Paul Smith’s involvement with the bookies’ favourite to win tonight’s Oscar for the best picture began with a thump on his desk in late 2005.

An advance copy of Q&A – the novel by Vikas Swarup that became the box-office hit Slumdog Millionaire – arrived in the post from Peter Buckman, Swarup’s literary agent and an old friend of Smith’s.

Smith created Celador, the television production company that is best known for the Who Wants To Be A Millionaire? quiz show that plays a central role in the novel. But when he elected to phone his friend it was far from a warm conversation. The book had come with a note attached, disclosing that Buckman had sold the movie rights to Film 4, Channel 4’s movie division.

Smith was not pleased. “I said, ‘Peter, you’re an arse’. If Film 4 or anybody wants to incorporate Millionaire into a movie they have to seek my permission and I would be inclined not to give it.”

The Slumdog story was nearly over before it had begun, but the fact that Smith had already dabbled in films was “the first bit of serendipity” that propelled him and his partners into Hollywood’s Kodak Theatre for tonight’s Oscars.

A couple of years earlier he had been involved in the movie Dirty Pretty Things. Smith had been afraid of losing its script-writer and had agreed to pitch the project to the BBC. It ended up on someone’s desk at BBC Films. Made on a shoestring budget and released in cinemas in 2003, Dirty Pretty Things was nominated for the best original screenplay Oscar and Smith was hooked. “We said: ‘That was fun and we made some money – shall we do it again?’ ”

By the time the Slumdog idea came along, Tessa Ross, who had worked on Dirty Pretty Things, had moved from BBC Films to run Film 4, which put up £1.5m of funding and drafted in Full Monty writer Simon Beaufoy to work on the script, about a boy from the slums of Mumbai who finds himself preparing to answer the final question on the Indian version of Millionaire. Celador added another £7m and Danny Boyle, the director of Trainspotting, was recruited to the team.

“There were no bumps in the road as far as the financing was concerned,” said Belfast-born Smith, 62. The release of the film went equally smoothly.

“It has been a phenomenon,” said Rupert Gavin, chief executive of Odeon and UCI cinemas. “So far in the UK, Slumdog has taken about £21m at the box office. If it wins the best picture Oscar, it could do £30m. In any case, it looks like it will do £26m, which means it would comfortably beat the last British film that won best picture – Shakespeare in Love – and will also place it firmly in the top five movies of the year.” Glo-bally, takings stand at £91m.

Film 4’s Ross said: “We discussed Slumdog with Celador from the film’s earliest conception so it is gratifying that it has become such a commercial as well as critical success.”

It helps that Celador has sufficient finance to put films into production. Two years ago, Smith sold the worldwide rights to Who Wants To Be A Millionaire? to 2waytraffic, a Dutch producer that is now part of Sony. The deal raised £112m, including £40m for Smith and £17m for Jasper Car-rott, the stand-up comedian he put on television in the 1980s and who had bought shares in the business. The programme, which pulled in audiences of 19m at its peak, had become a worldwide success, licensed in 100 countries.

The money means that Smith can comfortably fund more films but he denies that selling the Millionaire rights, along with Celador’s domestic TV production business, a postproduction arm and on-screen graphics designer, was prompted by any need to get hold of some cash.

“I made the decision to sell Millionaire because it was no longer a challenge,” he said. “I had been in television for 40 years and I had had enough. I wanted to diversify.”

Celador has two films in postproduction, plus one about to shoot and another in the pipeline.

“It is a high-risk business,” said Smith. “Not every film will make money, but as long as some do, that’s okay.” And it beats having to scrape together backing from the big studios. Smith is being courted by some of Hollywood’s top producers, who want to buy into his company.

“Conversations are going on. Something may come out of them. There are lots of interesting opportunities and one of them is very appealing,” he said.

With all the attention that Slumdog has received, it is surprising that Smith is equally enthusiastic about another of his divisions – radio.

After submitting more than 15 applications for regional radio licences to the Radio Authority and its successor, Ofcom, Smith fulfilled his dream last year by buying a Bournemouth station and rebranding it as The Coast 106.

In the age of on-demand, multi-choice programming, and with advertising revenues tumbling, his rationale for moving into radio strikes an old-fashioned note.

“Radio is like a good movie or TV programme – you go on a journey and you don’t know quite where it’s going to end,” he said. “That’s why I think radio will always survive.”

More stations will follow, but Smith won’t pay too much. He is trying to persuade Ofcom to reissue a licence for Edin-burgh that was returned by UTV when it pulled the plug on a talk-radio station in the city. His preferred format is soft rock for the overforties.

The third strand to the future business of Celador, which will turn over £13m this year, is live events.

Smith is eyeing a move into West End theatre. He wants to license two dormant properties. One is a musical, the other a comedy. “Both of them were commercial failures,” he said. “My view is that they hadn’t been produced correctly.

“Slumdog is absolutely part of the success of the company, but it is not the only success,” said Smith.

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