Behind the huge loss of Yuewen group in the first half of the year: goodwill impairment of Xinli media

category:Finance
 Behind the huge loss of Yuewen group in the first half of the year: goodwill impairment of Xinli media


Monthly average consumption of paying users increased

From the perspective of revenue structure, Yuewen groups revenue comes from two sectors: one is online business, mainly from online paid reading, online advertising and the distribution of third-party online games on the companys platform; the other is copyright operation, which comes from the production and distribution of TV series, online drama, animation, film, authorization of copyright adaptation rights, operation of self operated online games and sales of paper books Income.

Yuewen groups online business revenue explosion growth is unsustainable. Some media industry securities analysts, who do not want to be named, said that the growth of the companys online business segments revenue in the first half of the year was mainly due to the increase in the willingness of paying users to pay, while the number of paying users did not increase significantly. In other words, the revenue growth is more dependent on paying users to pay more every month.

According to the performance report, due to the expansion of distribution channels and the increase of users willingness to pay for reading content, online business income increased by 50.1% to 2.495 billion yuan in the first half of 2020, the average monthly active users (MAU) of self owned platform products and self operated channels increased by 7.5% to 233 million, and the average monthly income (ARPU) from each paying user increased by 51.6% to 34.1 yuan.

From the perspective of online reading business, the progress of free reading is not as expected. The overall performance of the free reading app flying reading launched last year does not match the leading position of online literature corresponding to reading articles.

Goodwill impairment of Xinli media with 10 billion yuan

On the other hand, Xinli media, a wholly-owned subsidiary, once again dragged down the performance of Yuewen group. According to the financial report, in the first half of 2020, Xinli media had an income of 130 million yuan and a net loss of 97.1 million yuan. At the same time, the recoverable amount of goodwill and trademark right of Yuewen group on acquisition of Xinli media was lower than its book value, and the provision for impairment of goodwill and trademark right was 4.016 billion yuan and 390 million yuan respectively.

Dragged down by Xinli media, Yuewen groups copyright operation and other revenue in the first half of the year amounted to 765 million yuan, down 41.5% year on year.

In 2018, Yuewen Group acquired Xinli media with a transaction consideration of 15.5 billion yuan, which was constantly questioned by the outside world.

From the perspective of business structure, Xinli media is a well-known film and television company in the industry. It has participated in the production of my first half of my life, Bailuyuan, Ruyi Zhuan and other crimes. It has a high degree of business overlap with Yuewen group and has a wide range of cooperation space.

But in terms of financial contribution, the situation is not optimistic. At the time of acquisition, Xinli media made performance commitment: the net profit in 2018, 2019 and 2020 will not be less than 500 million yuan, 700 million yuan and 900 million yuan. After the acquisition, Xinli medias performance commitment has not been fulfilled once. According to the financial report of Yuewen group, in 2018, Xinli media completed a performance of 324 million yuan, only 64.8% of the promised performance of 500 million yuan. In 2019, Xinli media achieved a performance of 549 million yuan, accounting for 78.43% of the promised performance.

New management faces internal and external troubles

In fact, in the past six months, there has been a lot of trouble in the Yuewen group. On April 27, Wu Wenhui, former co chief executive officer of Yuewen group, Liang Xiaodong, President shangxuesong, and Senior Vice President Lin Tingfeng retired from their current management positions. Wu Wenhui was transferred to a non-executive director and vice chairman of the board of directors, while Liang Xiaodong and other senior executives served as group consultants. At the same time, the board of directors appointed the current Vice President of Tencent group and the head of Tencent film industry Cheng Wu, executive officer, was appointed as CEO and executive director of Yuewen group, and Hou Xiaonan, vice president of Tencent platform and content business group, served as president and executive director of Yuewen group.

Then, Yuewen groups 2019 version of the old contract was exposed, causing public concern. Some online writers claim that the old contract has overlord clause, and some even claim to launch a 55 break change Festival protest.

Source of this article: Yang Qian, editor in charge of Securities Daily_ NF4425