After Salman, SRK To Refund Money To Distributors. Here’s Why

Can distributors legally claim compensation if the film flops?

After Salman, SRK To Refund Money To Distributors. Here’s Why

The makers of Jab Harry Met Sejal had some high expectations from the film and so did the theaters and distributors and all those who were connected with the film, but unfortunately, the film tanked badly at the box office.

While the producers of the film did not suffer much loss from the film as they had sold the satellite rights, music, and digital rights, the distributors were the ones who suffered the most as they were recovering from a previous loss with the Salman Khan starrer Tubelight which was another failure at the box office.

Salman Khan compensates by refunding money after Tubelight's failure
Salman Khan compensates by refunding money after Tubelight’s failure

However, Salman compensated the distributors for their loss and that’s apparently when the distributors requested Shah Rukh to follow suit. Even though SRK is not legally bound to do so, he has already refunded a certain amount to the distributors according to reports. This is also not the first time that SRK is said to have compensated the distributors for their losses due to the debacle of his films. In 2001, SRK compensated for the loss of Ashoka and that’s not all, he also sold his next release Paheli for a lesser price to make up for their loss.

Besides Salman and Shah Rukh, earlier too filmmakers like Subhash Ghai and the late Raj Kapoor have also compensated the distributors for the losses they incurred because of their films failing at the box office. This is not a new practice. So what do these actors gain by doing so, you may ask or do they shell out the money from their own pockets?

With more and more actors turning producers, this trend of compensating the distributors is gaining popularity, this is probably because as producers they are more aware of the business aspect of filmmaking and also about the kind of money that distributors shell out.

Another and the most important reason is that these actors need to create some kind of a goodwill with the distributors, paving a safe path for the films they produce in the future.

They also need to create a good name in the industry and among their fans.The fact that most of the producers break even before the release of the film by selling the satellite, digital and music rights etc. So in that sense, they do not lose anything much by compensating the distributors. There are big players like Amazon, Hotstar and Netflix etc. in the digital market today to choose from for the producers to sell their rights to.

While most are in favor of compensating the distributors, there are a few who disagree. The distributors, however, cannot claim the same legally even if a film does badly at the box office, But with some of the stars charging an exorbitant fee, the distributors are at a risk and perhaps the stars too understand that.

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