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How B4U’s expansion plans can go sour with Relativity Media’s financial crisis

MUMBAI: B4U Network’s plans to launch a new pay TV channel, set up a digital streaming technology platform and produce a wide slate of movies have possibly gone sour with joint venture partner Relativity Media reeling under deep financial crisis.

lakshmi_mittal_uk_richest_mThe JV, promising to invest $100 million, would have given B4U Network, which is controlled by steel magnate Lakshmi Mittal and London-based industrialist Gokul Binani, a big push in India. While having a stronger business in some of the overseas markets, B4U’s Hindi movie and music channels have been struggling to move up the ladder in the Indian market that is dominated by bigger broadcast networks.

The two companies had also signed a deal with Balaji Motion Pictures to produce three movies. Balaji Telefilms joint MD and creative director Ekta Kapoor had then said, “The co-production tie-up brings us unprecedented access to Relativity’s catalogue past and future, and allows for the films to be re-imagined for India. Relativity boasts an exciting array of films and a creative collaboration with Relativity is something that excites all of us at Balaji.”

Though rescued from near bankruptcy by Toronto-based Catalyst Capital Group, Relativity Media will not have a cash pot that will allow it to splurge on the Indian JV company.

Catalyst has acquired all of Relativity’s senior secured debt amounting to $150 million. Besides, the Canadian investment firm is investing $170 million of equity. However, Relativity Media is not free of its clutch of debt-holders, including Colbeck Capital, and is in negotiations with them for a one-year payment extension.

Relativity Media will need to focus on bigger issues and keep alive the high-profit projects rather than spread thin its resources. A problem with the company has been that its recent movies have not done well at the box office. The US-based entertainment company’s other challenge is to cut down on its large overheads, which cannot be sustained by a business model that focuses on films that earn less than $100 million worldwide.

Although Relativity Media is planning to raise capital through an initial public offering (IPO) next year, its fate is uncertain at this stage. The company has made movies like ‘The Fighter’, ‘Three Days to Kill’ and ‘The Best of Me’.

“It is unlikely that Relativity Media would actively invest in the Indian market at this stage. B4U’s growth prospects through the JV will have to wait,” said a media analyst.

B4U and Relativity Media were planning to co-produce and distribute Indian-language films and television shows. The JV would also distribute future Relativity films and other select entertainment content in India and the surrounding regions.

Moreover, the two companies had revealed plans to launch a pay TV channel focused on Hollywood content in both English and Hindi, besides a digital streaming technology platform called RelaTV to deliver short- and long-format content to Indian consumers.

ishansaksena001An email questionnaire sent to B4U CEO Ishan Saksena remained unanswered till the filing of this report.

In India, B4U owns and operates two channels, B4U Movies and B4U Music. The two channels are also available in the US and the UK.

B4U also has a strong presence in Middle East where it owns and operates an Arabic-dubbed Bollywood movie channel B4U Aflam and a hybrid movie and music channel called B4U Plus.

The company has a full-fledged theatrical distribution unit through which it distributes Bollywood and South Indian films worldwide.

The Relativity–B4U JV has so far distributed only one Hollywood film, ‘The Best of Me’, in October. It is slated to release its second film ‘The Transporter Refueled’ on 4 September in English, Hindi, Tamil and Telugu.

In terms of producing local-language Indian films, the JV is in the process of completing its first project, the Huma Qureshi- and Shakib Salim-starrer ‘Zahhak’, which is a remake of American psychological-supernatural horror film ‘Oculus’.

Ryan-Kavanaugh02Speaking at FICCI Frames earlier this year, Relativity Media CEO Ryan Kavanaugh had shed more light on the JV’s plans going forward.

Kavanaugh had said that the JV planned to remake three to five of Relativity’s Hollywood films in local Indian languages annually. The languages being explored were Hindi, Tamil, and Telugu. The aim, he had stated, would be to make movies that were rooted in India, but could also travel abroad.

Apart from ‘Zahhak’, the JV was also planning to remake 2014 French–American action thriller ‘3 Days to Kill’ and upcoming heist comedy ‘Masterminds’.

Besides remaking Relativity films, the JV was also planning to co-produce a movie with Farhan Akhtar and Ritesh Sidhwani’s Excel Entertainment.

It had also inked a deal with EuropaCorp to release films of international studios in the country and take Indian films to international markets.

Relativity-MediaWe are in India for the long haul. We are not here to do quick business. Each year, we will remake three to five of our films in India. Our aim is to open India to the world. We believe that we can converge two worlds. We aim to build a business that will last for a century,” Kavanaugh had said at the media conclave.

Kavanaugh had also boasted how 85 per cent of the movies that Relativity made earned money. The key to Relativity’s success was that it shot films in places that offer tax incentives, and unlike bigger Hollywood studios, it did not have the legacy infrastructure.

B4U will now have to wait for Kavanaugh to turn around Relativity Media before the JV gets to drive in high gear.

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