Film industry debate rages on: Imthiaz Cader responds to Buddhi Keerthisena

Furthering the debate within the film industry, Liberty Cinemas Ltd. Managing Director Imthiaz J. Cader yesterday responded to comments and allegations levelled by Film Exhibitors Association of Sri Lanka President Buddhi Keerthisena and Movie Works Ltd. Managing Director Anura Jasenthuliyana, as published in the Daily FT of Thursday (2 August). 

Liberty Cinemas is one of the pioneer companies with its sister company Ceylon Entertainments that has been in the film business for over 65 years. The companies have produced films, in addition to being importers of Hollywood, Tamil, Hindi films, and own and operate Liberty, now known as “Liberty by Scope”, the latest twin-screen cinema with the newest sound equipment and state-of-the-art projection equipment. Liberty also is further expanding by establishing,in association with Scope Cinemas Ltd., the first ever six-screen multiplex at Colombo City Centre Shopping Mall towards early September 2018 and will be further adding more screens in other parts of Colombo and outside the Greater Colombo area. A first-of-its-kind Dinner Cinema will alsobe introduced.

“We are not fighting or finding fault with them (Film Exhibitors Association - FEA) but are only correcting them to account the collections properly, which I think is explained in the article. Till the arrears are paid up, our Principals will not give the film, and we have been informed as their local agents to collect the arrears,” said Cader.

Following are Cader’s responses to specific allegations or comments, made by Keerthisena and Jasenthuliyana.

1.Importers cannot override the industry rules and regulations.

A: As importers we always follow the rules and regulations of the industry, as we have been doing so for the past 6 decades, and as per the contractual obligations we have with the studios, where we are obliged to follow the international industry best practices.

2.Importers cannot dictate terms on distribution of films.

A: As importers, we are not trying to dictate any terms, but there are certain exhibitors who have violated the best practices of business, where they have understated revenues for their own benefit at the expense of our lawful revenue. We currently supply movies to all exhibitors, except to those exhibitors who owe money and are not willing to sign a booking contract, as stipulated by our respective studios, and as is also approved by the NFC.

According to Section 62 (1) (a) of the aforesaid National Film Corporation of Sri Lanka (NFC), Act No. 47 of 1971, any person who knowingly makes any false or incorrect statement in any return (in this case the Daily Report), or other document made or furnished under or for the purposes of the Act, or any regulation made thereunder, shall be guilty of an offence under the Act.

3.NFC has given license to importers to bring down films, and they cannot deprive the rights of that over the distributors and exhibitors.

A: Same as above response. 

4.Importers have no legal entity in the film industry. They import movies from the license given by the NFC through the national quota. It should be equally distributed among all cinemas in the country.

A: Liberty Cinemas Ltd. is a legal entity, which is also a registered importer with the NFC, and is a pioneer of the film industry of Sri Lanka, along with its sister company Ceylon Entertainments Ltd. In fact, we have been importing and supplying movies prior to the establishment of the NFC, and most cinemas in certain areas have been sustained because of the quality movies supplied by our respective studios, via our companies. We firmly believe you need all types of quality content for the development of the industry, which brings in the people to the cinema, which helps sustain and growthe industry. All importers of Hindi, Tamil, English, and quality domestic productions are very important stakeholders for the stability, sustainability, and growth of the industry, giving audiences options to choose from. 

5.Most digital projectors are also with the importers.They have been supplying movies to those who have the latest technologies and facilities in a biased manner, discriminating against other players in the marketplace.

A: We firmly deny this statement.The only exhibitor who hasn’t received our imported movies is the one which owes our companies money. In a general business, if someone owes the other party money, you have the fundamental right of not dealing with them.

6.The main intention of the importers was to make money.He stressed that they have done nothing for the development of the film industry in general.

A: It is most businesses’ intention to maximise profit, and what gives him the right to state that importers haven’t done anything? We as importers, via our sister companies, have invested heavily in the development of the industry, by investing in state-of-the-art cineplexes, and giving patrons world-class experiences such as Dolby Atmos, 4K technology, Gold Class theatres and value-added services, to improve the country’s offerings in the near future.In addition, as importers, we spend on marketing collateral to enhance the experience to patrons, which has never been done by anyone.

7.Keerthisena stressed exhibitors have no intention of creating rifts in the industry, but a level playing field for all stakeholders engaged was a must to sustain and improve the sector.“We are not against liberalising the market, but then there has to be a new system of distribution. We have had continuous dialogue with the NFC regarding the matter, and we are hopeful that there will be some positive response to that in the near future.”

A: I am also in agreement to liberalise the industry, and have been in several committees on this subject matter, but where we disagree is that the NFC has gone against the recommendations of the Presidential Committee Report, where they are trying to monopolise the distribution, and in my opinion this will lead to a contraction of the industry.

8.Movie Works Ltd. Managing Director AnuraJasenthuliyana said that for the past one and half years, the two English film importers have not distributed any movies to the cinemas he owns, as well as to a few other players.“I own a total of 11 cinemas and six of them have the latest technologies and facilities. However, my rights have been severely violated over the past one-and-a-half years by these two English film importers, namely Liberty Cinemas Ltd. and Skyline Entertainment Ltd., who are running a cartel. They are bringing down movies from the national quota, but there is severe discrimination in the distribution of films. It is high time that we get over this one-sided 

system and adapt a fair system to distribute movies,” he added.

A: As you may have been aware, the most recent issue was relating to a particular exhibitor who was in the practice of recording a lower value in the Daily Report statement, but charging a higher value on the face of the ticket in respect of 3D movies of up to Rs.50. This undeclared excess income is not recorded in any statement but reflects as a direct income for the exhibitor as a 3D glass charge.

According to Section 62 (1) (a) of the aforesaid National Film Corporation of Sri Lanka (NFC), Act No. 47 of 1971, any person who knowingly makes any false or incorrect statement in any return (in this case the Daily Report) or other document made or furnished under or for the purposes of the Act or any regulation made thereunder shall be guilty of an offence under the Act.

Thus it is clear that recording a lower value in the Daily Report, but charging a higher value on the face of the ticket, amounts to knowingly making a false or incorrect statement, and therefore constitutes an offence under the NFC Act as set out in the above provision. We must state that this should not be limited onlyto the cost of 3D glasses, but knowingly and willingly failing to report the correct income received by the exhibitor would constitute an offence under the Act.

Therefore through this fraudulent/illegal malpractice, the film suppliers had lost revenue and the Government of Sri Lanka has lost revenue too. Despite several correspondences and discussions with the NFC, this issue has still not been fully resolved, and the said exhibitor continued this malpractice till the date we suspended our supplies to them. Profit earned per glass through this malpractice is as follows:

8.1. Cost of 3D Glasses (best quality): Rs. 500. This glass could be used for over 3 months.

8.2. Extra charge per show: Rs. 50.

8.3. Number of shows per day: 4.

8.4. Therefore, the amount raised to recover the 3D glasses cost = 50 X 4 show times a day X 30 day × 3 months= Rs. 18,000.

8.5. Therefore, an extra amount earned per glass, without paying any tax to the Government and & supplier = 18, 000-500 = Rs. 17,500.00.

9.Jasenthuliyana also noted that there is no need to depend on foreign investment for new cineplexes, as there is enough capital to build new facilities from local entrepreneurs, if there is equal distribution of movies.

A: I am surprised about the above statement, when any Government will be clamouring for FDIs, but it is surprising that a statement against foreign investment has been made against new cineplexes, where it is further stated that there is enough capital to build new facilities by local entrepreneurs. All Governments will encourage sufficient FDIs as this will help the economy.