Bombay Times spoke to the producer after the Competition Commission of India ruled in favour of the multiplexes on the Virtual Print Fee (VPF) issue
Rachana Dubey (BOMBAY TIMES; July 26, 2019)

Back in March, producer Ronnie Screwvala had filed case with the government body Competition Commission of India, against four multiplex chains — PVR, Inox, Cinepolis and Carnival Cinemas — and the FICCI Multiplex Association of India, alleging undue imposition of Virtual Print Fee (VPF). In his petition, the filmmaker complained that the multiplexes make Indian film producers/distributors cough up Rs 20,000 for every film screened, per screen as VPF.

On Wednesday evening, the CCI ruled the matter favouring the multiplex chains and their association, citing that there wasn’t enough reason or material for them to initiate a probe in the matter as Ronnie had demanded in his petition. The Commission observed that the general allegations made in the case, including lack of transparency in exhibition of trailers and promotions, do not fall within the ambit of the provisions of the Competition Act, 2002. The Commission was of the opinion that there exists no prima facie case warranting investigation into the matter.

Talking to BT about this, Ronnie said, “I have read the ruling from the CCI on the cartelization by the multiplexes and they have dismissed the petition on the grounds that it lacked documented proof of such misuse of collective power. My complaint was not an anonymous one which is normally how it starts. It was based on asking the CCI to launch a formal probe and investigation and they would have got all the documentation and proof they needed. But they have ruled on it and I respect and abide by their final view. I am disappointed, though not surprised, at the complete lack of support from all colleagues, producers, distributors and the creative community who in private commended the action. But not one individual, company or association supported my complaint as that would have gone a long way to endorse with the CCI the apparent practices that is common knowledge to all. I am a firm believer that there is a circle of life and in the end, truth always catches up with reality. So, I am sure that at an appropriate time there will be justice to this. Meanwhile, it’s business as usual for the multiplexes while fair play takes a back seat.”

Talking about the ruling, Kamal Gianchandani, the head honcho of PVR Cinemas, told BT, “I think the CCI’s decision validates what we have believed and said from the time this one particular matter came to the fore. I am thankful to them for viewing it objectively.”

To jog your memory, as a result of Ronnie’s petition, Inox Leisure had boycotted the film Mard Ko Dard Nahi Hota and refused to screen it (which was produced by Ronnie’s company). Reportedly, he was asked to withdraw his complaint, if he wanted the multiplex chain to screen his film. The producer, it’s learnt, had paid VPF to other multiplexes, albeit under protest, for his film to be screened. His petition described VPF as a draconian, discriminatory charge that the multiplex chains are forcibly imposing.

In 2010, following a discussion among producers, distributors and exhibitors, the process of transformation from physical prints to digital had started. Back then, it was agreed upon that VPF will be levied to support the transition for five years, which ended in December 2015. According to Ronnie’s complaint, the period was extended twice, following a verbal agreement between producers and distributors with the sunset clause till December 2017.

What is Virtual Print Fee?
Earlier, when films were developed from negatives, the distributors and producers had to pay a Print Fee to develop the print of their films. And the exhibitors used to bear the projector costs. VPF was first introduced to help make multiplexes compliant with Digital Cinema Initiaties (DCI), a technology that helps reduce cost, curbs piracy and enhances the movie-viewing experience. Since the technology was costly, it was agreed that the multiplex chains will charge Rs 20,000 per screen for each movie for five years to recover that cost, beginning 2010.
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Ronnie Screwvala reacts to the CCI’s order against his allegation of undue imposition of Virtual Print Fee by national multiplex chains; Kamal Gianchandani of PVR says it was not an industry issue
Himesh Mankad (MUMBAI MIRROR; July 26, 2019)

On March 19, Mirror had reported that Ronnie Screwvala had filed a case with the Competition Commission of India (CCI) against four multiplex chains—PVR, Inox, Cinepolis and Carnival Cinemas—and the FCCI Multiplex Association of India after the release of Sushant Singh Rajput’s dacoit-drama, Sonchiriya, for “anti-competitive collusion with respect to undue imposition of Virtual Print Fee (VPF)”. In his petition, the filmmaker had alleged that the multiplexes make Indian film producers/distributors pay Rs 20,000 for every film screened in their theatres as VPF. He described it as a “draconian discriminatory charge that the multiplex chains are forcibly imposing”.

We have now learnt that in its judgment passed on Wednesday, the CCI has given a clean chit to the multiplexes. “The informant (Ronnie) did not allege that VPF is anti-competitive per-se, rather, the allegation of informant pertains to its undue imposition after a certain period,” read the judgment. It observed that there is no formal/written agreement pertaining to imposition of VPF between producers and national multiplex chains, hence a ‘Sun-set clause’ doesn’t exist. The case was filed under section 3 of the Competition Act, 2002, which prohibits an association or enterprise from entering into anti-competitive agreement.

