equity market for the Bollywood industry

Some days ago I had a interesting conversation with one of my friends and he put forward an idea which I think is worth sharing. I am not aware of the legal and financial implications of that idea but I think when the idea is strong, regulations can be dealt with, easily (otherwise what is the use of lawyers and CA’sJ).

This idea relates to film industry. We all tend to have a preconceived notion that if a movie has a great actor( Amir khan), actress ( ash) , play back singer(Lata Mangeshkar), musician (A.R. Rahman), lyrics composer (Guljaar) ,Director (asutosh gowariker) and a great team then that movie would definitely be a super hit ( I have heard many people predicting that a movie would be a great success just because it has Aamir Khan in it, and its true most of the times too!). Also if people are asked to bet on that movie then they will definitely go for it. So why can’t a producer hire Amir khan, Lata Mangeshkar, A.R. Rahman, Asutosh gowariker etc? Well, the answer is very simple and it is “ the Budget” ( Where is the money? ). Hiring the above said people will make the total cost around Rs 200 Cr. But once a producer has these personalities in the movie, a lot of people would be interested in betting on the movie.

So here opens the equity market for the Bollywood industry. People want to play big bet on the movie which they think will definitely be super hit and want to share some profit margin earned by the producer. But with a small amount in hand, they are not capable of investing their money in the movie. In the current scenario when the film producers are not finding it easy to raise money through debt or borrowing, there is a huge opportunity to involve these people into movie making. A film producer can issue an initial public offer (IPO) for his movie, once his team is ready. He can invest the amount he is capable of investing and the rest can be raised from the market. People will subscribe for the public offer based on the team members. Once the movie is released, revenue would be divided based on the no of shares held. Every month, revenue can be shared among the shareholders and the promoters. This is how both the parties can achieve their desired goal. I accept that there are many pit-falls in this concept like transparency (which actor would disclose his signing amount?), promoter’s honesty, etc. But I think once the idea is strong we can find out the way to deal with these pit-falls. After all, we shouldn’t forget that ‘an Idea can change our life’J.