Wen | Jiang Yuqi, Peng Xiang
Edit | Shigongdong
The cover of the film Xihong City, the richest man
“What do Chinese companies that raise pigs, do dairy products, open restaurants, do metal pipes, sell hardware, and fireworks have something in common? Answer: They have all become film companies.”
In April 2014, Wang Kai, CEO of Yikai Capital Co., Ltd., tuned the listed company's transformation of film and television culture business on Weibo. At that time, the total box office of domestic movies rose for many years, and the concept of film and television in the capital market was heated up. Many listed companies have transformed into film and television media companies through mergers and acquisitions.
How high it was at the beginning, how bad it is now. The drug lord (ID: youhaoxifilm) found that in 2018, not only did a large number of listed companies in entertainment and film and television lose money, but several companies even lost more than 4 billion. In the figure of the 21 Data News Lab, the total net profit of the media industry in 2018 was -28.82 billion, ranking first in all industries. Behind this, it is precisely because of the large number of mergers and acquisitions of Chinese entertainment media companies in the past two or three years, which also made these companies accumulate a large amount of goodwill impairment provision.
In fact, film and television companies are far from imaginative and bright, not only the loss rate of the film is not low, even if you get a bright box office, the actual income of the account is often far from the total box office results. At the beginning, many companies were rushing into the film and television industry, and now many companies are trying to go to film and television. Why are movie companies not imagining to make money?
After the crazy merger, leave``one place'' goodwill and 1 billon loss.
2015 is probably the most glorious moment in the film and television industry.
At that time, the total box office of the country was 44 billion, up 48% from the 29.6 billion in 2014, and the total box office of the movie has maintained rapid growth for many years – from 4.3 billion in 2008 to 44 billion in 2015, just 8 years. Time, the box office has turned 10 times. The film of 1 billion+ box office has emerged in an endless stream, and many new and old companies have become rich overnight.
The box office continued to rise, and the fierceness of the capital market naturally did not allow much. 2015 was also the most beautiful moment in the capital market.
At the end of 2014, Ma Ma, Ma Huateng, Ma Mingzhe "Sanma" took a stake in Huayi, and took out a total of 36 billion of cash at one time; then, Huayi bought two star companies of Dongyang and Dongyang, and the actual holding person of the latter was Feng Xiaogang, The company's net asset value was-5500 yuan; in March 2015, it was a "What's the $30 billion film market" to discuss with Mr. Ma and Mr. Wang.
According to statistics, in 2015, there were 88 reorganizations of the film and television industry, involving a total of 43.5 billion yuan. The listed companies of the cultural media only raised 86.5 billion yuan in the same year. In fact, starting in 2013, in the capital market, some players who are almost incompatible with the entertainment industry are entering the market. Zhongnan Heavy Industry, which is mainly engaged in manufacturing business, changed its name to Zhongnan Culture after the acquisition of cultural and entertainment companies; Beijing Tourism officially entered the literary circle after acquiring 100% shares of Beijing Ferris Wheel for 150 million yuan, and later renamed “Beijing Culture”; Shen Dongjun, President of Tongling Jewelry The establishment of the diamond film industry, the catering of Hunan and Hubei, the fireworks of the panda fireworks, etc. have also announced plans to acquire film and television companies...
This is why Wang Hao wants to ridicule that "Chinese pigs, dairy products, restaurants, metal pipes, hardware, fireworks have become film companies."
Yi Kai Capital Co., Ltd. CEO Wang Wei's Weibo
No one thought, however, that the scenery of 2015 was the pinnacle of film and television and media companies in capital markets over the years. In 2016, 2017, the overall growth rate of the entertainment sector fell from an all-time high of 73 times PE to 31 times in 2017. In 2018, the share price of entertainment companies that experienced the "tax incident" plummeted. The market capitalization of most film and television companies has shrunk by more than 60 percent compared with their valuation peaks, and the average PE fell to a trough at the end of 2018.
Fan Bingbing’s “Tax Gate” exposes industry chaos
Under the cover of the nest, the end of the M&A transformation is more radical, and the losses now facing may be even more serious.
