Promoters of Tips Music plan to sell a minority stake in the Mumbai-based entertainment company to raise capital to scale investments in film content and deepen control over music rights, people familiar with the matter said.

The Taurani family, which holds 64.15% in Tips Music, had earlier held discussions with Universal Music Group for a potential stake sale, but the talks are stalled and a deal is unlikely to materialize due to the latter’s demand for a significant stake, sources said.

“The Taurani family wants to sell a minority stake to raise financial investment, whereas Universal was seeking a strategic investment of about 23-24% with additional voting rights at par with the promoters,” one of them said.

Tips Music’s market capitalization stood at Rs 8,248.97 crore at Monday’s closing price of Rs 645.30 on the BSE.

The Tauranis may now engage with financial investors, the person said. “They want to raise cash to invest in their film business.”

Kumar Taurani, chairman and managing director of Tips Music, and Devraj Sanyal, chairman and CEO for India and South Asia at Universal Music Group, declined to comment.

While valuation was not a sticking point in their discussions, Universal’s demand for enhanced governance rights proved a hurdle, a second person said.

Global music labels typically invest as strategic partners, seeking operational influence rather than acting as passive financial backers.

The development comes amid a broader shift in the music industry, with labels increasingly investing in film production to secure music-linked intellectual property and diversify beyond streaming-led revenues.

Recent deals underscore this trend. Universal Music Group acquired a 30% stake in Excel Entertainment, founded by Farhan Akhtar and Ritesh Sidhwani, at an enterprise value of Rs 2,400 crore. Meanwhile, Saregama invested Rs 325 crore in Bhansali Productions for an initial minority stake of about 28%, with the option to raise it to 51% by 2030.

According to a Ficci-EY report, India’s music industry is projected to grow at a 9% compound annual growth rate (CAGR) to Rs 7,500 crore by 2028. The sector grew 10% in 2025, with digital licensing rising just 2% due to weaker YouTube yields, while OTT platforms, social media and live events drove growth. Labels’ other income rose 26% on expansion into events, talent management and branded content.

At the same time, the sector is seeing consolidation, with large labels acquiring stakes in independent and regional players as streaming consumption rises and the business shifts from an ad-led to a subscription-driven model.

Times Music has acquired Punjabi music label Catrack Entertainment, marking its third strategic deal after earlier buys of ARC Musicq and Symphony Recording Co, while also expanding its partnership with Primary Wave Music.

Tips Industries was demerged into Tips Music and Tips Films in 2021. In the January-March quarter, Tips Music reported revenue of Rs 104 crore, up 33% year-on-year, while net profit nearly doubled to Rs 59 crore.

In its earnings presentation, the company highlighted four growth drivers: rising subscription revenues, increased monetization of short-form content, stronger enforcement of public performance rights, and emerging royalties from artificial intelligence companies.

It also noted that Warner Music Group and Universal Music Group have been actively signing deals in the artificial intelligence space. Universal recently partnered with Nvidia to develop tools for music creation and discovery using its Music Flamingo model.

Separately, a Reuters report in April said billionaire investor Bill Ackman’s Pershing Square Capital Management has proposed a $64-billion takeover of Universal Music Group.

In December last year, when we first heard rumours of Netflix acquiring Warner Bros, the thinkpieces came thick and fast. People said this was the final nail in the coffin for theatrical films, the moment algorithms would officially replace auteurs, and boardrooms would decide not just what gets made, but what kind of stories are even worth telling. A streaming giant swallowing one of Hollywood’s oldest studios seemed to confirm everyone’s worst fears, that cinema would finally become content, IP would matter more than ideas, and risk, originality, and the mid-budget film would be the first casualties.

Closer at home, Universal Music India (UMI) just acquired a 30 per cent stake in Farhan Akhtar and Ritesh Sidhwani’s production house, Excel Entertainment. This comes after Saregama Music invested in Bhansali Productions in December last year, and vaccine billionaire Adar Poonawalla acquired a 50 per cent stake in Dharma Productions in 2024. When corporate deals that haven’t even gone through in the West cause such a stir, is there any panic of a corporate takeover of the movies at home?

Managing director at Mukta Arts production house, Rahul Puri, says, “Giants have always existed in the business. Mukta was one of the first companies that went public and raised money from the equity markets. Then you had PNC [Pritish Nandy Communications], Balaji [Telefilms], Tips [Industries] in those early days. Even when there was a corporate interest, companies — like the [Aditya] Birla Group with Applause — tended to build organically. They didn’t necessarily partner with anyone because they had enough capital to come in and attract talent.”

He adds, “Now the mindset has changed. Corporate houses have recognized the value that creators and production houses bring. They bring a network of talent and relationships, and our business is very much about those networks.”

