COVID-19 at the movies

The year 2019 had been a groundbreaking year for the Indian film industry, which saw some of its best box office performances in the past decade. As content took center stage, many films of various budgets witnessed success at the box-office. However, the year 2020 seems to be a completely different story.

The outbreak of COVID-19 in December 2019 has left the global economy in a state of mayhem. While, the true impact of COVID-19 was not truly experienced in India until early March, the country knew it was a matter of ‘when,’ and not ‘if’. By March 15, 2020 we saw the Central and State Governments introducing policies to limit social interaction, ordering shut down of establishments and taking precautionary measure to implement ‘social distancing’. The limitation on movement and a fear of contracting COVID-19 steered a large number of people away from cinema halls and into their homes, impacting the movie business within India and around the world.

Several States in India have invoked a 123-year-old legislation called The Epidemic Diseases Act,1897 (Act) to combat the spread of COVID-19. Under the legislation, the State has far reaching powers to take any decision they deem fit to curb and manage the spread of a disease within its jurisdiction. The Act also makes any advisory issued by the Ministry of Health and Family Welfare enforceable as Orders. India has approximately 415 confirmed cases and States are implementing a practical lockdown to effectively contain the outbreak, for instance, the Government of Maharashtra on March 20, 2020 issued a shutdown of everything except essential services, such as pharmacies, grocery shops and transportation providers. The closure is extensive and includes all cinema halls, swimming pools, restaurants, amusement parks, etc. Further, the Office of the Commissioner of Labour, Government of Maharashtra has also issued an advisory on March 20, 2020 to advise all employers (public and private) to not terminate contractual or casual workers from jobs or reduce their wages. It has also advised that in the event that a worker takes a leave, he/she should be deemed to have been on duty without any consequential deduction in wages. As the COVID-19 spread becomes an actual threat in India, these are necessary advisories as a large amount of Indian population is engaged in casual jobs and protection must be accorded to the weaker sections of the society.

The Order saw production houses close down until March 31, 2020. Several producers and filmmakers have taken preventive measures in light of the outbreak and postponed the release of big-tickets films such as Sooryavanshi, and the new Bond film No Time to Die. Yash Raj Films is also believed to have postponed the release of their next Sandeep Aur Pinky Faraar due to the outbreak. While, the producers of Angrezi Medium braved the outbreak and released the film on March 13, 2020, films that were already in theatres, such as Baaghi saw a gradual decline in viewership and seems to have suffered substantially due to the outbreak.

‘Dates’ play an important role in the film industry; there is often a battle on actor dates, release dates, schedule dates, promotion dates and location dates, to name a few. The industry is highly dependent on scheduling and dates due to its dependency on third party approvals, permissions, and bookings. Further, several key people on the production side work on a project-to-project basis and are rarely tied with a production house, therefore, the delay is expected to increase the cost of doing business for all involved, especially the production houses. The cost of capital in a Hindi film is usually close to 12.5%, and a delay of mere two months may lead a production house to face a cumulative loss of Rs 50-60 crore. The industry is looking at an overall loss of approximately Rs 250 crores in the short term. The production cost alone of Hindi films releasing between March and April 2020 is Rs 300 crore.

While understanding the complete impact of the outbreak is not possible as of now, the industry seems to be taking proactive measures to ensure the safety of all involved. On March 15, 2020, the Indian Motion Picture Producers’ Association in a joint meeting held with the Indian Motion Picture Producers’ Association, Western India Film Producers’ Association, Indian Film and TV Producers Council, Indian Film & Television Directors Association and Federation of Western Indian Cine Employees unanimously decided to stop shootings of films, tv serials, web-series and all other entertainment including digital formats until March 31, 2020. The Producers Guild of India have also announced a relief fund for daily wage earners impacted by the shutdown of all production activity within the country. This is a very commendable move by stakeholders in the industry as daily-wage workers will be the most impacted by the closure of activity, irrespective of the industry they are in.

Over-the-top (OTT) platform providers may have a golden net protecting them from potential losses as quarantine and isolation measures have led most people to  stay indoors. OTT platforms are expected to see higher daily usage by subscribers and potential increase in subscriptions. However, with no new content being generated in the time-being, time will tell how they retain monthly subscribers as there may be a tendency to jump from one platform to another. Interestingly, creative as the industry is, it has been reported that the Indian Motion Picture Producers’ Association has witnessed film producers rushing in to register Covid-19-based film titles, with a recent registered title being Corona Pyaar Hai. A similar trend was seen after the 2009 flu pandemic, which saw iconic movies such as Contagian being based on its impact and spread.

While several industries have implemented measures to combat the economic impact of COVID-19, it remains to see how industries where a work-from-home module is not possible, such as the entertainment industry, recover from the impact of the pandemic. In addition to immediate economic loss, stakeholders will have to also consider that even after COVID-19 has been successfully contained, the revival of economic activity will be gradual and not immediate as people may still fear a possibility of spread, especially in closed air-conditioned areas such as cinema halls or malls.

The outbreak has given rise to a substantial amount of uncertainty in relation to economic activity. At least in India, the containment of COVID-19 is a primary concern as we have a large number of people living in proximity to each other and social distancing may not be possible for those who share a small space with their families. While the country grapples to contain the spread of the virus, and a sense of social responsibility is being inculcated in all, it is hoped that India is able to ride the tide and keep economic and life loss to a minimum.


 

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Photo of Bharat Vasani Bharat Vasani

Partner in the  General Corporate and TMT Practice at the Mumbai office of Cyril Amarchand Managaldas. Bharat has over 30 years of experience at senior management level. His areas of specialization includes company law, corporate and commercial laws, securities law, capital market, mergers…

Partner in the  General Corporate and TMT Practice at the Mumbai office of Cyril Amarchand Managaldas. Bharat has over 30 years of experience at senior management level. His areas of specialization includes company law, corporate and commercial laws, securities law, capital market, mergers and acquisitions, joint ventures, media & entertainment law, competition law, employment law and property matters. He heads firm’s media and entertainment law practice.  He is highly regarded in Government circles and in various industry organizations for his proactive approach on public policy issues. Bharat was a member of the Expert Committee appointed by the Government of India to revise the Companies Act, 2013.

Prior to joining the Firm, Bharat was the Group General Counsel of the Tata Group.  He has been at the helm of and steered several large key M&A transactions pursued by the Tata Group in the last 17 years.

Bharat’s contribution to the legal fraternity has been recognized by the Harvard Law School’s Award for Professional Excellence in 2016. Bharat has won several other national and international awards for his various achievements. He had a brilliant academic record in law and first rank holder in all India company secretary examination. He can be reached at bharat.vasani@cyrilshroff.com

Photo of Samiksha Pednekar Samiksha Pednekar

Associate in the General Corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Samiksha has experience in general corporate and advisory work, primarily focused on mergers and acquisitions and corporate restructuring. She also has experience in dispute resolution and has advised and…

Associate in the General Corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Samiksha has experience in general corporate and advisory work, primarily focused on mergers and acquisitions and corporate restructuring. She also has experience in dispute resolution and has advised and represented clients in litigations and arbitrations involving commercial or transactional issues. She can be reached at samiksha.pednekar@cyrilshroff.com