Central South culture is one of the most typical representatives.
In 2013, the South-South Heavy Industry Co., Ltd., which mainly engaged in the production of pipe fittings, acquired Datang Brilliant Media Co., Ltd. to enter the cultural industry, and also co-sponsored the establishment of the M & A fund as the whole platform of the cultural and media industry of the listed company. After that, South-South Heavy Industry began to acquire the company of the culture industry, such as film and television, game, and so on, and formally changed its name to the central-south culture in 2016.
Just entering the cultural circle, the performance of Central South Culture has continued to rise. From 2015 to 2017, the net profit has risen from tens of millions to nearly 300 million yuan, and the company has also participated in the explosion of "I am not a drug god". film.
Central and southern culture once participated in "I am not the god of medicine"
At the end of last year, due to the failure to fulfill the internal approval decision-making procedures to issue commercial acceptance bills, external guarantees, controlling shareholders and actual controllers, etc., Zhongnan Culture was directly put on the ST hat, and the securities abbreviation was changed to “ST South China”.
With the overall decline of cultural and entertainment companies last year, ST Central South 2018 annual report showed that the company achieved operating income of 970 million yuan, down 36.4 percent from the same period last year, of which the revenue of the cultural and entertainment industry was 362 million yuan, down more than 60 percent from the same period last year, and the proportion of cultural entertainment in the total revenue also fell from 64.74 percent in 2017 to 37.36 percent; its net profit was-2.1 billion yuan, down 81.7 percent from the same period last year. At the same time, due to the company's M & A target performance is not up to expectations, ST Central South Plan proposed more than 1.5 billion goodwill impairment preparation, which has become the main reason for the company's loss of more than 2 billion.
From 2017 to now, the stock price of ST Zhongnan has dropped from a low of 10.2 yuan to a low of 1.53 yuan. The market value has shrunk by more than 90% compared with the peak period. At present, the company has only 2.5 billion market capitalization. For the large losses and the company's follow-up development, Chen Shaozhong, the controller of Central South Culture, said at this year's shareholders meeting of Zhongnan Culture: "There are currently considerations for divesting some inefficient cultural assets, of course, depending on the price."
The Stock Price of the South-South Culture in the last two Years
Another company that has transitioned from industrial manufacturing to film and television also experienced a sharp decline last year. Xinke material originally mainly engaged in copper processing, rare earth and other composite materials, since 2014, Xinke material has planned five mergers and acquisitions, involving film and television culture, tourism, automotive services and other fields, in addition to the 2015 1.3 billion yuan acquisition of Xi'an Mengzhou Film and Television success, the other four failed, and finally the company also changed its name to Mengzhou shares (600255.SH).
The renamed Mengzhou shares in the film and television business is not smooth sailing. The company completed shooting in 2015, "Football Love" has not yet been released. Last year, the company's net profit was 1.26 billion, down 939 percent from 2017, and the company's provision for goodwill impairment of 900 million yuan was also an important reason for the company's sharp loss last year.
Coincidentally, it took more than 8 billion in six years to acquire Jiecheng shares in 19 companies, which were once regarded as a model for transformational film and television companies because of the pressure on Wolf Warriors 2 and Red Sea. Last year, Jicheng shares also raised 800 million yuan in goodwill impairment preparations, net profit also fell by more than 90 percent, and the company's books still have more than 4.7 billion goodwill.
Among the companies that have transformed, the most successful ones may be Beijing culture. In the past few years, Beijing culture has been able to suppress the explosion of the film market every year, from the "Wolf Wolf 2" in 2017, to "I am not a drug god" in 2018, and to this year's "Wandering Earth", which is a box office. More than 3 billion box office hits, and the stock price of Beijing Culture has repeatedly skyrocketed during the film's release because of the explosion.
Popular style works of Beijing Culture
However, although it is possible to suppress the money every year, Beijing culture is more like a fund speculation. In the wave of speculation, the stock price of Beijing culture is getting lower and lower. After the release of 2, the stock price of Beijing Culture once reached 22 yuan, but now only 9.9 yuan. In two years, the market value has fallen by more than half, and now only 7 billion.
