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Reliance Industries (RIL) is in talks to acquire a stake in Bollywood producer and director Karan Johar‘s Dharma Productions, said people familiar with the matter. A deal will strengthen the oil-to-telecom conglomerate’s position in the Indian content production industry. The size of stake on the table could not be ascertained.
“Karan Johar has been looking to monetise his stake in Dharma for some time, but past deals have fallen through due to disagreements over valuation,” said a person familiar with previous negotiations, requesting anonymity.
Dharma is owned 90.7% by Karan Johar and 9.24% by his mother, Hiroo. It has produced a large number of popular Bollywood firms.
Dharma Productions’ pursuit of strategic partnerships underscores the broader financial challenges facing the Hindi film industry, including rising production costs, declining theatre attendance and shifting consumer choices due to the growing popularity of over-the-top (OTT) platforms.
Several Gains from Divestment
“In the past, RIL acquired a minority stake in Balaji. A similar arrangement could be made with Dharma,” said a second person. A potential stake purchase would boost Reliance’s content production portfolio, which currently includes Jio Studios, Viacom18 Studios, Colosceum Media and a minority stake in Balaji. Jio Studios, now the largest film studio in India, garnered `700 crore in box office collections in FY24. Its coproduction with Maddock Films, Stree 2, has become the highest-grossing Hindi film of all time.
RIL and Dharma did not respond to ET’s queries.
A media analyst noted that many film production houses are weighing fundraising plans to overcome financial stress since the pandemic. “One reason Dharma Productions could be exploring a stake sale is that a personality-driven organisation eventually seeks to ensure its future by transitioning to professional management,” the analyst said.
Dharma was earlier reported to be in talks with Saregama, backed by entrepreneur Sanjiv Goenka, to sell a majority stake. Saregama, in a BSE filing on October 8, said it had no material updates to report.
Dharma Productions posted a nearly fourfold surge in revenue to Rs 1,040 crore in FY23, from Rs 276 crore the previous year. Net profit, however, fell 59% to Rs 11 crore due to a 4.5-times rise in expenses at Rs 1,028 crore, according to the company’s latest available financial data accessed from Tofler.
In FY23, the company earned Rs 656 crore from distribution rights, Rs 140 crore from digital, Rs 83 crore from satellite rights, and Rs 75 crore from music. This compares with earnings of Rs 19 crore, Rs 167 crore, Rs 34 crore, and Rs 21 crore from these streams, respectively, in FY22.
Film production companies’ earnings are unpredictable, depending largely on the volume and success of their latest releases. Major Hindi film production houses, including Dharma, have been cautious in greenlighting new projects due to the unpredictable nature of the box office, which also impacts the value of streaming and satellite rights.
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