The style of filmmaking too has changed today. Going to the cinema is a theatrical event, reserved only for big-ticket spectacles.

“Whether it’s action films with big sequences or films on a large canvas with international travel, budgets are much bigger,” says Puri, “There’s also the ambition to make Indian films competitive globally, so quality has to go up, which affects production costs. Corporate investment is a way to de-risk producers while also giving them capital to be able to make these large projects.”

Among the three deals mentioned, interestingly, two of them happen with music labels entering films. In Indian cinema, music and films have always shared a special relationship, in business and in bed. Even bad films could rely on a banger album to be able to succeed. Before phones and social media, music was the first taste of a film, and often the biggest factor that invites the audience in. 

“Unfortunately though in India, music is perceived as free. We never want to pay for music. Since the piracy boom, music has been seen as an add-on to everything else,” says Rajdeep Anand, who works in music licensing, “With UMI and Saregama getting into films, music will finally get its due.”

For Anand too, the deal is like music to his ears. “The older model was that someone would come up with a movie and a set of songs, and then labels would bid for it. But now, everything in Excel’s future that relates to music will go through UMI. Universal doesn’t have to worry about any other player coming in. If I already know my slate for the next five to ten years — what’s coming on OTT, what’s coming in theatres — I can spend time developing new talent and strategically placing which singer gets attached to which project. It gives artistes a platform even before they start off,” he explains, “Look at something like Mismatched (2020-26), Kho Gaye Hum Kahan (2023), or Gehraiyaan (2022), or something as big as Dhurandhar (2025) — they could take much bigger bets with their music. Excel has always had a great ear for music, so I am hopeful that this collaboration will bring music to the forefront.”

Puri also adds, “It is also a play to give music labels a strong flow of content separate from their traditional business, which is essentially just music distribution. They’re taking advantage of a dynamic content monetization space.”

Filmmaker Arati Kadav, whom you may recognize from Mrs (2025), shares why she thinks corporates are investing in films. “First of all, there is always the charm of being associated with the film industry,” she says, “We hear of many films making Rs 100 or Rs 200 crore, but we confuse revenue for profit. Even if a film makes Rs 100 crore, the production cost has gone up so much that the profit we earn is very less.” 

Puri argues that big-ticket films might actually help with cash flow. “If a film like Dhurandhar [Jio Studios] does really well, that money can flow into smaller films. Big stars can’t make infinite films, so the surplus has to go somewhere. Ideally, into more creative films.”

Kadav also agrees, “Corporates coming in might actually impart some autonomy to production houses. For example, Dharma  [Productions] could make the beautiful film, Homebound (2025) because they had the backing of Adar Poonawalla.”

We ask, what if algorithms start to dictate storytelling? She says, “Unfortunately, the climate has already become like that. Algorithms are dictating the shape of our stories already. Actors are chosen by follower counts. The world has become like that, regardless of corporations. At least if a producer with a good sensibility gets corporate money and support, and if they have good convincing power, they might actually be able to break out of that.”

Although Puri, Kadav, and Anand make this sound like a sweet deal, there are still sceptics who worry that this might mean a death for their creative vision. Filmmaker Aditya Kripalani shares his concerns, “Within corporations, you have a whole board of people and their aim is to not lose their job. I’m not saying they are wrong. But for them, the peak point of their life is to keep that job at the platform,” he says, “If I’m at a platform, it’s easy for me to have a checklist: Did it go to Cannes? Does it have a star? What numbers has that star’s previous film done? Once I have that checklist, my head will not roll if I take the film. But if I say ‘I like the film’ and the film doesn’t work, my head will roll.”

Kripalani calls back to when Netflix co-CEO Ted Sandoros said that he thinks Sacred Games (2018-19) may not have been the best choice to open in the Indian market; he would have liked to go with something more “populist”. “Exactly, there you go,” says Kripalani, “For me, the 100 per cent corporatization is when a platform makes a film. Because then the creative individual — which is the director — has no power.  They are hired hands, no matter how big that director is.”

Eros International, a music giant, produced Raanjhanaa (2013), while Aanand L Rai directed it. When the film was re-released, Eros could change the ending of the film with AI, without the director’s consent, completely changing the meaning of the film. Rai was then dragged in a copyright infringement lawsuit by Eros for making Tere Ishk Mein (2025) too similar to Raanjhanaa. 

An important loss in the race to corporatization is the mid-budget film. “The '1-crore films, we used to call them,” says Kripalani. According to him, movies will now split into big-ticket spectacles or OTT releases. The traditional trajectory for a director to get a big-budget would be to start with AD-ing, get to mid-budget, and then big-budget event films. With corporatization, we may just be witnessing the death of a mid-budget hit. 