The successful transformation of Beijing culture is more like a case. Turning over the 2018 annual report, many companies that had undergone a vigorous transformation have handed over a record of a sharp decline in performance in 2018: the contemporary East, which was the main focus of the cement business, had a net profit of -1.6 billion in 2018, down 1559% year-on-year; The Lukang culture of textiles and clothing has a net profit of 56.09 million in 2018, down 80% year-on-year; the Huangshi Group, which is mainly engaged in the dairy industry, has only 13% of its revenue from film and television business in 2018, but its net profit is 6.2 billion, which is also related to other transformations. The company has fallen sharply, with a year-on-year decline of more than 1186%...
The bright film and television industry, actually the risk is very high.
The original infinite scenery of cross-border players, why in a twinkling of an eye has fallen into a dilemma?
When many companies conclude in their annual reports, they attribute the reason to "film and television cold winter", "industry downturn" and "policy and regulatory changes." But in fact, the change of the overall environment is more "push the hand", and in the existing film and television industry model, brilliance often only exists on the surface, high risk is the normal that the upstream companies of film and television need to face.
In 2018, the total box office in the mainland reached an all-time high of 60.97 billion, and six films at the box office of 2 billion appeared to be popular, but even despite the impact of the impairment of goodwill, the performance of many domestic film and television companies still experienced a large decline or even loss.
In fact, although many films often earn billions of yuan at the box office, the revenue that can bring to a single producer company is often less than 1/10 of the box office.
According to China's current sub-accounting policy, after all the box office of a movie is deducted from taxes and special funds, the remaining part (about 91%) will be divided by the cinema line and the film side (production + Xuanfa), and finally can be loaded. The producer's pocket may only be 25% of the total box office. Therefore, a film with a box office of 1 billion yuan, 100% of the investment in the proportion of the producers can also get 250 million, not to mention the fact that many films behind the production of more than a dozen, so the smaller producer may only be divided Get millions of dollars in income.
Take the head content company's light media as an example. According to the data provided by the Lighthouse Professional Edition, in 2018, the film company, Horgos Youth Light Film and other children and grandchildren participated in the total movie box office of more than 7 billion yuan, while still Participated in the distribution of a large number of hot films, including "Chinatown Detective 2", "a good show" and so on.
However, such a luxurious piece of film did not turn into a brilliant performance. In 2018, the revenue of the "Media and Derivatives" business of Light Media was only 1 billion yuan, a decrease of 12.99% year-on-year. The gross profit margin of the business was 32.18%, a decrease of 11.83% year-on-year. Affected by this, Light Media's non-net profit loss in 2018 was as high as 285 million yuan, down 161.73% year-on-year.
Light 2018 Annual report data
It's important that the box office is high and the revenue is low. For example, in Chinatown Exploration 2>, which sells nearly 3.4 billon, Horgus Youth Light Pictures is only the seventh joint producer, so the actual income of the company may be only a few hundred to a few hundred yuan.
Similar situation is very common in the film and television industry, Jinyi Film and Television in 2018 participated in the total box office of more than 10 billion, invested in "Red Sea Action" Xihong City richest "and other blockbuster, but its related income is only 45 million yuan; and according to the previous announcement of Jiecheng shares, through the investment" Red Sea Action ", the company received revenue of 40 million-compared with the total box office of the film 3.6 billion, which is not a big figure.
Even if the producer is able to share a relatively large box-office number, it is not necessarily able to cover the cost of the film. In recent years, domestic production costs have been rising, and the investment volume is already very common in the 100 million films. If the cost of a film reaches 3 billion yuan, in the current business model, it means that it may need to sell to 700-800 million to return to the book.