Ronnie, in his petition, had stated that following a discussion between producers, distributors and exhibitors in 2010, the transition from physical prints to digital started and a fee was agreed upon to support the evolution for five years till December 2015. It was extended twice, following a verbal agreement with producers/ distributors till December 2017. “But they have continued collecting VPF directly from distributors of Hindi and regional films,” he groused. Apart from VPF, Ronnie also raised concern over delay in release of payment by the multiplexes, lack of transparency over screening advertisements and inserting interval in films which don’t call for a break. These grouses didn’t fall within ambit of the Competition Act, 2002. The concluding lines of the CCI’s order read, “The commission does not find alleged contravention of the provision of Section 3 of the Act against opposite parties being made out.”

Kamal Gianchandani, CEO, PVR, reacted to the CCI’s order, saying, “It is a validation of the position we had taken all along.” He added that partners often have disagreements and he’s looking forward to the future because content producers and suppliers are integral to the business. “We are committed to working in a constructive fashion. I’m glad that the debate at the CCI forum is out of the way, this wasn’t an industry issue, but rather a disagreement with one producer,” he insisted.

Ronnie is disappointed that colleagues from Bollywood didn’t come forward to support him. He believes that CCI’s verdict would have been different had the film industry shown some unity. “Have read the ruling from the CCI on the cartelization by the ’plexes and they have dismissed the petition on the grounds that it lacked documented proof of such misuse of collective power. My complaint was not an anonymous one which is normally how it starts and was based on asking the CCI to launch a formal probe and investigation to all the practices and they would have got all the documentation and proof they needed. But they have ruled on it and I respect and abide by their final view. Am disappointed though not surprised at the lack of support from colleagues, producers, distributors and creative community who, in private, commended the action but not one individual, company or association supported my complaint as that would have gone a long way to endorse with the CCI the apparent practices that is common knowledge to all.”

He ended saying, “But I am a firm believer that there is a Circle of Life and in the end truth always catches up with reality so am sure at an appropriate time there will be justice. In the meantime, it’s business as usual for the ’plexes while fair play takes a back seat.”

Rachana Dubey (BOMBAY TIMES; March 28, 2019)

If murmurs in the Bollywood power blocs are anything to go by, heads of top studios, production companies and distributors are expected to hold a closed-door meeting today at the Indian Motion Pictures Producers’ Association (IMPPA) office. While it’s said that there are several issues on their agenda, one of the key reasons is Ronnie Screwvala’s battle against multiplex giants and the Multiplex Association of India.

Two weeks ago, Ronnie filed a complaint that highlights five grey areas in the film distribution and exhibition business, before the Competition Commission of India (CCI). While the petition rued the payment of Virtual Print Fee (VPF) to multiplex chains, it also highlighted the fact that the audience is forced to watch excessive amount of ads between films. Another point put forth by Ronnie was that foreign studios are exempted from the payment of VPF, which gives them an edge over domestic films.

Over the last 48 hours, Ronnie has been getting support from other filmmakers like Hansal Mehta, Dinesh Vijan, Ramesh Taurani and Anand Pandit, along with several independent voices on social media applauding his effort. Now, BT has it that various heads of filmmaking companies like Disney/Fox Star, Viacom 18, JIO Studios, T-Series, Zee Studios and Dharma Productions, distributor Anil Thadani, producer Siddharth Roy Kapur (President of the Producers Guild Of India) and producer Mukesh Bhatt (a longtime office-bearer at the Guild) are expected to meet to discuss ways of joining Ronnie’s existing complaint with CCI. Buzz is that some of them want to be appended as a party to the complaint.

We didn’t get a response from Mukesh and Sidharth till we went to press. 

BOMBAY TIMES (March 26, 2019)

BT reached out to Ronnie Screwvala for his side of the story. He said, “Firstly, I want to clarify that five serious matters will be under investigation with the CCI and are sub judice. So, I will not want to comment on them.” However, the producer answered our specific questions, from a personal point of view.

There are many large studios and producers doing many more movies than you. You have gone on record to say RSVP is a passion project and hobby, so why have you done this on your own ?
It’s about right and wrong. It’s about the theatre owners acting in collusion and the content industry is unfortunately not united. So, I had no choice but to act on my own rather than seek any form of consensus. Directors sell to producers, producers sell to financiers or studios and studios use sub-distributors. So, the accountability on these levied by theatres is just not understood. For me, it was the only way. And secondly, as a hobby, I have nothing to lose. I have learnt as an entrepreneur that the formidable opponent you can have is someone who has nothing to lose.

Normally, people file complaints before the CCI anonymously. Why did you decide to front it?
The five charges I have brought about are very serious and need a final solution, even if that means a face-off. The matter is now sub judice and so, I cannot comment more on it. But it would be a cop-out to not take full accountability for what you think needs to change.

