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Tapping a vast market

India is in the midst of an entertainment biz boom that has been so sudden and swift over the past year that it’s difficult to assess which companies have emerged as the core movers and shakers.

Given the breakneck competition and the fear of sour deals, most contenders keep a low profile, making sub-rosa moves and enjoying the security of anonymity. India TV giants Dhirubhai Shah, NFDC and ZeeTV fight for the best telecasting deals with the film studios.

Joint ventures with foreign interests abound. Industrialist R.P. Goenka has pacted with Time Warner; leading video distrib Shemaroo is linked with Sony; news TV producer HTV has pacted with Pearson Network; and Concept Advertising is in bed with Reuters.

Among the hungriest of the lot is the two-year-old Modi Entertainment Group (MEG), which has formed a string of partnerships with the foreign theatrical and TV arms of Disney’s Buena Vista, as well as Disney Consumer Products, giant exhib United Artists Theater Circuit (UATC), cable sports network ESPN and Yank producers Multimedia and New World.

At Modi’s heart is the dream of one Lalit K. Modi. Three years ago, Modi envisioned the creation of India’s premier entertainment company.

Today, the 32-year-old Modi – the president and managing director of Modi Enterprises, and the vice chairman of MEG, has the money, the infrastructure and the Hollywood partnerships to realize that dream. He also has good timing, as he rides the surging market.

Behind him stands the Modi group of companies, one of the country’s five-largest conglomerates with annual revenues of $2 billion, and 16,000 employees.

The six-decades-old Modi Enterprises has grown from a textile manufacturer into a highly diversified group involved in everything from chemicals, tea and tobacco to an airline, computers and cellular phones.

Add to these interests basic cable and pay TV; film production, exhibition and distribution; TV production and distribution; and licensed consumer products. And in little more than two years, Modi has catapulted itself into the upper echelon of India’s entertainment ranks.

January 1993 marked the launch of the Modi Entertainment Group, under the aegis of K.K. (Krishan Kumar) Modi, Lalit’s father, who’s one of the five sons of company founder and patriarch Gujar Mal Modi. MEG has since mushroomed into eight separate companies that propel its various interests.

The Modi philosophy was handed down from the founder, whose maxim was: “What the country does not have must be imported.”

The Modi of today has gone one better by not only importing product and know-how, but fortifying its strengths and growth prospects by launching a series of joint ventures with U.S. partners.

“When Disney tied up with us, we realized that there was a vacuum in this area which we could enter in multiple activities,” K.K. Modi tells Variety. “Our idea is to bring cinematic and related entertainment to each individual age group, and to the family as a cohesive whole, and to bring that entertainment into the home.”

Lalit K. Modi says he’s earmarked $250 million to $300 million to invest in the entertainment industry over the next few years, augmented by contributions from various partners. That excludes the coin to be raised from a planned stock market listing of the Modi/United Artists partnership.

The Modi game plan is clearly addressing the need for software in India, avoiding the country’s widespread tendency to market product of inferior quality.

Through partnerships it has obtained films and TV programming with higher production values that can be adapted to the Indian market. Its next step is building a library of product. In that regard the company is moving into in-house production of both TV and films.

Lalit Modi is negotiating exclusive deals with a number of Indian producers, aiming to churn out 15-20 titles a year to start. He characterizes these projects as negative pick-up deals that in some cases give producers a piece of the back end.

His target is to build a library of approximately 100 Indian films in three years. In the world’s largest film-producing country, which churns out some 800 features annually, this goal isn’t as farfetched as it sounds.

“We want to own intellectual properties,” he says. “We’ve discovered that we can buy all rights to (Indian) films for a small extra cost (over theatrical rights).”

This is the first large-scale venture into entertainment by any Indian industrial group, and for Lalit Modi, a voyage into uncharted waters.

“We’re on a tremendous learning curve. There are no set rules, nothing (else) to compare to,” he says. “It’s exciting; something new happens every day.”

Like his management recruits, Modi appears to be taking a crash course in the biz. Modi used the U.S. firm Communications Equity Associates to identify and broker joint ventures with UATC and ESPN.

ESPN International executive VP Andrew Brilliant says Modi was chosen because it’s the most experienced player in the Indian broadcast and cable TV business. For a company scarcely more than two years old, Brilliant’s prognosis bodes well for Modi’s long-range plans.

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