The Securities Regulatory Commission has proposed the principle of refinancing that cross-border investment in movies, television and games should not be allowed.

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 The Securities Regulatory Commission has proposed the principle of refinancing that cross-border investment in movies, television and games should not be allowed.


Seven years ago, the state issued documents such as Cultural Industry Revitalization Plan (Guofa [2009] 30) and Guiding Opinions on Financial Support for Cultural Industry Revitalization and Development and Prosperity, to support and encourage film and television enterprises to publicly list and publicly publicized stocks for financing and mergers and acquisitions from the policy level. Why did this change happen seven years later?

That years fever

Whatever you do, buy the film and television company.

Horizontal, vertical and even cross-industry mergers and acquisitions, reorganization of film and television, games and other cultural media enterprises in the domestic capital market began in 2013. According to the statistics of China Economic Network, there were more than 30 mergers and acquisitions in the film and television media industry, involving film, TV series, publishing, advertising, games and other sub-industries, with a total capital of more than 40 billion yuan. Among them, 18 A-share listed companies launched 20 mergers and acquisitions related to games - 12 of which were hand-held acquisitions involving a total amount of 18.839 billion yuan.

Over the next three years, the relevant figures have risen steadily: 169 in 2014, involving about 160.5 billion yuan in capital. Among them, there are 61 films and 40 games, with an average merger and acquisition of film and television companies occurring every 6 days. According to Wind information statistics, in the two years of 2015 and 2016, there were 88 M&A cases and more than 70 M&A cases in the film and television industry, involving 43.5 billion yuan and 30 billion yuan. A joke once circulated in the market: Pigs, steelmaking, fireworks, vegetables, and cement all come to buy film and television companies...

Its cold today.

Fire Cooking Oil Mergers and Acquisitions

Starting in 2016, the merger and acquisition boom of hot cooking oil suddenly encountered a bottom drawdown. In June of that year, the famous demon stock storm Group acquired Wu Qilong Straw Bear Film Industry for 1.1 billion yuan, and Tang De Film and Television Company for 700 million yuan were successively rejected by the Securities Regulatory Commission. In addition, a total of 4.12 billion yuan was abandoned and 100% of the acquisition of Spring Fusion and Lehua Culture was made. Wind data show that no major restructuring of film and television assets in 2017 has ever been tried.

Behind these abortion mergers and acquisitions, we can see the shadow of regulators. As clearly stated in Securities Regulatory Commissions 33 Rules for the Review of Refinancing by the Securities Regulatory Commission released last October, the funds raised by listed companies are used for film and television dramas shooting, and the relevant scripts need to complete the relevant filing procedures in accordance with the regulations. With the publication of Q&A, regulators restrict listed companies from the policy level to increase their cross-definition in film, television and game fields, which means that it is difficult for small and medium-sized film and television enterprises to complete listing financing through backdoor listing. At the same time, it is more difficult for non-film and television enterprises to enter the film and television industry through acquisition of film and television companies.

The series of measures taken by the regulators are interpreted by the industry as a way to let the capital boom subside, to prevent the capital from falling out of reality to empty, and to allow capital to flow back to the real economy.

Why is it easy to invest in movies and games? In addition to the blindness of some companies mentioned above in cross-border acquisitions and the ugliness of star securitization, the volatility of the performance of the film, television and game industries and the lack of sustainability of performance growth are also the reasons for the tightening of policy.

It should be said that the performance of film and television stocks in recent years is difficult to match the bear hug of capital. In 2016, the media sector turned its face from leading up to leading down. According to the data of the media (Shenwan) index, from 2016 to 2018, the declines of the media sector were 32.39%, 21.41% and 39.58%, respectively. Even compared with early 2018, the share prices of film and television listed companies mostly fell by 20% to 50%. Among them, the shares of nine listed companies, including Tangde Film and Television, Hualu Baina and Wentuo Holdings, have fallen by more than 50% since the beginning of the year.

How messy is it?

Ten thousand props need one hundred thousand

In addition, the investment chaos in the film and television industry has also aroused widespread concern in society. At the Shanghai Film Festival in 2018, Wang Changtian, chairman of Ray Media, mentioned the phenomenon of extravagance and waste in the film and television circle. The founder of the film and television company, such as high consumption, staying in a high-class hotel, opening a party and flying first class, hurt the investors feelings.

A producer of a listed company complained privately, The crew may have problems from top to bottom. If you buy a prop and report it for 100,000 yuan, it may actually be 10,000 yuan. It costs the producers money. Who else would like to vote?

Not to mention investors, there are some chaotic phenomena that even the film and television circles themselves can not see. In a video that was exposed in 2018, director Lu Chuan made a mess of Nanjing and Nanjings shooting: a set of street lamps 3500 (RMB), 18 sets, more than 60 thousand. Now, its 9 million dollars. You cant make it yet. Youve got 4.8 million dollars. Youve spent it for me in two days.......................................... Faced with the camera, Lu Chuan sighed: The speed of running water (capital expenditure) is too fast, no one wants to tighten the tap, some people want to smash the pool, water (money) rushed out.

How stable

The film and television industry is trying to find money.

After the road of cross-border refinancing has been cut off, how can film and television companies find money?

Someone embraces state-owned assets. Ciwen Media, for example, announced in February that its actual controllers, Ma Zhongjun, Wang Mei, Ye Biyun and Ma Zhonghua, would transfer a total of 7147 9928 shares (15.05% of the corresponding companys shares) to Huazhang Tiandi Media Investment Holding Group, a wholly-owned subsidiary of Jiangxi Publishing Group Company, by a price sub-agreement of 13 yuan per share. Ltd. (hereinafter referred to as Huazhang Investment) at the same time, the voting rights of 117725135 shares were entrusted to Huazhang Investment. After the transfer on March 27, Jiangxi Provincial Peoples Government became the actual controller of Ciwen Media.

Someone has turned to the Internet giant. On January 24, Ali Pictures announced that its subsidiary company, Beijing Zhonglian Huameng Cultural Media Investment Co., Ltd., had agreed to grant Huayi Brothers a loan of 700 million yuan for a five-year period at the benchmark lending rate of the Peoples Bank of China. Huayi Brothers pledged 70% of the equity and related earnings of Zhejiang Dongyang Meila Media Co., Ltd. and Wang Zhongjun and Wang Zhonglei will provide joint and several liability guarantees for the above loans.

Some people try to sell. In January this year, the Great Wall Movie and Television announced that 100% of Zhuji Movie and Television Citys shares were transferred to Youchuang Health at a transaction price of 300 million yuan. In other cases, the famous paintings were sold to Hunan Radio and Television Station, whose subsidiary, Hunan Cable Television Network Group, had announced that Yugong Shishan would be sold to Hunan Radio and Television Station. In addition, there are not a few film and television companies that sell houses to make up for their losses.

At the financial policy level, the industry of film, television and games is viewed differently, which reflects the current situation and some predicaments of the industry development from one side. For film and television companies, after the withdrawal of hot money, financing difficulties or lead to real financial problems. But after the short-term pain of the past bubble, film and video game companies will have to spend more energy polishing high-quality content. After all, it is the well-developed and promising works that are favored by policy and capital. Only high-quality goods can stand the test of time and the favor of capital.

(Wen/Journalist Zuwei)

Source: Jiang Siqi_NBJS8579, responsible editor of Beijing Youth Daily