Farhan Akhtar’s Excel Entertainment sells Rs 800 cr stake to Universal Music Group; how it’s different from Karan Johar’s Rs 1000 cr Dharma deal

Karan Johar’s Dharma sold 50% stake for Rs 1,000 cr

Johar opted for a majority deal because he wanted a hefty amount in return. While Dharma Productions was initially also in talks with Reliance for the equity deal, they ultimately went ahead with the company owned by Poonawalla, CEO of the Serum Institute of India. The idea behind the deal was not recovery, since Dharma Productions has been a profitable venture, but for growth, to scale up a boutique production house into an independent multifaceted studio. Thus, Dharma Productions, valued at Rs 2000 crore, managed to secure Rs 1000 crore from Poonawalla in return of 50% stake.

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Farhan Akhtar’s Excel sells 30% stake for Rs 800 cr

On the other hand, Excel Entertainment, valued at Rs 2700 crore, chose to keep its majority stakes within its existing ownership, and sold 30% stakes for Rs 800 crore, as per The Wall Street Journal. The higher valuation of Excel Entertainment helped it secure a proportionately heftier deal than Dharma Productions, which was valued at Rs 700 crore less than that of the former. It’s to be noted that both companies came into prominence at around the same time — at the turn of this millennium.

Excel Entertainment started in 1999, with Farhan and Ritesh combining their might to independently produce the former’s 2001 directorial debut, Dil Chahta Hai, which turned out to be a commercial success. Two years before that, Karan’s 1998 directorial debut Kuch Kuch Hota Hai became a blockbuster, infusing life into Dharma Productions, which didn’t enjoy as successful a run under his father Yash Johar’s leadership, from 1980 to 1998. It scored only a few success, including its first production Dostana (1980), but delivered many flops back to back for more than the next 15 years, from Duniya (1984) to Duplicate (1998).

Excel Entertainment started its journey with Dil Chahta Hai.

Rarhan Akhtar, Ritesh Sidhwani to excercise full creative control

A joint press release by Excel Entertainment and Universal Music Group confirms that Farhan and Ritesh will continue to exercise full creative control post the deal. While Karan is also said to enjoy the same powers at Dharma Productions, he did admit that profitability is the company’s primary priority going forward since he’s accountable to his partner, Poonawalla.

“Now, you have to take every decision with profitability. It is very important to be profitable, we are a commercial enterprise,” Johar said on the Game Changers podcast last year. He also admitted to future potential uncertainty towards making another film like Neeraj Ghaywan’s Homebound, which hasn’t been profitable but is currently contending for a nomination in the Best International Feature category at the Academy Awards.

“I made Homebound, worldwide critically acclaimed, but I can’t say if I’ll take such decisions in the future or not. I will feel upset, but I chose this deal for a reason – growth. Growth comes from profit, and profit comes from profitability. I will always be artistic, but it is important to be commercial as well,” he argued.

Homebound was backed by Dharma Productions.

Advantage Excel Entertainment over Dharma

Another advantage that Excel Entertainment has over Dharma Productions in terms of their respective deals is that the former’s minority partner is deeply steeped into the world of entertainment. Universal Music Group, founded in 1934, is among the top 3 global music giants. Its India wing was established in 1999, although it’s backing songs in Hindi films, right since Bachpan (1970). After the set up of Universal Music India, it even ventured into independent music with hit songs like Aryans’ “Aankhon Mein Tera Hi Chehra”, Falguni Pathak’s “Maine Payal Hai Chhankhai”, and Shaan’s “Tanha Dil…” UMG also has a global presence, unlike Serene Productions.

In fact, Serene Productions was set up days before its acquisition of majority stakes in Dharma Productions. Adar Poonawalla’s primary business is Serum Institute of India, the biggest vaccine manufacturer of India. His wife Natasha Poonawalla is a socialite and philanthropist, best known in the entertainment world for her fashionable appearances on the red carpet of global events like the Met Gala. The Poonawallas have no prior experience in the realm of entertainment despite holding majority stakes in Dharma Productions.

Future expansion plans

Thus, for Karan and Apoorva, their deal with Poonawalla was motivated by the hefty investment more than creative or global expansion reasons. Banking on the investment, Dharma Productions has already launched its distribution arm. It also acquired full stakes in Dharma Cornerstone Agency, initially a partnership between Dharma Productions and Bunty Sajdeh’s Cornerstone, reintroducing the talent management agency as Dharma Collab Artists Agency. It already has a digital production wing, Dharmatic, and an advertisement production wing, Dharma 2.0. Its next goal is to start a music label.

Music seems to be a major part of Excel Entertainment’s expansion plans, given its new partnership. As per the agreement, UMG will gain global distribution rights for all future original soundtracks created for projects owned or controlled by Excel Entertainment. The alliance also includes the launch of a dedicated Excel music label, to be globally distributed by UMG.

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Universal Music Publishing Group will also become Excel’s exclusive music publishing partner, creating opportunities for existing UMG and UMI artists and repertoire to be included in Excel Entertainment’s future productions. The massive Universal Music India roaster includes composers like AR Rahman, singers like Arijit Singh and Alka Yagnik, and rappers like Divine among others.