Synopsis : Inaugural Session

Distinguished Guests:

1. Ms. Aishwarya Rai- Lighting of the lamp
2. Mr. Vilasrao Deshmukh, Chief Minister, Maharashtra- Address on state policy
3. Mr. R.S. Lodha, President, FICCI- Welcome address
4. Mr. Yash Chopra, Chairman, Entertainment committee, FICCI-Opening observations
5. Mr. Bobby Bedi, Convener, FRAMES 2002- Theme of the convention
6. Mr. P.P. Vora, Chairman & Managing Director, IDBI- "A year of film financing"
7. Mr.Subrata Roy Sahara, Mg. Worker & Chairman, Sahara India Pariwar- special address
8. Mr. Pawan Chopra, Secretary, Ministry of I&B - Special address
9. Mr. Kamal Hassan - Special address
10. Mr. James Murdoch, Chairman & CEO, STAR Group- Keynote address Launch of FICCI- NASSCOM- TIE "e-Entertainment Alliance"
11. Mrs. Sushma Swaraj, Union Minister for Information & Broadcasting- Inaugural Address

SESSION SYNOPSIS

MS. AISHWARYA RAI

The inauguration of the FRAMES 2002 was a grand and elaborate event. It was full of a heady mix of power and glamour reflected through the dignitaries who had come to grace the occasion.

The proceedings started by the presentation of welcome bouquets by Mr. R. S. Lodha, President FICCI to the honorable Chief Minister of Maharashtra and to the Honorable Minister for Information and Broadcasting.

Miss Aishwarya Rai lit the traditional lamp to signal the start of the session.

MR. R.S. LODHA

Mr. Lodha, then gave the welcome address and recalled the historic announcement made by Mrs. Sushma Swaraj at a FICCI seminar some time ago according industry status to the business of entertainment.

He reaffirmed FICCI's role as a promoter and facilitator for bringing in policy changes for the betterment of the entertainment industry.

By virtue of having deep roots into entertainment, Mr. Lodha believed that India had the potential of being a leader in the field of entertainment as 'entertainment was the nation's core competence'. And, its convergence with IT would surely make entertainment the industry of the future.

Mr. Lodha announced the formation of the Multiplex Association of India.

He also announced the release of the third FICCI Anderson report.

Another report was released in partnership with Amarchand and Mangaldas on the entire legal structure for the entertainment industry.

MR. VILASRAO DESHMUKH

The Honorable Chief Minister of Maharashtra, Mr. Vilasrao Deshmukh, spoke on the state policy with regard to the entertainment industry.

He expressed his Government's willingness to not only provide support but also to be partners in the growth of the entertainment industry.

As a proof of his government's commitment, he talked about the various tax benefits awarded to the entertainment industry. He made a mention of the multiplex policy declared by the government.

He expressed his happiness over the modernization work of Dada Saheb Phalke Chitra Nagari which housed 16 state of the art air conditioned studios and other production facilities.

He said that the film institute coming up in collaboration with Mukta Art would fulfill the country's needs for trained manpower.He considered the proposed Global uplinking at the film city as also a matter of pride.

He congratulated FICCI on successfully widening the scope of the global convention from film and television to areas like live entertainment, music, and financial and legal aspects.

The two streams of film and television, and computer and telephone were being converged resulting in better quality and reliability to the consumer. He also mentioned that the advancement in technology was to be used not only for entertainment but also for the welfare and rural development.

He concluded his speech by reaffirming his faith in the vision of a great future for the Indian entertainment industry.

The next speaker called on the dais was Mr. Yash Chopra, Chairperson of entertainment committee of FICCI.

MR. YASH CHOPRA

He expressed his gratitude to Mrs. Sushama Swaraj for having accorded the status of industry to the business of entertainment. He also talked about IDBI's commitment to set aside Rs. 100 crores for lending to the film industry.

He extended his best wishes to Amir Khan and his team of Lagaan for success at the Oscars.

He referred to the presence of Mr. James Murdoch at the FRAMES 2002 as an indication of world's attention towards India's potential in this field. He said, "Mr. James Murdoch's presence here today is the indicator that world media and entertainment corporates have sensed our potential. All the big names are already present here and are interested in expanding their business operations. All of them: Universal, Sony, Star, CNN, BBC, and all the best, and the rest are ready to follow."

He commended the efforts made by FICCI and he mentioned the first ever meet of state and I&B ministers brought about by the efforts of FICCI where the states agreed to a ceiling of 60% in entertainment tax which marked the beginning of a brighter future for the entertainment industry.

