Tinseltown: Hooray for Bollywood

Flush Indian media companies are partnering with the U.S. film industry at a time of belt-tightening in L.A.

By Ronald Grover, with Nandini Lakshman in Mumbai

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Shyamalan on the set of The Happening, which was backed by a Mumbai company Twentieth Century Fox/MCT

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If you're an aspiring director in India, one shortcut to Hollywood can open up if you gain a spot on a TV show called Gateway. That's an Indian reality program in which filmmakers compete for a shot at working on a movie in Tinseltown. For already established Bollywood film types, there's a more direct approach these days: Just throw down some serious rupees.

A wave of cash-flush Indian media companies are now financing costly Hollywood fare. The latest: Mumbai-based UTV Software Communications is shouldering half the $57 million budget for The Happening, an apocalyptic 20th Century Fox (NWS) film directed by M. Night Shyamalan of The Sixth Sense fame, opening on June 13.

The Hollywood-India tie may have some staying power. On May 18, India's Reliance Big Entertainment signed deals to develop and finance films with production companies headed by actors Tom Hanks, Jim Carrey, Brad Pitt, and others. That's part of the company's $1 billion bankroll for films over the next two years.

The Indian spending spree (driven in part by the appreciation of the rupee vs. the dollar) is timely, given the U.S. credit crunch. "Hollywood is turning to places like the Middle East and India because Wall Street is finding it difficult to get deals done," says Stephen Prough, co-founder of Los Angeles investment bank Salem Partners.

American studios, meanwhile, want a piece of India's fast-growing $2.1 billion a year film industry. Walt Disney (DIS) took a 32% stake in UTV, while Sony (SNE) last year signed a three-film deal to make Bollywood flicks with Mumbai's Eros International studio. "India is a country with a large middle class driving a tremendous amount of consumption," says Jon Feltheimer, CEO of independent studio Lionsgate Entertainment (LGF), which also has a tieup with Eros.

FAT RETURNS

For Bollywood producers, the strategy is twofold: Finance films that might generate fat returns while hopefully reaping even more revenues distributing the content back home. CEO of UTV Ronnie Screwvala, who wants to secure American programming for a Hindi-dubbed cable-TV channel, is planning to make films with Will Smith's Overbrook Entertainment production company. For now, that's getting Bollywood producers the red carpet treatment in Hollywood.