Reliance Industries Eyes Stake in Karan Johar’s Dharma Productions Amid Industry Changes

Reliance Industries (RIL) is in discussions to buy a stake in Dharma Productions, the film company owned by Bollywood director and producer Karan Johar. This move could strengthen RIL’s position in the Indian content production sector, though the size of the stake being considered is not yet clear.

Karan Johar has been looking to sell part of his stake in Dharma for some time, but previous attempts have failed due to disagreements over the company’s value, according to a source who wished to remain anonymous.

Dharma Productions is primarily owned by Karan Johar (90.7%) and his mother, Hiroo Johar (9.24%). The company has produced many popular Bollywood films over the years.

The search for strategic partnerships by Dharma Productions reflects the financial struggles facing the Hindi film industry, including rising production costs, falling theater attendance, and changing viewer preferences with the rise of over-the-top (OTT) platforms.

Potential Benefits of a Stake Sale

In the past, RIL bought a minority stake in Balaji and could pursue a similar arrangement with Dharma. This potential investment would enhance Reliance’s content production portfolio, which includes Jio Studios, Viacom18 Studios, Colosceum Media, and a minority stake in Balaji. Jio Studios is currently the largest film studio in India, earning ₹700 crore in box office sales in FY24. Its collaboration with Maddock Films on Stree 2 has set records as the highest-grossing Hindi film ever.

Both RIL and Dharma Productions did not respond to inquiries from ET.

A media analyst noted that many film production companies are considering fundraising options to deal with financial pressures since the pandemic. One reason Dharma Productions might be looking to sell a stake is to ensure its future by moving toward professional management.

Previously, Dharma was reportedly in talks with Saregama, backed by entrepreneur Sanjiv Goenka, to sell a majority stake, but Saregama announced on October 8 that it had no significant updates to share.

Dharma Productions saw its revenue almost quadruple to ₹1,040 crore in FY23, up from ₹276 crore the previous year. However, its net profit fell by 59% to ₹11 crore due to expenses rising 4.5 times to ₹1,028 crore, based on the latest financial data from Tofler.

In FY23, Dharma earned ₹656 crore from distribution rights, ₹140 crore from digital sales, ₹83 crore from satellite rights, and ₹75 crore from music. This is a significant increase from earnings of ₹19 crore, ₹167 crore, ₹34 crore, and ₹21 crore, respectively, in FY22.

The earnings of film production companies can be unpredictable, largely depending on how successful their latest releases are. Major Hindi film production houses, including Dharma, have been cautious about approving new projects due to the uncertain nature of box office performance, which also affects the value of streaming and satellite rights.