“In the 1990s, you used to get 2 to 3 such films a year each from Ram Gopal Varma, from Dharma [Productions], from Yash Raj [Films]. Even Munna Bhai MBBS (2003), Rock On!! (2008), Dil Chahta Hai (2001) were all mid-budget films. A film made for a certain budget with a known face, these are gone,” he says, “In the last couple of years, you have seen Superboys Of Malegaon (2024), Laapataa Ladies (2024), and maybe one or two more — there’s a handful of this kind of film that I can name.”

“I think the people who are in the biggest problem are the mid-level people. New people — like a crazy YouTuber making great content — can still get picked up. And if you’re already an established [Martin] Scorsese or [Christopher] Nolan, you’re okay,” says Kripalani, “But the people who have made five to eight films and are in the middle of their career. There is no platform left for them.”

But what do we lose when we lose mid-budget films? “We lose stories with depth. They may not deal with dark subjects, but they touch you deeply — family dynamics, interpersonal relationships,” says Kripalani, “The indie space deals with the darker sides of society.  Big films are just popcorn films, which is fine. Now you’ll get either mindless spectacle or very dark films. When was the last time you got something like Dil Chahta Hai? That middle space is disappearing.”

Mumbai: Recent investments by music labels Saregama India and Universal Music in film producers Bhansali Productions and Excel Entertainment, respectively, point more to a larger play in the entertainment sector than consolidation of film production houses, industry experts told ET.

These investments are disparate both in structure, strategy and goals as opposed to the Adar Poonawala-Dharma Productions deal, and they have been triggered largely by the bearish business conditions in the music industry, they added.

"After a few years of bull run of over 20% compounded annual growth rate in revenue from streamers, YouTube and digital sources, labels today are seeing a bear phase as the industry consolidated, streamers merged or shut shop and free streaming is moving towards paid subscription," said a top executive at a leading industry player, on the condition of anonymity.

"Some of these labels seem to grow through reverse consolidation to build acquisition moats and create a robust pipeline. They may end up producing films," said the executive cited immediately above.

Another aspect that has triggered these investments is the fiercely competitive space of buying music rights in the open market.

"These investments ensure consistent availability of new content at a reasonable cost. In the past few years, competition intensity for music rights in the open market has become too high," said Vaibhav Muley, lead analyst, media and entertainment sector, Yes Securities.

Labels pay Rs. 10 crore-Rs. 33 crore per film if they buy music in the open market, shared analysts. A multi-year deal for music with a production house is almost 30-50% cheaper for labels, they pointed out.

Also, these investments are effective from the standpoint of return on capital employed (RoCE) ratio-how effectively a company generates profits using its capital. Analysts shared that monetizing music across avenues provides RoCE of 30-40%, while films generate RoCE of 11%. This shows why buying a stake in production houses is a relatively less risky proposition than directly producing films.

Acquiring stake in production houses is also a win-win strategy, pointed out analysts.

"Today, labels have reasonably good cash on books. They are looking for low-cost avenues to buy music. Investment in production houses is one such route. Production houses get a minimum guarantee amount to start a film and labels in turn get music rights and ownership of films in proportion with their stakes," said an analyst, who declined to be named.

Furthermore, consolidation in the music label industry has prompted incumbents to look for adjacent diversifications.

"Labels are chasing growth. Acquiring labels have become expensive after consolidation (three labels shut shop). Then, there is subdued growth in revenue from streamers due to a shift in subscription mode. These deals reflect these realities," said the analyst cited immediately above.

Industry experts say the distinction between these investments and the Adar Poonawala-Dharma Productions deal.

"These investments do not amount to consolidation among production houses. They are different from Adar Poonawala-Dharma Productions, which is about equal partners. Whereas, after the investments, labels will function as 'strategic investors.' Along with owning music, they will own film rights in proportion with their stakes," explained Gaurav Dagaonkar, co-founder and chief executive officer of Hoopr, a leading platform for music licensing.

Analysts expect labels would integrate talent from their talent management division into the films produced by the production houses more effectively, right from the scripting stage, while also improving the monetization of music assets in these entities.

Mumbai: The India unit of Universal Music Group (UMG), world's largest music company, has acquired a 30% stake in Farhan Akhtar and Ritesh Sidhwani’s Bollywood production house Excel Entertainment at an enterprise valuation of Rs 2,400 crore, in one of the largest deals in the film entertainment business.

Under the agreement, Akhtar and Sidhwani will retain creative control, while UMG gains a foothold in the video business and strengthens its Bollywood music catalogue. Devraj Sanyal, Chairman and CEO of Universal Music India & South Asia and SVP of Strategy for Africa, Middle East and Asia, will join Excel Entertainment’s board.

The deal marks the third major M&A transaction in the Hindi film industry in recent times, following Adar Poonawalla’s Rs 1,000 crore investment for a 50% stake in Dharma Productions and Saregama’s Rs 325 crore investment in Sanjay Leela Bhansali’s Bhansali Productions.