Yash Chopra announced with great fervor the collaboration between FICCI, TIE, and NASSCOM for the formation of an E-entertainment alliance where all the three organizations would pool their respective strengths.

He concluded his speech by remarking about the resilience and fortitude of the Indian film industry, which had overcome skepticism, derision, piracy, lack of infrastructure and had tremendous vision and drive.

MR. BOBBY BEDI

Mr. Bobby Bedi, Convener FRAMES 2002 was the next speaker who spoke on the Theme of the Convention.

He said, "I draw this year's theme from the Finance Minister's budget speech, as has been said earlier. He has seen in us the potential of the IT sector. We have the people and we have the creative talent. Let us devote this next couple of years to this challenge".

He said that there were sessions on innovative financial structures, venture capital, and formal legal structures for the entertainment industry. The sessions would also include various aspects of doing business.

He reaffirmed that the Indian entertainment industry was gearing up to play the international field. The Anderson report was an indication of the industry's progress. The law book by Amarchand Mangaldas was leading the industry into the international frameworks of the legal system of entertainment. There was also a study of financial structures by the bank, which would take the whole process further.

MR. P.P. VORA

The next speaker was Mr. P. P. Vora, Chairperson, M.D., IDBI.

He expressed gratitude towards the ministry of I&B for notifying film financing as an eligible activity. This made it possible for IDBI to finance films which they started from March 2001 onwards. He presented the statistics that in the past one-year 9 films were financed by IDBI and he drew applause by saying that money would not be a constraint for a viable project.

For this, there were certain requirements to be met by the industry.

Corporatization would be the first benchmark.

A detailed script, which would be examined by an advisory committee.

Transparency and standardization.

Insurance companies must come forward to cover the risks involved in filmmaking.

Completion bonds were also needed.

Strict measures to prevent piracy and infringement of the copyrights were to be put into place.

He spoke about the guidelines issued by the Reserve Bank of India that commercial banks could also extend financial assistance up to Rs. 5 crores for a maximum budget of Rs. 10 crores per film. He was sure a consortium of some sort could be worked out with the other banks.

He stated that bank financing would be of tremendous advantage to the industry as financing from other sources cost the industry at the rate of 30-48% whereas from the banks would cost them at the rate of 16-16.5%, which was less than half.

He made a point to the I&B Minister that under section 36(18) of the income tax act, the income from the development financial institutions was exempted up to 40%, provided the income was for a long-term loan of a period of more than 5 years. Now, since film financing could never be for that long a period, this rebate was denied to the bank. Hence, Mr. Vora requested the honorable Minister to make available this benefit in the case of film financing too.

He concluded by expressing hope that in the two days of the convention a lot of fruitful deliberations would take place and would result in bright prospects for all.

MR. SUBRATA ROY

Mr. Sushanto Roy apologized for the absence of his father, Mr. Subrato Roy, chairman, Sahara India Parivar, and read out a message from him.

His address began by defining entertainment as food for the emotional aspect of a human being. An aspect, which provided peace and harmony to the world if all its needs were fulfilled. Its needs were fulfilled by artistic activities such as music, dance, and drama, which were the popular modes of entertainment among the masses.

He said, "Romance, joy, sadness, laughter, and anger, jealousy, hatred, love, attachment, etc. are all different facets of emotion. Eventually, the basic purpose of entertainment could be served only if emotional aspects are deeply activated".

He thus saying made an appeal to give very high priority and importance to entertainment and he expressed his best wishes to FRAMES 2002.

MR. PAWAN CHOPRA

Mr. Pawan Chopra, Ministry of I&B commended the fact that the Frames convention of the previous year had provided valuable inputs in the form of Arthur Anderson report and the film industry had diligently followed up with structured and positive responses, which went a long way in policy making. He was hopeful that this year too there would be similar inputs.

He suggested that although a lot had already been achieved, there was still a lot that needed to be done and expressed his belief that the Indian entertainment industry had as bright a future as the IT industry.

The industry and the ministry were both working together in formulation of solutions of the problems and concerns that had been highlighted.

The most important and remarkable change that he could see around him was the change in the mindset of people regarding the globalization of the industry and the foreign market, not only with regard to the Indian Diaspora but also the crossover audiences.

He said that the basic concern remained about financing. Capital had to be accessed from a larger catchment area by finding various ways of attracting finance not only through the mechanism of loans but venture capital and also inviting foreign content creators.

