Koimoi.com Editor Komal Nahta explains the economics of Shah Rukh Khan’s Don 2, which hit theatres on December 23, 2011, in India. A Koimoi exclusive.

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Don 2 Movie Poster

In The Hands Of The Producers:

All rights sold to Reliance EntertainmentRs. 80 crore
Add: Subsidy expected from German governmentRs. 15 crore
Total revenuesRs. 95 crore
Less: Cost of production (excluding Shah Rukh Khan’s remuneration)Rs. 65 crore
Profit to ProducersRs. 30 crore

This means the three producers (Farhan Akhtar, Ritesh Sidhwani and Shah Rukh Khan) have already made a profit of Rs. 30 crore.

In The Hands Of The Worldwide Distributors Reliance Entertainment:

Cost of acquisition of worldwide distribution rightsRs. 80 crore
Add: Cost of 3D conversion, promotion, prints and releaseRs. 25 crore
Add: Cost of money (interest; since a huge amount of acquisition cost was paid in advance)Rs. 5 crore
Total costRs. 110 crore

Revenues:

Satellite rightsRs. 36 crore
Music rightRs. 9 crore
Overseas theatrical business (expected)Rs. 25 crore
(minimum; of this revenues of about Rs. 15 crore have already come in from pre-sale of rights of some parts of Overseas circuit)
India theatrical business (expected)Rs. 52 crore (minimum)
Total revenuesRs. 122 crore

Therefore, the profit in the hands of Reliance Entertainment will be a minimum of Rs. 12 crore (Rs. 122 crore minus Rs. 110 crore). If the film scores better in Overseas and India, the profit could go upto Rs. 20 crore. The return on investment would, therefore, be a minimum of 11 per cent and it could go upto 19.8 per cent. In filmi parlance, this would be termed a Commission Earner in the hands of Reliance Entertainment. For the sake of clarity, any film which earns more than 20 per cent on the investment is termed an Overflow film.

Note: The above figures are very close to actuals where deals have been finalised and very fair estimates (on the lower side) where revenues are still to be generated.

Update: All revenues mentioned in the above  report are net of taxes.

Komal Nahta, the Editor of Koimoi.com, is Bollywood’s most trusted trade analyst & film reviewer. You can follow him on Twitter and check out his Video Blog.

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