The transaction highlights a renewed consolidation wave in the media and entertainment sector, as companies chase scale, capital and stronger IP portfolios amid shifting consumer behaviour. UMG becomes the second music label after Saregama to invest in a film production company, expanding its presence beyond music into filmed entertainment.

Ritesh Sidhwani and Farhan Akhtar, Founders of Excel Entertainment said, “India’s entertainment landscape continues to grow from strength to strength, and this is the perfect moment to build meaningful global collaborations. We’re excited to partner with UMG in what we believe will be a truly creative and transformative alliance—one that unlocks fresh opportunities for artists and repertoire across music, film, and emerging formats. Together, we aim to take culturally rooted stories to the world.”

Vishal Ramchandani, CEO, Excel Entertainment said: “This partnership with UMG marks a pivotal step in our journey to broaden creative opportunities and tell Indian stories with a global lens. With a shared vision for innovation and excellence, we aim to transform Excel into a creative global studio—one that brings clutter-breaking, original content to audiences across platforms and geographies.”

Adam Granite, UMG’s CEO of Africa, Middle East and Asia (AMEA), said: “Today’s announcement further strengthens UMG’s position in India, a dynamic and strategically important music market for the group globally. Original soundtracks remain at the heart of India’s fast-growing music market, with Indian listeners showing a growing desire to access more music in that genre. By investing in and partnering with Excel Entertainment, UMG will be uniquely positioned to contribute from the earliest stage to Excel’s future endeavours and throughout the creative process, providing huge benefits to both parties.”

Devraj Sanyal said: “Farhan and Ritesh have built an exceptionally impressive business, and we’re thrilled to be working with them on the next phase of their journey. The Indian film scene presents a hugely exciting opportunity for music and the music-led entertainment business, and Excel is the perfect partner for us to work with going forward”.

The investment and strategic partnership, he added, would help UMG deepen its presence in a high-potential recorded music market.

India is the world’s 15th-largest recorded music market by revenues, according to the latest IFPI data, with strong linkages between the country’s audio-visual and music sectors. The opportunity is further underpinned by more than 375 million OTT viewers and an estimated 650 million smartphone users.

Founded in 1999, Excel Entertainment has released more than 40 films and scripted series. Its breakout film Dil Chahta Hai set the tone for a slate that includes Lakshya, Don, Zindagi Na Milegi Dobara, Fukrey, Dil Dhadakne Do and Gully Boy.

The company was also among the earliest studios to embrace streaming, producing Amazon Prime Video’s first Indian original series Inside Edge, followed by titles such as Mirzapur, Made In Heaven, Dahaad and Netflix’s Dabba Cartel.

AZB & Partners acted as legal counsel to Universal Music Group. Ernst & Young and KPMG served as transaction advisors to Excel Entertainment and Universal Music Group, respectively. Morgan Stanley advised Excel Entertainment, while Khaitan & Co acted as its legal counsel.

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Mumbai: The Universal Music Group-Excel Entertainment deal could catalyse fresh foreign merger and acquisition interest in India's media and entertainment industry, with the Maharashtra government promoting Mumbai as a global hub to produce creative content, people familiar with the development said.

At least three similar transactions are currently under discussion, though details remain under wraps due to commercial sensitivities, said a top-ranked Maharashtra government official closely tracking the discussions, requesting anonymity.

Universal Music Group's India unit has agreed to acquire a 30% stake in Farhan Akhtar and Ritesh Sidhwani-promoted Excel Entertainment at an enterprise valuation of Rs. 2,400 crore, marking one of the largest deals in India's film and entertainment space.

The Maharashtra government was involved in facilitating the transaction.

The deal follows a series of consolidation moves in the sector, including Adar Poonawalla's acquisition of a 50% stake in Karan Johar's Dharma Productions for Rs. 1,000 crore in 2024, and Saregama's Rs. 325 crore investment in Sanjay Leela Bhansali's Bhansali Productions.

"The film industry is ripe for consolidation, and companies with strong IPs are likely to attract foreign investors," the official said. In the past, several Hollywood studios like Disney and Paramount either scaled back or exited the Indian market due to challenges around scale.

"Global companies today look for five things when choosing where to invest: talent, policy stability, respect for IP, speed of execution and a complete ecosystem. Mumbai and Maharashtra offer all five. That is why we are seeing sustained global interest across music, films, OTT, gaming, AVGC and the creators economy," Maharashtra CM Devendra Fadnavis said announcing the Excel-Universal deal.

UMG CEO for Africa, Middle East and Asia Adam Granite said the company will remain a minority investor in Excel Entertainment, while retaining a say in creative decisions, even as Sidhwani and Akhtar continue to exercise creative freedom.