He expressed delight over the reports of Twentieth Century Fox and other large foreign international players planning to move into the area of production and acquisition of rights of Indian films.

The other important area was the setting up of institutional arrangements for risk management as this industry was fraught with risks.

He spoke about the concern expressed in the past of the movement of skilled people overseas. He reasserted that his government was advocating free movement and would watch the results of liberalization keenly.

He concluded his speech by highlighting the fact that the multilateral binding under the 'general Agreement On Trade and Services was coming up requiring a finalization of India's stand with respect to audio-visual services.

MR. KAMAL HASSAN

Kamal Hassan was emphatic in his statements and earned the title of being the provocateur for change.
He believed that Indians needed to prove their talent to the world through deeds and not just through claims.
Indians also needed to shed the traditional biases and needed to be anticipate and accept change. He said that India should not hesitate to borrow from the west their operational systems.

He explained corporatization as the 'most practical and the least expensive system of recovering investments.' He saw light at the end of the tunnel through the coming together of financing sectors and entertainment. Such seminars as the present one were steps in the right direction.

He pleaded that there should be no delay in the implementation of new revolutionary measures by the government. Transparency and stringent anti-piracy laws were the need of the day.

He made two pleas to the government on behalf of the South Indian Film industry:

1. To raise the tariff nationally with the price based on the expectation and demand situation.
2. Equality in taxation for all states.

Kamal Hassan concluded his hard-hitting speech by quoting the Gandhian maxim that he himself followed: "Instead of shouting for change, become the change!"

MR. JAMES MURDOCH

James Murdoch, CEO, Star Group, was the next speaker to make his presentation.

He asserted the policy of his group that although Star might be a multinational group, yet its business in India had a distinct Indian flavor. He said the content of the programs was by Indians and for Indians. The focus was to create great entertainment and a lasting bond. He said he was proud that his group had made a major contribution in the development of the broadcasting and the cable industry in India in the past one-decade. The advent of satellite television had given rise to a whole new breed of cinematographers, scriptwriters, and directors; opening up new avenues and career options in the field of entertainment.

He said that the reason why the local entertainment industry had exploded in India was because of the vibrancy and diversity of its culture and its creative community.

He stated that the consumers were liking the choices that they had and preferred the Indian channels over even BBC and CNN. But the consumers were also facing problems from the independent cable operators in the country. He very categorically said, "The problem is not that there is a middleman, the problem is that this middleman is making a mess."

He said that he would like to address the tricky issue of multi channel distribution in India. The biggest malady that ailed it was the pervasive under declaration which was to the extent of 85% in some areas and the broadcasters were getting a paltry 5% of the total subscription revenue. As compared to this, in countries like Japan and Australia, broadcasters collected up to 35% of subscription revenue. Other countries like Thailand, Malaysia, and Singapore, it was up to 30%. This money was put back into the system to provide better content and facilities.

In India, Rs. 2000 crores was stuck at the sub-operator level which should otherwise be flowing through the system. These practices amounted to copyright thefts and major efforts were needed to combat these forces.
The solution put forward by the interested lobbies was that conditional access system be made mandatory by the government and in the mean time the rates by the broadcasters be held steady. This was misguided. There was no connection between under declaration and conditional access.

He said, "What conditional access should mean was a pathway to further investments. It meant the ability to introduce subscription management systems, the allocation of identification codes, to build out and maintenance of 24 hours call centers, tiering, paper view etc."

He suggested the following measures out of this problem:

1. 100% subscriber declaration to be made.
2. Incentives to be given to operators to grow their customer base and provide more predictable pricing plans to its customers.
3. Broadcasters should have a frank and free exchange about rate adjustments.
4. The current rates needed to be scrapped and true rates to be established.
5. Competition was the best weapon for reform, as it would put the independent operator under pressure.
6. A relaxed DTH policy.
7. Freedom from onerous restrictions and tax regimes.
8. MSOs needed to get together with the broadcasters to clear the way for a better and bright future.

He concluded by saying, "Producers, broadcasters, MSOs, and ultimately sub-operators, all must stand together for a modern, transparent, and legitimate industry." Only then would the entertainment industry achieve its full potential.

Dr. Amit Mitra announced three major launches:

1. The launch of the Anderson-FICCI report.
2. A law report by Amarchand and Mangal Das in association with FICCI.
3. FICCI, TIE, and NASSCOM came together to form an E-entertainment alliance.

