Hooray for Bollywood

This anticipated boom has foreign and domestic players scrambling to get in. Disney bought a 15 percent stake in Screwvala's UTV for $14 million in 2006. This year Viacom inked a 50-50 joint venture with budding news-media mogul Raghav Bahl, head of the Indian entertainment conglomerate Network18. The venture, called Viacom18, will produce and distribute TV shows, digital media and, eventually, 10 to 12 movies a year. A separate entity called the Indian Film Co.—in which Network18 and Viacom own stakes—will begin financing about 40 to 45 films a year by 2010. Billionaire Anil Ambani's Reliance ADAG conglomerate has acquired a 51 percent stake in a leading movie company called Adlabs Films for a little less than $90 million. And three Indian studios held IPOs in London this year, raising a combined $220 million.

That's big money in a nation where until recently the average film budget was only about $150,000, and it should dramatically increase the number and quality of Indian films. But very little cash will likely flow into coproductions with Hollywood, an area where Screwvala remains several years ahead of his competitors, most of whom still shy away from big Hollywood gambles. Screwvala is contributing $27 million—more than an Indian hit would gross—to the $57 million budget for Shyamalan's "The Happening." But the returns can be huge: "The Sixth Sense," which cost Shyamalan about $40 million to make, grossed nearly $700 million.

Screwvala has more than one wager in play. UTV has also forged coproduction deals with Fox Searchlight and Sony Pictures, and with Will Smith's Overbrook Entertainment. Hollywood—which requires endless cash injections and has for years been looking for outside funding from sources as diverse as German pensioners and private-equity funds—is only too eager to cut more such deals. These coproductions "are going to become more common," says Jose Rodriguez, Shyamalan's U.S.-based coproducer on "The Happening." "Ronnie is sort of leading the pack."

He's also shaking up Bollywood. Until recently, India's film industry was controlled by a few powerful producer-directors like Yash Chopra, who enjoyed strong family or personal ties to Bollywood's fickle superstars, many of whom were also related. The heads of these "film families" never worked out a budget in advance and started shooting with only a fraction of the cash they needed in hand. Preproduction was a 20-minute meeting. Writers made up the dialogue as they went along. There were no production schedules or contracts; stars walked in and out of projects at whim. With hundreds of local distributors and tens of thousands of theater owners who habitually underreported box-office returns, it was hard to tell who, if anybody, was making money. "Nobody thought of this as a profit-and-loss [business]," says Screwvala. "They thought of it as a cash-flow [business]. So if a producer-director made a movie and it lost $5 million, but he got advances to make his next movie of $5 million, [in his mind] he'd broken even."

UTV, by contrast, went public on the Bombay Stock Exchange in 2005, becoming one of the first listed film companies in India and introducing modern methods. The studio spends as long as two years in preproduction selecting scripts and setting casts, budgets and distribution plans. UTV has also taken control of marketing and raised spending to 25 percent of each film's production costs, nearing the Hollywood average (about 50 percent). And UTV shoots pictures in three months—on budget. To improve collections from the foreign market, UTV has avoided selling the overseas distribution rights to its films and built its own distribution network instead, setting up offices in the United States, Canada, Britain and the United Arab Emirates. Now the company is focusing on turning the 20-odd other countries where Bollywood films have established a niche market into a meaningful part of the business.

Screwvala says he shook things up out of necessity. "I was an outsider," he explains. "I hadn't grown up with these stars and directors." The son of a businessman—his father retired as managing director of a cosmetics firm—he was hardly destined for the movies. But after graduating with a degree in commerce from Mumbai University, he cut his teeth in television. He was the first to launch multichannel TV in India, schlepping around to meet with the residents' associations of Mumbai apartment buildings to sell closed-circuit cable at a time when the only other option was a single, state-owned broadcaster. Later, his company produced India's first daily afternoon soap opera, "Shanti." Working with Disney to dub its library of films into Indian languages in 1996 gave Screwvala the idea to try to create a modern, Western-style film company himself.