While Adlabs Films is into overseas distribution of films, the new company will tap the domestic market distribution as well.
The group is planning to invest Rs 400 crore (Rs 4 billion) in this business in 2006-07. The rationale for beefing up its presence in film distribution, according to sources close to the development, is to streamline the business.
Reliance Films will not only deal with theatrical distribution but also buy all other rights ranging from television, DVD, DTH, broadband, IPTV and overseas distribution rights.
"There is great potential in the business of trading films. The group is in the process of structuring a business model around various rights of a film. The proposed company is a part of this," the sources said.
When contacted, R-ADAG executives declined to comment. The company plans to distribute 24 films in the current financial year and raise the number to 40 next year.
Reliance Films will get into exclusive contracts with distributors, making the film a solely Reliance Films release worldwide.
Reliance Films will try to capture the entire value chain of filmmaking and will provide an exploitation platform for the producer. This means, Reliance Films will pay the producer the cost of production of a film and an additional 10 per cent as miniumum gurantee.
Under this arrangement, once the company recovers the guarantee amount from the market, profits will be distributed in a 50:50 ratio between Reliance Films and the producer.
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