Mr. Kiran Karnik, President NASSCOM expressed his pleasure at this alliance which signified the coming together of IT and entertainment.

Mr. Harish Mehta, Founder member, TIE declared that TIE's focus in India was to promote and help create an environment for innovation driven entrepreneurship to flourish.

He hoped that this alliance would help India realize its potential in the field of entertainment.

MRS. SUSHMA SWARAJ

The Honorable Minister, Mrs. Sushma Swaraj then spoke in length about the efforts put in by the government to make this industry successful.

She emphasized that FRAMES helped in providing valuable inputs which were used by her government for policy making.

She pointed out that all the various sectors like film, television, music, advertisement, and event management had all consolidated their positions and were moving forward. Certain concessions had been announced and still a lot more was required. Some of the steps taken by the government to promote and facilitate the industry were:

1. Permission had been granted for 100% FDI by automated route in the entertainment and advertising sectors.
2. Cumbersome import procedure for films from oversees had been done away with.
3. Co-production agreements were being considered.
4. Rs. 10 million had been earmarked in the tenth five-year-plan for a new scheme which was being planned for promotion of Indian films.

Mrs. Sushma Swaraj expressed her happiness about the Indian Pavilion being set up at Cannes Festival and was hopeful that a great Indian film personality could be felicitated at the festival.

She wanted the industry to honor oversees sales and territory agreements as there had been complaints in this regard. It must focus on GATT.

Three areas of concern remained for the government:

1. Piracy had not been checked in spite of efforts put in.
2. The galloping subscription rates in the cable industry which was hurting the consumers.
3. Content creation and development should be met by domestic supply.

She summed up by predicting a bright future for the Indian entertainment industry and said that her government would not lag behind in meeting the expectations of the industry people.

The summing up speech was given by Mr. Farokh Balsara, Partner, Anderson.

His observations were:

For Films:

• Entertainment industry was the industry of the future. Its growth had been second only to the IT industry.
• The number of movies produced in India was far more than Hollywood but the investment per film was fairly low and better quality movies were needed with more investment.
• Various new areas for revenue generation like DVD; video sales, video rentals were needed to be explored without depending only on box office sales.
• The number and quality of theaters was to be improved.
• Indian movies had to look at audiences abroad, Indian Diaspora as well as others.
• Speeding up of the move towards corporatization would result in good movies made in record time with discipline and professionalism.
• IDBI was the only institution providing finance, more such avenues were needed.
• The tax incentives to multiplexes was welcome.
• Further reduction in entertainment tax was needed.
• Piracy was a big problem.
• The signing of MOU between film producers and the cable operators was a good beginning.
• Film fraternity had to move towards digital technology.

For Television:

• The growth in the television sector was the fastest.
• The increase in subscription was leading to an increase in broadcasters revenue.
• Because of bouquetization, niche channels were getting on the common platform thus bringing in the revenue deserved by the quality products.
• Another positive was the uplinking from India being permitted by the government.
• Addressability and conditional access was leading to consolidation on the ground level and serious money was put into the cable television.

In the music sector, the growth was not very positive with just 8%. The report had predicted an 18% growth. Hindi film music rights were expensive to acquire. There was a need for alternative methods of acquisition of music rights. The practice of the retailer returning the unsold music cassettes and CDs to the music company impinged on the margins of the music companies.
Piracy needed to be checked.

CD prices were falling which would lead to growth.

For Radio:

• The reach of radio which is 08% of the total population is phenomenal but in terms of advertising spent on it a lot needed to be done. In India it is 2.5% as compared to 6-7% the world over.
• Government had issued 10 licenses but only 4 companies had gone into operation so far.
• The reasons for the slowdown were high licensing fees, auction, ban on news and current affairs on radio stations, integration of content was not allowed. These needed to be looked into.
• With the entry of organized players, the live entertainment segment was expected to grow by 30% over the next 5 years.

Mr. Amit Khanna, Chairman Convergence Committee, made the concluding observations.

He reiterated that the attitude within the industry towards change had to change.

He made the observation that the global media entertainment industry was expected to be $ 1.1 trillion by 2005 and if India was to get only 0.5% share of the global pie, it would mean $55 billion industry in 2005. That was the potential of this industry. What was required was introspection, regulatory framework, convergence bill to be cleared as early as possible, ironing out of the voices of dissent, and most importantly, money needed to funneled back into the system.

He concluded on the positive note that during the course of the seminar, efforts would be made to create a road map to reach the magical figure of $50 billion which was definitely attainable in the next 3-4 years.