There are many reasons for the high cost of film investment and the narrowing of income. There are many factors such as the rapid increase in star pay and the rapid increase in the cost of publicity, as well as the intensification of competition during the period, which leads to the decline of box office revenue and the improvement of film production standards. There will be problems. Although the current state has introduced policies to limit star high pay, many companies are still not optimistic about the substantial decline in costs, and include "costs continue to rise" in the company's risk.
In North America, where the film industry is relatively developed, major studio often enrich the means of monetization and reduce the pressure caused by high investment by building a series of IP, to develop derivative industries. At present, including Huayi Brothers, Light Media, Wanda Film, many private film enterprises in China are trying to explore more monetization means and business lines to avoid the above risks, but under the influence of IP training cycle and scattered resources of domestic film and television companies, no company has found a suitable way out for the time being.
It is precisely because no company has explored other better monetization methods, which has led to the transformation and production of film and television business, which is a very high-risk thing in China. There have been more than one practitioner who has revealed to the drug lords that although many movies seem to be driving billions of box-offices, at present, in the entire film and television industry, less than 10% of the movies can be made without losing money every year. It is less than 5%.
Throughout 2018, the total box office of 11 domestic films was between 100 million and 200 million yuan, which is already 5% of the top of the pyramid in terms of box office revenue. However, according to the cost data disclosed on the Internet, including Nineteen generations of ancestors (170 million), "European Strategy" (150 million), "Yunnan insect Valley" (150 million), "Ye Man external biography: Zhang Tianzhi" (130 million), "Weather pre-explosion" (120 million), a number of films are at risk of loss. As for hundreds of millions of investments like Ashuro but only tens of millions at the box office, sometimes it may even lose the "home" of participants.
Potential risks disclosed in Light Media's 2018 Annual report
In fact, the unknown nature of film revenue has long become the consensus of the film and television industry. As a subjective cultural product, many things can influence the audience's choice: "the Last Night of the Earth" leads to the inexplicable collapse of word-of-mouth because of marketing, "Animal World" because "I am not the god of medicine" accidentally became popular, but did not achieve the ideal results; Before no adverse happy hemp flowers, in "Li Tea Auntie" was evaluated as "aesthetic fatigue." What kind of subject matter will be hot, what kind of factor may cause the box office to decline inexplicably, not the film and television company can master.
The Last Night of the Earth
In fact, not only film companies, TV series companies, variety companies and other content companies may also face a lot of uncertainty caused by policies or the general environment. As mentioned in previous articles, pressure dramas have put great pressure on many TV drama companies, and if works such as Ba Qing Zhuan can not be broadcast, they are likely to turn bad debts and weigh on the company's performance.
So a company made a lot of money in the theater last year, and the next year it's too common to lose. In the past 20 years, there has been almost no standing green tree in China's content production industry, even the traditional``five major private enterprises'' , which have suffered from recent content crisis and have been challenged by the latter.
Ba Qingchuan said that he invested 500 million yuan and is currently the largest single investment film and television drama in Asia.
Under this industry background, many cross-border companies do not have much experience and resources in the production and production fields. They do not have the ability to control the production and distribution of projects. The form enters the film and television industry, so it will be more passive than some old players. In most cases, it can only be "seeing the sky to eat" and gambling luck.
It is by no means an overnight effort to really avoid these risks through industrialisation, even in Hollywood, which has taken decades. In the most prosperous years of China's film and television industry, many cross-border companies have only seen demographic dividends, driven by industry gaps, superficial grandeur, but have not realized that this is not easy. There have been senior film and television practitioners complaining to the eyes:
"In the past, some cross-border players, even the film's accounting rules are not clear, they rushed into the game. The final result is to let the industry lose its original norms."
After this round of crisis, many talents gradually realized the true face of the film and television industry: in fact, the seemingly glamorous film and television industry, in the fastest growing years, the total box office is only tens of billions. If you put it in the real estate industry or even just a few middle-stage companies, sales for one year.
But the risk of this industry, by contrast, is much higher than that of many traditional industries. If you used to make fast money from market loopholes, today, when viewers are getting smarter, these companies may have to leave only one place of goodwill.
Intern Li Shi Xinzhu is also helpful to this article.
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