What does "Satellite Rights" mean in the Indian film industry? And how is the amount paid to the film owners by a TV channel as "satellite right" decided?
There is a very good answer present on Yahoo Answers:
Satellite right is the legal permission given by the producer of a film to a Television channel to show (broadcast) the film in TV. It might be for a limited time period or for lifetime. There will be many clauses and conditions like the film can be shown in TV only after a particular time period etc. Nowadays, satellite rights plays an important part of a film funding. If the film has a big star associate with it, the TV channels pays huge amounts as satellite right before or while shooting. But if there are no big names in a movie, most of the time the movie has to release and proof itself to be taken by the channel. The satellite rights are mostly sold like an auction- Who pays more will get the right to air the film. Also it will increase the popularity of the channel. In the meantime, the channel plays the film many times and gets the money back through advertisements.
Note:- Unsourced and rumoured (or yet to be confirmed) stuff from the Yahoo answer is not included.
For the second part, these are the facts to decide about the amount paid for satellite right:
- Production Banner (Yashraj production can sell its films on higher rate to channels than any new production house).
- Past record of the people associated with the film.
- Success or expectation of the film.
There could be many others but it's like a bid on the expectation of film earnings from TV.
For example Kites' rights got sold on high rate due to the expectation associated with it but rumours suggest that the channel got disappointed due to the movie's theatrical response and thought they have overpaid.