Inox banned your movie because you fronted the CCI complaint. Do you feel victimised?
It’s all too petty. Inox has shown their high-handedness and I have nothing to comment on that. However, look at the double standard of an Inox — they will ban one of our new movies, but continue to run our URI in their theatres? Why? Because they are very clear that the movie has made them a ton of money and made their Quarter 4 look good, so they will not mess with it. Same way, they will not mess with Hollywood studios and continue with their discriminatory behaviour, which is at the core of my complaint.

What’s the financial impact for content creators and theatre owners?
For theatre owners, it’s clearly a reversal of a free lunch they have been enjoying for many years when it comes to VPF. It’s also a call to ban advertising in theatres, as it’s anti-consumer. The consumer has paid a ticket price to watch a movie and he/she is being subjected to a massive 15 minutes or more of advertising thereby driving him/her away from coming to the theatre. This has to stop. And for me, the theatre owner is a service provider — who would have nothing to show if the content creators did not take the primary risk to make movies and give it to them to run for a limited period and for a revenue share, which again needs to be corrected to a more equal footing. For content creators, they can save Rs 2 crore to Rs 8 crore per movie release — last week, Kesari released with 4,000 prints and so, at Rs 20,000 per print, that is a massive Rs 8 crore that Zee Studios would have saved on one movie. You can do the maths on what that would mean for the year. Also, no advertisements would mean shorter viewing experience for audiences and so more footfalls plus shorter intervals would mean more shows, too. If there is a balanced and long-term view taken by both sides, there is a win-win, but the content sector cannot suffer and pay for the growth of theatre owners when they are the higher risk takers in the value chain, creating the content in the first place. I hope better sense will prevail over high-handed approach to all issues.

So, you see the content creators coming out to support you?
I don’t know. What I do know is, they all have more to lose than I do personally. For me, all eyes are on Disney — they have always been clear there is no VPF to be paid and they did not pay on Dangal. And so, in the new avatar of all movies from Fox/Star inside the Disney umbrella, they would also not be allowed to pay any VPF. And that will be the beginning of the end of VPF. So let’s see what Disney does.

So, are you committed to see this through even with low support from your fellow content creators?
The writing is on the wall. The charges are serious and costly on both sides. This is a face-off that needs to be settled properly. I do want to add that I did make efforts to talk to the owners and management of the theatre owners, but got no coherent answer other than to say that they needed to hold on to their VPF fees and their high advertising due to their need to build more screens. Not one of them replied to my query as to why in India, Hollywood movies were given favourable treatment against Marathi, Hindi and regional language cinema. It’s totally anti-Indian and anti-consumer.

Filmmaker has complained that Indian producers/distributors are being forced to pay Rs 20,000 per theatre, something Hollywood films are exempt from
Himesh Mankad (MUMBAI MIRROR; March 19, 2019)

Ronnie Screwvala has filed a case with the Competition Commission of India against four multiplex chains—PVR, Inox, Cinepolis and Carnival Cinemas—as also the FICCI Multiplex Association of India for “anti-competitive collusion with respect to undue imposition of Visual Print Fee (VPF)”. In his petition the filmmaker has complained that the multiplexes make Indian film producers/distributors pay Rs 20,000 for every film screened in every theatre as VPF. He described it as a “draconian discriminatory charge that the multiplex chains are forcibly imposing”.

Following a discussion among producers, distributors and exhibitors in 2010, the process of transformation from physical prints to digital started and the fee was agreed upon to support the evolution for a period of five years till December 2015. But, according to the complaint, it was extended twice following a verbal agreement with producers and distributors with the sunset clause till December 2017. “However, they have continued collecting VPF directly from the distributors of Hindi and regional films,” the petition states, pointing out that Hollywood movies, even dubbed versions, are exempt from VPF and this gives them a competitive advantage over domestic films.

The petition brings to notice that 2016 Aamir Khan-sport drama, Dangal, produced by Disney was not charged the discriminatory fee owing to an arrangement with the foreign studio regarding the exhibition of their international films in India. “This severely limits any kind of level playing field that Indian content creators crave for.”

The petition informs he was forced to release Love Per Square Foot, digitally, as the exorbitant charges to get his film screened in the national chains were not economically viable. It reasons that while national multiplex chains are the obvious choice for a theatrical release since they control 60 per cent of the entire multiplex film exhibition business in India, given that Love Per Square Foot was made on a budget of just Rs 8 crore, the additional cost would have made it a loss-making venture, as hypothetically, the multiplexes would have earned in excess of Rs 7 crore from him as compared to his earnings of Rs 2.35 crore. “All the Indian producers on an average have to pay Rs 2 to 3 crore to the multiplexes as Visual Print Fees, if they want to release their film on 1000 to 1500 screens,” it states.

More recently he had a run-in with cineowners during the release of the Sonchiriya. He’d planned to release Sushant Singh’s dacoit drama on 505 screens in PVR, INOX, Cinepolis and Carnival. But that would have meant spending Rs 93 lakh on VPF. So he had to change his release plans.

When we reached out to Kamal Gianchandani, the CEO of PVR Cinemas, he said, “Since the matter is now sub-judice and will be under investigation there is nothing more to add at this stage.”