evolving story, potentially ushering in a new era of corporate-backed, high-budget film production in Bollywood.